PHFB

Analyst: Victor Sula, Ph.D.
Initial Report
October 30th, 2008
10/29/08
PHFB daily
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Phantom Fiber Corporation

144 Front Street West, Suite 580 0.05
Toronto, Ontario Canada, M5J 2L7 volume © BigCharts.com

400
300
Phone: 416-703-4007
Thousands
200
Fax: 416-703-0900 100
E-mail (IR): PHFB@firstcapitalinvestors.com 0
Website: www.phantomfiber.com Aug Sep Oct
MARKET DATA Company Introduction

Phantom Fiber Corporation (OTCBB: PHFB) develops and markets
wireless software applications and mobile solutions to offer broad
Symbol PHFB support of the world’s leading mobile platforms and environments.
Exchanges OTC BB
Using its proprietary data transmission technology - Smart Stream-
Current Price $0.08
Price Target $0.30 ing™ - the Company’s wireless platform software allows custom-
Rating Speculative Buy ers to extend the transactional capabilities of their Web sites and
Outstanding Shares 19.35 Million deliver wireless, fully secured transactions at speeds significantly
Market Cap. $1.55 Million exceeding browser-based mobile phone applications. The software
Average 3-m Volume 8,682 works with more than 1,500+ different mobile devices, including
personal digital assistants (PDA) and mobile phones with Micro-
Source: Yahoo Finance, Analyst Estimates soft PocketPC, Palm, Symbian, i-Mode, Blackberry, Research In Mo-
tion, Smart Phone and Java platforms. In addition, PHFB currently
supports more than 600 network carriers worldwide.
Initial applications for the Company’s mobile solutions were online

gaming, such as horse racing, fixed odd game providers, and sports
book software companies. These applications required speed, rapid
account updates, security and a rich user experience. With an es-
tablished brand in the gaming and entertainment sector, PHFB’s
platform is also being deployed by enterprises seeking to imple-
ment high-performance mobile applications in remote video sur-
veillance, banking and brokerage, logistics and distribution.
A number of software providers and clients have signed multi-year

exclusive contracts with Company. Some of the top sports book and
horse racing software providers partnering with PHFB include:
United Tote, Finsoft, Orbis, BetOptions, BidNation, IQ-Ludorum,
Kiron Interactive, Digital Gaming Solutions, BoDog, Interactive
Gaming & Wagering, and ASI/Extension. The Company has also
signed agreements with Scientific Games (p.ari-mutuel), Sports
Phantom Fiber Corporation (OTCBB: PHFB) 1
Initial Report
October 30th, 2008
Acumen, Churchill Downs, YouBet and Phantom EFX in the U.S., and Swiss Lottery and Electracade in Europe.
PHFB has partnered with key enterprise and e-commerce companies such as AireSurf Networks Inc., Guard
Dev, Citadel Commerce, FireOne Group and Navaho Networks, among others.
The Company was founded in 2002 and is based in Toronto, Canada. PHFB conducts its business through its
wholly owned subsidiaries Phantom Fiber Corporation and Phantom Fiber Inc.
Investment Highlights
Favorable industry outlook
According to Gartner research, worldwide mobile phone sales reached 1.15 billion units in 2007 and are forecast
to grow 11% to 1.28 billion units by year-end 2008. The mobile phone market is poised for double-digit growth
in 2009 as well. This growth is supported by robust demand for mobile content and software solutions.
According to iSuppli Corp., the global market for mobile phone premium content, including music, gaming and
video, is expected to expand to more than $43 billion by 2010, rising 42.5% annually from $5.2 billion in 20041.
Further Gartner research shows that worldwide mobile gaming revenues are on-track to increase 16.1% in 2008
to $4.5 billion, and are expected to grow 10.2% annually between 2007 and 2011, with worldwide end-user
spending of $6.3 billion in 2011. The North American market is forecast to grow from $845 million currently to
approximately $1.2 billion in 2011.
Business model providing wireless data transition solutions
PHFB develops and markets wireless software applications and mobile solutions. Its products offer broad sup-
port for all of the world’s leading mobile platforms and environments. Using the proprietary data transmission
technology - Smart Streaming™ - PHFB wireless platform software allows customers to extend the transactional
capabilities of their Web sites and deliver fully secured wireless transactions at higher speeds than browser-
based mobile phone applications to more than 1,500+ assorted mobile devices. PHFB also supports more than
600 network carriers worldwide.
Focus on wireless gaming and entrainment sectors
PHFB’s applications represent a suite of “game frames” developed to quickly enable wireless gambling solutions
in sports betting, including horse racing and team wagering, or in softer games like bingo and poker. Wireless
provides a cost-effective alternative to the traditional overhead associated with placing wagers. It gives users
access to wagering systems directly from their seats and allows race operators to reduce the number of terminals
and cashiers required on race day. The Company has integrated its solution with the world’s leading tote and
gaming providers to deliver the best value-added functionality.
1. www.cellular-news.com/story/16425.php

Initial Report
October 30th, 2008
Expansion into financial services, healthcare and logistics verticals
Over the past year, PHFB has expanded its sales and marketing efforts, and has secured clients in the financial and
mobile payments vertical (such as FireOne, Citadel, and Navaho Networks), healthcare, logistics and distribution
software providers, as well as in the security and remote-monitoring industries. Last quarter, PHFB successfully
rolled out a real-time foreign exchange trading application for FX Solutions and a personal healthcare manage-
ment system for My Medical Records. The Company has also secured a contract with GTX Corp. to develop
a Personal Location System, with numerous applications in pari-mutual, lottery, athletic and personal location
tracking.
Client portfolio creates recurring revenues
In the last four years, PHFB has built a sizable portfolio of clients in various verticals. These clients include Finsoft
PLC, Real-Time Gaming, Bid Nation, Digital Gaming Solutions, Kiron Interactive, Bet Options, Dynamite Ideas,
GTS, Orbis, and Parlay Entertainment. The Company recently signed Scientific Games, Sports Acumen, Churchill
Downs, YouBet and Phantom EFX in the U.S.
Generally, PHFB charges a one-time fee ranging from $50,000 to $250,000 for integration and customization ser-
vices to match the functionality of the client’s Internet offerings. In addition, on customers with a client base
greater than 10,000 mobile users, the Company generates recurring revenues via a revenue-sharing or monthly
subscription arrangement.
Expansion into European, Australian and Asian markets
During 2008, the Company entered the EU market by signing agree-

ments with Swiss Lottery and Electracade. In October 2008, PHFB an-
nounced further expansion into Australia and Asia through an agree-
ment with Smart Ventures and Beach Hut Media. PHFB’s focus in the
Australian and Asian markets is initially in three vertical markets:
Gaming, Retail and Financial Services. The Asian markets have been
recognized for their mobile society and dependence on the latest mo-
bile technologies, eclipsing PC-based alternatives.
Triple-digit revenue growth
During the last four years, PHFB has reported impressive revenue
growth, confirming increasing market acceptance of offered services.
The Company’s revenue increased 309% year-over-year to $517,678
during the first six months of 2008 because of significant new customer
additions. Recently signed agreements support our outlook for 2008
revenues approaching $2 million. Going forward, we expect the lat-
est agreements to drive 100%-200% annual revenue growth through
2010.

Initial Report
October 30th, 2008
Business Model
The Company has created a mobile transaction enablement software business that provides a mobile transport
layer and delivers encrypted packets over cellular networks on behalf of hosting clients. PHFB develops wireless
software applications and mobile solutions that allow enterprises to experience high-performance functionality
on today’s mobile devices and global communication networks. The Company’s wireless data delivery platform
allow users to experience Internet-like graphics and Internet-like speed in an end-to-end highly secure solution
across 1500+ mobile devices and 600+ network carriers. All applications based on PHFB’s proprietary platform
can be applied to any enterprise requiring speed and a rich-user experience in their mobile solutions. Once
deployed, the platform utilizes PHFB’s proprietary Smart Streaming™ data transmission technology to deliver
high-speed, client-side performance that intuitively adapts to device and network properties.
The Company initially focused on applications in the gaming and entertainment sector (e.g. casinos, sports
betting, lottery, racing, poker rooms, etc.). PHFB’s technology provides a suite of “game frames” developed to
quickly enable wireless gambling solutions in sports betting where speed and simultaneous delivery matters.
PHFB’s clients represent approximately 300 sports bookings and horse racing sites, or about 75% of the sports
wagering and horse racing industries.
In the last two years, the Company has expanded its platform functionality with strong live streaming video
technology and wireless financial solutions. PHFB provides an integrated interactive component to existing
monitoring systems that allows security companies to remotely access their systems through hundreds of differ-
ent mobile device types. The Company’s proprietary technology gives customer instant access, via their mobile
device, to their business surveillance systems, and also provides a secure connection for monitoring home-
based security, child care facilities and other properties.
The Company is expanding into the financial sector and recently signed a multi-year contract to deliver an inte-
grated mobile solution for FX Solutions LLC, a leading U.S. online foreign exchange broker serving both retail
and institutional customers. PHFB’s mobile solution will integrate directly into FX Solutions proprietary Global
Trading System platform to provide new functionality and features for traders.
The Company combines low implementation costs with a rapid deployment strategy using reusable software
objects to reduce initial purchase barriers. PHFB’s business model generates revenues through the sale of propri-
etary software and custom integration services. The Company typically enters into exclusive multi-year, reve-
nue-sharing agreements with partners who use the Company’s technology to offer services or functions such as
games, content and other features.

Initial Report
October 30th, 2008
PHFB typically charges a one-time fee ranging from $50,000 to $250,000 for integration and customization ser-
vices. For customers with more than 10,000 mobile users, a service charge or transaction fee applies. The Company
also participates in revenue- sharing or monthly subscription arrangements.
Corporate strategy
The Company plans to develop additional products and services, innovative features, and expand distribution
to attract new customers while enhancing its value for existing clients. In implementing its initial strategy, PHFB
established the following criteria:
• Users were likely to be “early adopters” of wireless technologies;

• There was no dominant competitor apparent;
• The Company could implement a stable recurring revenue model; and
• Focus on consumer-based applications that leverage product portability.
The Company’s goal for next year is to expand geographically and on a product platform basis into the broker-
age, banking, trading, logistics and distribution and healthcare markets. PHFB also plans to expand its platform
functionality with stronger video streaming technology and other analytical data to further differentiate its com-
petitive offering.
In addition, PHFB intends to further penetrate vertical markets where it has a presence. Each client typically
represents several operators or sites licensing the Company’s software. As a result, each partnership agreement re-
sults in the deployment of PHFB’s technology across a number of sites and creates backlog. The Company is work-
ing through the backlog amassed on existing contracts and is helping its partners market their mobile products. To
address this backlog, PHFB is introducing methodologies and product constructs designed to more quickly build
brand for the underlying operators.
Technology
The language spoken by the application server must be

translated into a format that the mobile device can under-
stand. PHFB’s Advanced Wireless Platform is the module
that connects the application server portion to the end-user
client. Essentially, the mobile solution may be viewed as
just another communication channel from the back-end’s
perspective, resembling that of the existing Internet portal.
Since the mobile solution just plugs into the existing appli-
cation framework, no changes or additional support are re-
quired for hosting the mobile solution.

Initial Report
October 30th, 2008
PHFB’s Advanced Wireless Platform
Source: the Company`s Web site.
The Company’s wireless platform is built using a building block or object approach. This technical architecture
was chosen to protect performance and ensure scalability on the device. Some of the primary features of the
platform are:
• Enhanced user experience: The wireless framework offers a rich graphic experience without compromising
performance.
• Cross-platform & network compatibility: The client-side software supports Windows/CE, Palm, Symbian,
Apple, i-Mode, RIM Blackberry, SmartPhone and Java-enabled phones (J2ME). This cross-platform compat-
ibility eliminates the need to recompile the application for devices running different operating systems, us-
ing different devices and running on different network protocols.
• Performance: The client can deliver Internet-type speed across networks. This approach puts less demand on
the server and network and allows the Company to provide the user with improved performance and better
graphic presentation.
PHFB’s advanced wireless platform includes several unique and proprietary functions such as:
• Secure State Management – Maintains a checkpoint connection in “no signal” areas. Should a user lose signal
for a period of time, their mobile device will auto refresh once a connection is re-established.
• Security – The communication component of the Company’s software uniquely delivers an end-to-end en-

Initial Report
October 30th, 2008
crypted secure solution over a secure socket layer (SSL) similar to secure Internet sites.
• SmartStream™ – Communications are handled using a proprietary raw data format to provide landline Inter-
net speed on today’s wireless devices. SmartStream also queues and prioritizes transmissions to assure a high
quality user experience and application responsiveness.
• Client Libraries - Presentation graphics and animation are stored in local device libraries, eliminating redun-
dant delivery and creating a vivid user experience without compromising performance.
• Store & Forward – Users without wireless connectivity or in a weak signal area can continue to use PHFB’s
software through a local storage method. The software incorporates an encrypted database on the device that
can be synchronized once a signal is detected. This allows enterprise customers to continue collecting or refer-
encing information from mobile device without hindering the work flow process.
Services
Mobile gaming
The Company has partnered with the world’s leading content developers and platforms to provide operators with
the widest range of content for mobile devices. PHFB’s gaming offering provides superior high-resolution inter-
activity complemented with speed rivaling the PC experience.
PHFB’s current content offering includes:
• Traditional Casino Games, such as Peer-to-Peer Poker, Blackjack and Roulette;

• Bonus and Progressive 5 Reel Multi-line;
• Animated Slots;
• Lottery, Keno, Bingo and Scratch Tickets;
• Virtual Horse Racing;
• Fixed Odd and Skill Games; and
• Reverse Auction Products.
Mobile pari-mutuel
Mobile provides a cost-effective alternative to the traditional

overhead associated with placing wagers and giving users ac-
cess to wagering systems from their seats. It also allows race
operators to reduce the number of terminals and cashiers re-
quired on race day.
The Company has integrated its solution with the world’s

leading tote providers to deliver the following value-added
functionality:
• Account Access via existing online username/password
that provides full transactional capability including ca-
shier access, reward points, integrated customer support
and detailed transactional history.
• Program Display in a real time format and detail/summa-
ry screens that provide odds, MTP, scratches, last minutes
changes, news alerts, program and handicapping informa-

Initial Report
October 30th, 2008
tion, and weather conditions.

• Live Alert System/SMS Channel that directs players immediately to the wager window when a user- trig-
gered event occurs.
• Video and Multi-Media tools that allow players to tap into live video feeds or search archived information
to be played on-demand.
Mobile banking
PHFB’s mobile banking solution extends a highly personalized offering of timely, relevant information to bank-
ing clients.
Some of the features provided by the Company’s platform are:
• Basic Account access;

• Bill payments and management;
• Transfer between accounts;
• Notifications on service upgrades;
• Integrated customer care via e-mail and online chat;
• Access to credit, mortgages and investment accounts;
• Mobile Trading and investing; and
• Branch/ATM finder.
Mobile trading
PHFB’s mobile trading solution extends a highly personalized offering of timely functionality and reliable infor-
mation to a client. Features include:
• Real-time trading that delivers true real-time quotes with no delays, and the functionality client need to buy,
sell, set limits and view trade histories;
• Single click trading with the option of confirmation windows to minimize the risk of data entry error and
increase customer confidence;
• An interface consistent with client’s existing system which enables full, fast and accurate trading without a
long learning curve; and
• Live graphing of real-time data and market information in a number of formats, including simple trending
or comparison charting, or more complex analytical charting such as Bollinger Bands.

Initial Report
October 30th, 2008
Industry Outlook
Mobile phone market
According to Gartner research, worldwide mobile phone sales reached 1.15 billion units in 2007 and are expected
to approach 1.28 billion units by year-end 2008, an 11% increase2; the market is poised for 10% growth in 2009.
Mobile phone sales growth will increasingly rely on emerging markets as mature regions such as Western Europe,
Japan and North America, reach saturation.
Nokia achieved a 37% market share in 2007 when it sold slightly more than 430 million phones worldwide. Al-
though its market share slipped, Motorola maintained second place at 14%, but the gap narrowed between it and
third-placed Samsung with 13% market share. Annual worldwide revenues from mobile phone sales surpassed
$110 billion in 2007.
Global Mobile Phone Sales, millions units
Source: www.tmcnet.com/usubmit/2006/jan/1278911.htm.
Smart mobile device market
With the ongoing development of new Internet services such as YouTube, Facebook, MySpace, Google Maps,
Skype, Chat and Gmail, the future of mobile computing lies with devices that are truly mobile, always connected,
and able to provide a rich Internet browsing experience. According to ABI Research, the market for Mobile Inter-
net Devices (MIDs) such as ultra-mobile PCs (UMPCs) and netbooks will grow 167% annually over the next five
years. ABI expects total revenues generated by vendors in the market to increase from $3.5 billion in 2008 to nearly
$27 billion in 20133.
2. www.gartner.com/it/page.jsp?id=736913
3. www.computerweekly.com/Articles/2008/10/13/232636/ultra-mobile-device-market-set-for-rapid-evolu-

Initial Report
October 30th, 2008
At present, smart phones represent 22% of the mobile market, creating demand for Web-based services on the
mobile network4. These high-end devices comprised around 10% of the global mobile phone market by units in
2007. With annual growth of 60%, smart phones are the fastest growing segment of the technology market.
In 2007, around 118 million smart phones were sold globally. Nokia shipped more than 60 million of the 118
million-unit total, while Research In Motion (RIM) ranked second with 12 million units shipped5. In the first half
of 2008, global smart phone sales to end-users rose to 64 million units, up 22% compared with the first half of
2007. Rounding out the top six smart phone makers behind Nokia and BlackBerry are HTC (4.1% of the market),
Sharp (4.1%) and Fujitsu (3.3%). Other smart phone makers made up the remaining 23.6%6.
The smart phone market is still growing at a healthy clip, estimated at 72% year-over-year; and analysts expect
sales to approach 200 million smart phones in 2008.
By OS provider, Symbian has the largest share at 57% worldwide, but lags behind other companies in the small
but highly visible North American market. RIM OS has the second largest share at 17.4% followed by Windows
CE at12%. Smart phones are widely deployed across Asia and enjoy great popularity because of the low barrier
to entry for third-party developers to write new applications for the platform.
Operating Systems Used in Smartphones, Q2 2008 Smart phone market share, Q2 2008
Source: http://en.wikipedia.org/wiki/Smartphone#cite_note-13 Source: http://www.cn-c114.net/578/a343562.html
Mobile gaming
According to iSuppli Corp., the global market for mobile phone premium content, including music, gaming
and video, is expected to expand to more than $43 billion by 2010, rising 42.5% annually from $5.2 billion in
2004 7.
4. www.letsgomobile.org/en/3392/mobile-device-market-trends/
5. www.allaboutsymbian.com/news/item/6671_The_State_of_the_Smartphone_Ma.php
6. www.cn-c114.net/578/a343562.html
7. www.cellular-news.com/story/16425.php

Initial Report
October 30th, 2008
Video games in their original versions on PCs and/or consoles represent a form of entertainment recognized
across a large population, while portable consoles have moved the market toward gaming on a mobile device.
Worldwide mobile gaming revenues are on-track to hit $4.5 billion in 2008, a 16.1% increase from 2007 revenues
of $3.9 billion. Gartner predicts that mobile gaming revenues will expand 10.2% annually between 2007 and 2011
and reach $6.3 billion in 2011. The North American market is projected to grow from $845 million currently to ap-
proximately $1.2 billion in 2011.
Mobile Gaming Revenue, $ billions
Source: www.gartner.com/it/page.jsp?id=706407
Systems integration market
In recent years, the worldwide systems integration (SI) services market has experienced its strongest growth since
the dot-com boom in the late 1990s. According to a new study published by IDC, after years of sluggish returns
and historic lows, the worldwide market experienced 4% growth in 20058.
According to a new IDC study, SI vendors reported a healthy market in 2007 with a slight increase in hourly bill
rates as customers continued to turn to SI vendors for integration projects that tie together disparate applications
and processes9. According to IDC, 2008 will likely be another strong year.
Accenture and IBM Global Services are the worldwide leaders for SI services. Other major players in the global
market are the Japanese SIs, including Fujitsu, Hitachi and NEC Corporation. In 2007, the U.S. market was domi-
nated by companies with a strong presence in the federal government market, namely Lockheed Martin, CSC and
SAIC.
8. http://news.top-consultant.com/UK/newsletter161106.htm
9. www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20081009005045&newsLang=en

Initial Report
October 30th, 2008
Financial Analysis
Revenues
In the last four years, PHFB has reported robust revenue growth and increasing market acceptance of its services.
The Company’s revenue increased 309% year-over-year during the first six months of 2008 to a record $517,678,
reflecting significant new customer additions. Going forward, the Company is likely to significantly improve on
FY2007 results by reporting revenues ranging near $2 million in FY 2008.
Revenue track, $
Source: SEC Filings; fiscal year ending December 31.
Income statement
In 2007, the Company’s operating expenses declined by $1.1 million, due mainly to reduced spending on public
relations, investor relations and advertising, as well as lower general and administrative expenses because of
the absence of bonuses paid in the prior year. Net losses increased, however, because of the recognition of an
additional $2.7 million of interest on accretion of senior convertible debt in FY 2007.
During the first six months of FY 2008, PHFB incurred net losses of $509,129, mainly due to the recognition
of $1,071,789 of interest on accretion of senior convertible debt. This loss was partially offset by a net gain of
$1,1725,332 related to the change in value of derivative instruments associated with the convertible debt issue.

Initial Report
October 30th, 2008
Operating results, $
FY06 FY07 % Chg H1 FY07 H1 FY08 % Chg
Revenue 309.3 495.3 60% 126.6 517.7 309%

Operating expenses 3,358 2,246 -33% 1,141 1,213 6%
Research and development 1,081 919.9 -15% 502.1 535.0 7%
Sales and marketing 853.0 454.9 -47% 214.3 184.2 -14%
General and Administrative 1,425 871.1 -39% 424.4 493.9 16%
Other Income (Expense) 144.2 (1,909) n/m 399.2 186.3 -53%

Net Income (2,905) (3,660) n/m (614.989) (509,129) n/m
EPS, $ (0.19) (0.21) n/m (0.04) (0.03) n/m
Source: SEC Filings; year ending December 31.
Despite strong revenue growth, the Company has not yet reached breakeven on an operating basis. PHFB is
implementing an aggressive marketing plan to drive revenue growth and position the business for profitability
in 2009.
Liquidity and capital resources
At June 30, 2008, the Company had a working capital deficit of $2.3 million, down from $5.8 million at year-end
2007. The change in working capital was due to a decline in short term and other borrowings of $825,120, which
were converted into convertible debt, a $324,482 reduction in accrued liabilities, a $427,168 increase in accounts
payable, a change in value of derivative instruments of $340,692, and a change in senior convertible notes of
$2,232,030 due to refinancing.
Balance sheet, $
31-Dec-07 31-Mar-08 30-Jun-08

-
Cash and equivalents 44,642 12,301 -
(2,317,234)
Net Working Capital (5,839,241) (3,504,637) (2,317,234)
561,996
Total Assets 515,751 409,653 561,996
5,820,892
Liabilities, including 5,896,660 4,769,074 5,820,892
4,139,831
Debt 4,320,789 3,637,997 4,139,831
(5,258,896)
Equity, including (5,380,909) (4,278,421) (5,258,896)
(12,295,788)
Accumulated deficit (11,786,659) (11,223,838) (12,295,788)
Source: SEC Filings; year ending December 31.

Initial Report
October 30th, 2008
To date, PHFB has financed its operation mainly from private placements of equity and debt instruments; how-
ever, this may cause dilution and increase financial risks. The Company plans to raise sufficient additional
capital over the next several months to eliminate or significantly reduce its current debt and provide adequate
working capital for operating activities.
Outlook and Valuation
PHFB has secured many new customer contracts that will favorably impact 2008 and 2009 results. Over the past
year, PHFB has expanded its sales and marketing efforts, and has secured clients in the financial and mobile pay-
ments vertical (such as FireOne, Citadel, and Navaho Networks), healthcare, logistics and distribution software
providers, and the security and remote-monitoring industries. Last quarter, PHFB rolled out a real-time foreign
exchange trading application for FX Solutions and a personal healthcare management system for My Medical
Records. The Company also secured a contract with GTX Corp. to develop a Personal Location System. Further
geographic expansion into Australia and Asia has been accomplished through agreements with Smart Ventures
and Beach Hut Media.
During the first half of FY 2008, revenue growth exceeded 300%, and PHFB signed several agreements that sup-
port our outlook for FY 2008 revenues approaching $2 million. Going forward, we expect new sales agreements,
geographical expansion and new verticals to fuel 100%-200% annual revenue growth through 2010.
Income statement forecast, $
2006 2007 2008E 2009E 2010E
Revenue: 309,271 495,285 2,005,904 5,215,351 10,430,702
Operating expenses:
Research and development 1,080,682 919,952 1,404,133 1,564,605 1,668,912
Sales and marketing 853,000 454,884 501,476 730,149 938,763
General and administrative 1,424,764 871,072 902,657 1,095,224 1,147,377
Total operating expenses 3,358,446 2,245,908 2,808,266 3,389,978 3,755,053
Operating income (3,049,175) (1,750,623) (802,362) 1,825,373 6,675,649

Other income (expenses): 144,239 (1,909,226) (954,613) (1,050,074) (1,155,082)
EBT (2,904,936) (3,659,849) (1,756,975) 775,299 5,520,568
Net income (2,904,936) (3,659,849) (1,756,975) 542,709 3,864,397

Diluted EPS ($0.19) ($0.21) ($0.08) $0.03 $0.19
2009
Source: Analyst estimates
We expect the Company to break even in 2009 and report impressive earnings gains as its technology and cus-
tomer base are further leveraged.
We also think the Company will issue equity to finance its growth plans. Considering also the issued convertible
notes, we expect shares outstanding to exceed 30 million by the end of 2010.

Initial Report
October 30th, 2008
Peer comparisons
We looked at companies providing gaming, mobile and wireless software solutions for the gaming and financial
services industries as valuation peers for PHFB. Peer companies are trading at 8.65 times forward P/E multiples.
Comparative analysis
Company Name Ticker Price per Mrkt. Cap. P/E P/S

29-Oct-08 symbol Share, $ $ Mn 2008 2009 2008 2009
CryptoLogic Ltd. CRYP 4.14 56 20.70 7.81 0.79 0.69

Sybase Inc. SY 25.09 1,990 12.36 11.56 1.76 1.70
Research In Motion Ltd. RIMM 47.82 27,050 13.36 10.09 2.45 1.72
Aristocrat Leisure Ltd. ALL.AX AUD 3.96 AUD 2,716 9.97 8.65 2.44 2.33
THQ Inc. THQI 7.62 509 10.89 7.86 0.45 0.41
Peers Median 12.36 8.65 1.76 1.70
PHANTOM FIBER CORP PHFB 0.08 1.55 n/m 2.70 0.77 0.30
Source: Reuters and analyst Estimates
We value PHFB at a 10 times forward P/E multiple because of the market’s favorable growth outlook, the Com-
pany’s revenue momentum and increasing worldwide adoption of its innovative platform. We multiply our 10
times forward P/E multiple by our $0.03 FY 2009 EPS estimate to obtain a $0.30 price target. As a result, we are
initiating coverage of PHFB with a Speculative Buy rating and a $0.30 price target.
However, we strongly advise investors to consider the risk factors discussed in the next section which cause us to
accentuate the “Speculative” aspect of our rating.

Initial Report
October 30th, 2008
Investment Risks
Limited sales history
The Company has a limited sales history in the wireless applications and enterprise mobile market area. As a
result, PHFB may experience revenue volatility as its sales order backlog, and project bookings are not at levels
to smooth revenues or sustain quarterly growth. If the Company’s projected revenues for a particular period fall
below expectations, PHFB may not be able to adjust spending quickly enough to offset revenue declines, and
overall results would suffer.
Lack of sufficient capital
To date, PHFB has reported losses from operations, negative working capital, and an insignificant cash balance.
PHFB will not generate sufficient cash from operations to fund its business plan in 2008. Its ability to grow may
depend on obtaining additional debt or equity financing. If the Company is unable to raise additional cash, its
business plan could stall.
Dependence on strategic partners
The Company derives a significant portion of its license revenues from sales of its proprietary wireless platform
software through strategic partners, systems integrators, value-added resellers and original equipment manu-
facturers. The loss of any of these third-party relationships could have an adverse impact on PHFB’s operations.
Moreover, if these partners change their business focus or enter into strategic alliances with other companies, their
need for PHFB’s service could be reduced or eliminated.
Market competitiveness
The wireless applications market is highly competitive and characterized by rapid and significant technological
change, frequent product introductions, evolving wireless platforms and industry standards. A number of compa-
nies have achieved strong results providing services similar to PHFB’s. These competitors have greater revenues,
customer lists, market acceptance, brand recognition and financial resources.
System failure
The Company’s business is dependent on PHFB wireless platform’s ability to rapidly and efficiently process sub-
stantial quantities of data and transactions. These operations could be interrupted by any damage to, or failure of,
mobile device software, hardware or networks. Any system failures, delays or other problems could harm PHFB’s
reputation and result in the loss of customers.

Initial Report
October 30th, 2008
Management
Jeff Halloran Mr. Halloran brings to the Company more than 20 years of experience in emerging digital technologies and
telecommunications. He became CEO, president and chairman of PHFB in January 2002. Mr. Halloran as-
Founder, President and CEO sumed the positions of principal financial officer and principal accounting officer effective January 1, 2005.
From March 2001 to November 2001, he was CEO of Sona Innovations Inc., a wireless software company.
From March 1989 to February 2001, Mr. Halloran was CEO and president of Relational Solutions Inc., an
international consulting firm specializing in information management and strategic information planning.
From August 1987 to March 1989, he was a consulting manager for Oracle Corp., providing database con-
sulting services. Mr. Halloran graduated from St. Clair College in 1982 with a degree in business adminis-
tration.
Herb Sears Mr. Halloran brings to the Company more than 20 years of experience in emerging digital technologies and
telecommunications. He became CEO, president and chairman of PHFB in January 2002. Mr. Halloran as-
Chief Technology Officer sumed the positions of principal financial officer and principal accounting officer effective January 1, 2005.
From March 2001 to November 2001, he was CEO of Sona Innovations Inc., a wireless software company.
From March 1989 to February 2001, Mr. Halloran was CEO and president of Relational Solutions Inc., an
international consulting firm specializing in information management and strategic information planning.
From August 1987 to March 1989, he was a consulting manager for Oracle Corp., providing database con-
sulting services. Mr. Halloran graduated from St. Clair College in 1982 with a degree in business adminis-
tration.
Shane Lourensse Mr. Lourensse has more than 10 years experience in sales with software and technology based business
solutions. Prior to joining Phantom Fiber, he was a senior account manager in the technology consulting
VP Business Development division of Telus, Canada’s second-largest telecom and wireless carrier. Previously, Mr. Lourensse was sales
director for a publicly traded company specializing in software solutions for the online gaming market.
Dennis Logan Mr. Logan became a director in September 2007. He currently serves as a managing director of Investment
Banking for Desjardins Securities. Prior to joining Desjardins Securities, from May 2005 until June 2007, Mr.
Director Logan was a director in the Investment Banking Group at Westwind Partners where he focused on both
corporate finance and merger & acquisition activity in the real estate, technology and special situations sec-
tors. Before that, Mr. Loganheld Investment Banking positions with LOM Ltd from August 2003 to January
2005; CIBC World Markets from April 2000 to May 2003; and TD Securities Inc. from May 1998 to April
2000. He began his career in financial services in September 1994 as a staff accountant with Ernst & Young
LLP. Mr. Logan holds both an Honours Bachelor of Art in philosophy & economics (1991), an MBA (1994)
from the University of Toronto, and is a Chartered Accountant.

Initial Report
October 30th, 2008
Shimon Constante Mr. Constante became a director in November 2006. He is the CEO of mPortico, a private mobile distribu-
tion and marketing services provider. Prior to founding mPortico, from March 2003 until August 2005, Mr.
Director Constante was the Head of Mobile Business Development at 888.com, an online entertainment company.
Prior to that, from July 2000 until January 2002, Mr. Constante was the head of Technology and Business
Research at Aduva, a privately-held technology company. Mr. Constante received a Bachelor of Art in
psychology in 1999 and an executive MBA from the Kellogg School of Management at Northwestern Uni-
versity in 2004.
Konstantine Lucas Mr. Lucas became a director in February 2006. He currently serves as executive vice president of Warner
Bros. Domestic Cable Distribution. From September 1998 until April 2000, Mr. Lucas was a consultant to
Director the media industry, including cable networks and MGM Studios. From May 1995 to August 1998, Mr. Lucas
was president of programming for the Family Channel. Before joining the Family Channel, from August
1986 to September 1993, Mr. Lucas was executive vice president of Viacom Entertainment Group, and
president of West Coast Operations and Viacom Productions. Before that, Mr. Lucas held several positions
at ABC Entertainment, culminating in his position as vice president and assistant to the president of ABC
Entertainment.
Stephen Gesner Mr. Gesner became a director on February, 2006. Mr. Gesner currently serves as the executive vice presi-
dent and CIO of Resolve Corporation. He previously served as chief information officer of Meridian Credit
Director Union from April 2005 to December 2007. From May 2004 to March 2005, Mr. Gesner was the vice president
of financial services of marketing for TELUS Communications. During the period May 2003 to December
2003, he served as the CTO for Cap Gemini Ernst and Young Canada. Before that, Mr. Gesner worked for
14 years at TD Bank Financial Group. Mr. Gesner began his career with Ford Motor Company of Canada
in September 1979 and held several positions in finance, treasury, production planning and industrial re-
lations through December 1988. Mr. Gesner holds an Honours Bachelor of Science from York University
(1977) and an MBA from the Schulich School of Business (1979).

Initial Report
October 30th, 2008
Disclaimer
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Victor Sula, Ph.D. - Senior Analyst
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Analyst: Victor Sula, Ph.D.

Phantom Fiber Corporation

Toronto, Ontario Canada, M5J 2L7 volume © BigCharts.com

Website: www.phantomfiber.com Aug Sep Oct

MARKET DATA Company Introduction

Initial applications for the Company’s mobile solutions were online

A number of software providers and clients have signed multi-year

Business model providing wireless data transition solutions

Focus on wireless gaming and entrainment sectors

Phantom Fiber Corporation (OTCBB: PHFB) 2

Expansion into financial services, healthcare and logistics verticals

Client portfolio creates recurring revenues

Expansion into European, Australian and Asian markets

During 2008, the Company entered the EU market by signing agree-

Triple-digit revenue growth

Phantom Fiber Corporation (OTCBB: PHFB) 3

Phantom Fiber Corporation (OTCBB: PHFB) 4

• Users were likely to be “early adopters” of wireless technologies;

The language spoken by the application server must be

Phantom Fiber Corporation (OTCBB: PHFB) 5

PHFB’s Advanced Wireless Platform

Source: the Company`s Web site.

Phantom Fiber Corporation (OTCBB: PHFB) 6

PHFB’s current content offering includes:

• Traditional Casino Games, such as Peer-to-Peer Poker, Blackjack and Roulette;

Mobile provides a cost-effective alternative to the traditional

The Company has integrated its solution with the world’s

Phantom Fiber Corporation (OTCBB: PHFB) 7

tion, and weather conditions.

Some of the features provided by the Company’s platform are:

• Basic Account access;

Phantom Fiber Corporation (OTCBB: PHFB) 8

Global Mobile Phone Sales, millions units

Smart mobile device market

Phantom Fiber Corporation (OTCBB: PHFB) 9

Source: http://en.wikipedia.org/wiki/Smartphone#cite_note-13 Source: http://www.cn-c114.net/578/a343562.html

Phantom Fiber Corporation (OTCBB: PHFB) 10

Mobile Gaming Revenue, $ billions

Systems integration market

Phantom Fiber Corporation (OTCBB: PHFB) 11

Source: SEC Filings; fiscal year ending December 31.

Phantom Fiber Corporation (OTCBB: PHFB) 12

FY06 FY07 % Chg H1 FY07 H1 FY08 % Chg

Revenue 309.3 495.3 60% 126.6 517.7 309%

Other Income (Expense) 144.2 (1,909) n/m 399.2 186.3 -53%

EPS, $ (0.19) (0.21) n/m (0.04) (0.03) n/m

Source: SEC Filings; year ending December 31.

Liquidity and capital resources

31-Dec-07 31-Mar-08 30-Jun-08

Source: SEC Filings; year ending December 31.

Phantom Fiber Corporation (OTCBB: PHFB) 13

Outlook and Valuation

Income statement forecast, $

2006 2007 2008E 2009E 2010E

Revenue: 309,271 495,285 2,005,904 5,215,351 10,430,702

Operating income (3,049,175) (1,750,623) (802,362) 1,825,373 6,675,649

Net income (2,904,936) (3,659,849) (1,756,975) 542,709 3,864,397

Source: Analyst estimates

Phantom Fiber Corporation (OTCBB: PHFB) 14

Company Name Ticker Price per Mrkt. Cap. P/E P/S

CryptoLogic Ltd. CRYP 4.14 56 20.70 7.81 0.79 0.69

Source: Reuters and analyst Estimates

Phantom Fiber Corporation (OTCBB: PHFB) 15