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Flash Update | 1

30 October 2008

FiberNet Telecom Group


Mark Kelleher, MBA 1.617.371.3726
BUY mark.kelleher@canaccordadams.com
FTGX : NASDAQ : US$6.72
Target: US$10.80 Aron Honig 1.617.371.3728
aron.honig@canaccordadams.com

COMPANY STATISTICS:
Market Cap (M): 50.4
Technology -- Communications -- Telecommunications
52-week Range: 5.75 - 12.20
EXPANSION WORKING TO PLAN;
EARNINGS SUMMARY:
FYE Dec 2007A 2008E 2009E ANOTHER SOLID QUARTER
P/Sales (x): 1.0 0.9 0.8
EV/Sales (x): 1.2 1.0 0.9 Event
P/E (x): NM NM NM FiberNet reported strong September Q3 results: revenue of $14.9M and
corresponding EBITDA of $3.0M compares to our estimates of
Revenue: Q1 11.6 13.6A 16.2
Q2 12.1 14.4A 16.5 $14.4M/$2.5M. Total revenue of $14.9M is up 3.5% sequentially and up
Q3 12.5 14.9A 17.0 19.3% year-over-year. EBITDA of $3.0M (19.8% EBITDA margin) is up
Q4 13.6 15.2 17.5 4.7% sequentially and up 40.2% year-over-year. Colocation was
Total 49.8 58.1 67.2
EBITDA: Q1 1.8 2.5A 3.5 particularly strong, increasing to $3.3M or 22% of revenue from $3.2M
Q2 1.9 2.8A 3.5 in Q2 and $2.6M in the same quarter last year. Off-net transport services
Q3 2.1 3.0A 3.7 increased to 31.4% of revenue to $4.7M from $4.6M in Q2 and on-net
Q4 2.6 3.0 3.8
Total 8.3 11.3 14.5
transport increased to $6.8M from $6.5M in Q2 or 45.8% of revenue.
EPS: Q1 (0.01) (0.04)A 0.04 FiberNet exited Q3 with 295 customers (added 11 customers q/q).
Q2 (0.11) (0.01)A 0.03
Q3 (0.08) 0.01A 0.04 Impact
Q4 (0.03) (0.01) 0.03 Positive. The Q3 beat and positive tone for 2008 should increase
Total (0.24) (0.06) 0.14
investor confidence and help drive the stock higher. Similar to Q2, the
SHARE PRICE PERFORMANCE: company has not seen any weakness or slowdown in sales related to
macro economic weakness, as FTGX does not have any financial
services customers. The newly expanded colocation projects are clearly
paying dividends as colocation revenue was stronger than we had
anticipated. We also believe the company will have long term benefits
from the newly planned expansion of its network footprint in multiple
cities including NY/NJ, LA, San Francisco, Chicago and Miami.

COMPANY SUMMARY: Action


FiberNet is a facilities-based provider of data services,
offering end-to-end network solutions for customers'
With high barriers to competitive entry, a well-established installed
connectivity needs. The company owns and operates base, strong pricing trends, and significant earnings leverage available
integrated interconnection facilities and diverse transport as more revenue (and more margin) is generated from expansion, we
routes in both the New York/New Jersey and Los Angeles
gateway markets, designed to provide comprehensive believe FiberNet is well positioned for continued strong growth. We
broadband interconnectivity enabling the exchange of reiterate our BUY recommendation and 12-month price target of
traffic over multiple networks.
US$10.80 per share.
All amounts in US$ unless otherwise noted.

Canaccord Adams is the global capital markets group of Canaccord Capital Inc. (CCI : TSX|AIM)
The recommendations and opinions expressed in this Investment Research accurately reflect the Investment Analyst’s personal,
independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important
information, please see the Important Disclosures section in the appendix of this document or visit
http://www.canaccordadams.com/research/Disclosure.htm.
Flash Update | 2
30 October 2008

Revenue
The September quarter generated revenue of $14.9 million, representing a 3.5% sequential
and 19.3% year-over-year increase. Transport services remained the largest contributor to
sales, accounting for 77.2% of Q3 sales. On-net transport services accounted for 45.8% of
total revenue, with off-net transport services contributing 31.4%. This compares to Q2 of
44.9% and 31.9%, respectively, although we would note that the total dollar amount
increased $0.3M and $0.1M sequentially in the on-net and off-net transport segments.
Collocation and access management services accounted for 22% and 0.8% of revenue,
respectively. Collocation increased 3.3% sequentially and 28.6% year over year.

Figure 1: Income statement summary


Canaccord Variance
Q3/08 Q2/08 Q3/07 Q/Q% Y/Y% Adams vs. CA
(Sep) (Jun) (Sep) Change Change Q3/08E Est.
Total Sales 14.9 14.4 12.5 3.4% 16.2% 14.5 2.7%
Gross Margin 48.3% 48.7% 48.1% -0.8% 0.5% 48.0% 0.6%
Operating Margin 2.3% 1.9% -2.1% 17.7% NM -2.3% NM
Pretax Income 0.0 -0.1 -0.6 317.5% NM -0.9 NM
Net Income 0.0 -0.1 -0.6 317.5% NM -0.9 NM
EBITDA 3.0 2.8 2.1 4.5% 28.7% 2.5 16.8%
Shares (mm) 7.4 7.5 7.4 -0.9% 0.3% 7.6 -2.3%

Source: Company Reports and Canaccord Adams Estimates

EBITDA
EBITDA for the September quarter was $3.0 million, up 4.7% sequentially and 40.2% year-
over-year. We had estimated EBITDA of $2.5M. Gross margin for the quarter came in at
48.3 % vs. our estimate of 48.0%, 48.1% in the same period last year and 48.7% in Q2.

Balance sheet
FiberNet exited Q3 with total debt of approximately $13.7 million. FTGX generated cash
from operations of $3.4 million in the quarter, exiting with total cash of $7.5 million.
Capital expenditures for Q3 were $1.2 million, compared to $1.2M in the year-ago period
and $3.2 million in the previous quarter. The company targets $3.5 million in capital
expenditures in 2008 and an additional $3 million related to expansion activities at 60
Hudson St. and 165 Halsey St (invested ~$900,000 on expansion in 2007). Additionally,
FTGX remains on target with its $2.0M expansion of its network into key metro areas
including New York/New Jersey, Los Angeles, Chicago, San Francisco, and Miami.

FiberNet still has an additional $10.6 million credit facility in the quarter (L+3.5%), and
with the $1.7M in levered free cash flow (Q3), bought back 34,000 shares in the quarter.
To date, FTGX has repurchased 453,000 shares for $3.7M.
Flash Update | 3
30 October 2008

Figure 2: Balance sheet summary


Q3/08 Q2/08 Q3/07 Q/Q% Y/Y%
(Sep) (Jun) (Sep) Change Change
Cash & Securities 7.5 6.1 7.1 22.1% 5.6%
Accounts Recievables 4.2 4.3 3.4 -2.1% 25.4%
Total Current Assets 12.4 11.2 11.2 10.8% 11.0%
PP&E 52.9 54.1 55.6 -2.3% -4.8%
Current Liabilities 12.7 11.8 8.9 7.4% 41.9%
Shareholders Equity 37.7 38.2 40.2 -1.3% -6.2%
DSOs 25.6 27.1 24.4 -5.4% 5.1%
Source: Company Reports and Canaccord Adams Estimates

Network expansion and colocation expansion update


FiberNet provided an update on the planned expansion of its national network. As a
reminder, the company plans to invest approximately $2.0 million on four network
projects. These projects include capacity expansions to its metro networks in New
York/New Jersey and Los Angeles, a capacity expansion to its metro Ethernet network and
extending its network reach to the new markets of Chicago, San Francisco and Miami. The
NY metro network expansions are now complete, with Chicago and Miami beginning
operations shortly. Los Angeles and San Francisco will begin to be implemented in Q4 and
into Q1 of F2009. The colocation expansion of 11,000 square feet at 60 Hudson Street
(completed in Q3 of F2007) continues to show strong demand, with management
commenting on the facility utilization rate of approximately 85%. The Newark expansion
(8,000 square feet) is selling nicely as well.

Economic update
Management provided an update on the uncertainty in the economic environment,
indicating that FiberNet has not seen any weaknesses in its customer decisions during the
September quarter. FTGX will remain cautious with its expenses even though it has not
been impacted by the macro to date.

Estimates
For 2008 we are adjusting our estimates after the beat in Q3. F2008 adjusts to revenue of
$58.1M and EBITDA of $11.3M from $57.7M and EBITDA of $10.5M.

Our F2009 revenue estimate remains intact at $67.2 million. We are raising our
corresponding EBITDA estimate to $14.5M (21.5% EBITDA margin) from $12.9 million as
a result of lower operating costs.

Valuation
Given the high levels of depreciation and amortization associated with facilities-based
service companies, we believe the best way to value these enterprises is at a multiple of
EBITDA. Most service providers in our coverage universe are trading with an enterprise
value in a range of 6x-10x 2009E EBITDA. Applying a conservative 6x multiple to our
calendar 2009 EBITDA estimate of $14.5 million provides a 12-month enterprise value for
FiberNet of $86.7 million. Subtracting approximately $13.7 million of debt, adding $7.5
million of cash, and dividing by 7.6 million shares (fully diluted) provides a 12-month price
target for FiberNet of $10.80 per share.
Flash Update | 4
30 October 2008

Conclusion
With its flagship property at 60 Hudson Street in New York, as well as existing locations in
Los Angeles and expansion facilities in New Jersey, FiberNet is well positioned to address
the rapidly expanding market for carrier connectivity services. Rising collocation demand
(and pricing), an expanding business in off-net transport, solid relationships with
international carriers, and a predictable, visible revenue stream position the company well
to deliver solid, predictable growth over the next several years. Given our 12-month price
target of US$10.80 per share, we reiterate our BUY recommendation on FiberNet.

Investment risks
Competition. The managed services markets that FiberNet competes in are highly
competitive. Pricing pressures and the introduction of new services from substantially
larger competitors could hinder the profitability of FiberNet.

Facilities concentration. FiberNet's operations are concentrated primarily in the New York
and Los Angeles gateway markets. Disruption or damage at one of these primary facilities
would have a detrimental effect on FiberNet's business.

Valuation assumption. In our valuation determination, we have made several assumptions


as to earnings estimates, company growth rate, and market earnings multiples. If any of
these assumptions should be less than accurate, our price target could be inaccurate.

For additional risks, see FiberNet's 10-K filing with the Securities and Exchange
Commission.
Flash Update | 5
30 October 2008

Figure 3: FiberNet Income Statement


FiberNet Telecom Group Inc. Primary Analyst - Mark Kelleher
($ in millions, except for per share amounts)

Fiscal 2006 Fiscal 2007 Fiscal 2008 Fiscal 2009


FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
2005 Mar Jun Sep Dec 2006 MarA JunA SepA DecA 2007 MarA JunA Sep Dec 2008 Mar Jun Sep Dec 2009
Net revenue 33.8 9.0 9.5 10.4 11.2 40.1 11.6 12.1 12.5 13.6 49.8 13.6 14.4 14.9 15.2 58.1 16.2 16.5 17.0 17.5 67.2
Sequential growth -2% 2% 5% 9% 8% 18% 4% 4% 4% 9% 24% 0% 6% 4% 2% 17% 7% 2% 3% 3% 16%
Y/Y growth -2% 14% 13% 20% 26% 18% 29% 27% 20% 21% 24% 17% 19% 19% 12% 17% 19% 22% 14% 15% 16%
-
Total COGS 16.4 4.4 4.7 5.3 5.8 20.2 5.9 6.3 6.5 6.9 25.5 6.9 7.4 7.7 7.9 29.9 8.4 8.6 8.8 9.1 34.9

Gross Profit 17.4 4.6 4.7 5.1 5.4 19.9 5.7 5.8 6.0 6.7 24.3 6.7 7.0 7.2 7.3 28.2 7.8 7.9 8.2 8.4 32.3
Gross Profit* 17.4 4.6 4.7 5.1 5.4 19.9 5.7 5.8 6.0 6.7 24.3 6.7 7.0 7.2 7.3 28.2 7.8 7.9 8.2 8.4 32.3
Gross margin* 51.4% 50.8% 50.0% 49.3% 48.4% 49.5% 49.3% 48.0% 48.1% 49.5% 48.7% 49.2% 48.7% 48.3% 48.0% 48.5% 48.0% 48.0% 48.0% 48.0% 48.0%
Operating expenses
SG&A 16.8 3.8 3.6 3.6 3.7 14.6 3.9 3.9 3.9 4.2 15.9 4.1 4.2 4.2 4.3 16.9 4.3 4.4 4.5 4.6 17.8
% of revenue* 50% 42% 38% 35% 33% 36.5% 34% 32% 31% 31% 7.7% 30% 29% 28% 28% 29.0% 27% 27% 26% 26% 26.5%
Depreciation and Amort 8.8 2.2 2.3 2.3 2.3 9.0 2.3 2.3 2.4 2.4 9.4 2.4 2.5 2.6 2.8 10.4 2.8 2.8 2.8 3.0 11.4
% of revenue* 26% 25% 24% 22% 20% 22.5% 20% 19% 19% 18% 18.9% 18% 18% 18% 18% 17.9% 17% 17% 16% 17% 17.0%
Stock option expense(1) 0.5 0.2 0.2 0.2 0.2 0.8 0.2 0.2 0.3 0.4 1.1 0.3 0.6 0.3 0.4 1.7 0.4 0.4 0.4 0.4 1.6
Operating Expenses 26.2 6.2 6.0 6.1 6.2 24.4 6.5 6.5 6.6 6.9 26.5 6.9 7.3 7.2 7.5 28.9 7.5 7.6 7.7 8.0 30.8
Operating income (8.8) (1.6) (1.3) (1.0) (0.8) (4.6) (0.7) (0.7) (0.6) (0.2) (2.2) (0.2) (0.3) - (0.2) (0.8) 0.3 0.3 0.5 0.4 1.5
Operating income* (8.3) (1.4) (1.1) (0.8) (0.5) (3.8) 1.6 (0.5) (0.3) 0.2 1.0 0.1 0.3 0.3 0.2 0.9 0.7 0.7 0.9 0.8 3.1
Operating margin* -24% -15% -12% -7% -5% 14% -4% -2% 1% 1% 2% 2% 1% 4% 4% 5% 5%
21.2%
EBITDA 1.9 0.9 1.2 1.5 1.7 5.3 1.8 1.9 2.1 2.6 8.3 2.5 2.8 3.0 3.0 11.3 3.5 3.5 3.7 3.8 14.5
EBITDA margin 5.6% 9.8% 12.1% 14.5% 15.5% 13.3% 15.5% 15.6% 16.9% 18.8% 16.8% 18.8% 19.6% 19.8% 19.7% 19.5% 21.5% 21.3% 21.5% 21.7% 21.5%

Interest Expense (2.4) (0.7) (0.6) (0.6) (0.6) (2.5) (0.6) (0.4) (0.4) (0.4) (1.8) (0.4) (0.4) (0.3) (0.3) (1.4) (0.4) (0.5) (0.6) (0.6) (2.1)
Interest and Invest Income 0.1 0.0 0.0 0.0 0.1 0.2 0.1 0.1 0.1 0.0 0.2 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.1
Other costs not inc. in PF(1) (2.8) - - - 0.0 (1.1) - - (1.1) - - - 0.0 - - - 0.0
Pretax income (13.9) (2.3) (1.8) (1.5) (1.3) (6.9) (2.4) (1.0) (0.9) (0.6) (4.9) (0.6) (0.7) (0.3) (0.5) (2.1) (0.1) (0.1) (0.1) (0.2) (0.6)
Pretax income* (10.6) (2.1) (1.7) (1.3) (1.1) (6.1) (0.1) (0.8) (0.6) (0.2) (1.7) (0.3) (0.1) 0.0 (0.1) (0.4) 0.3 0.3 0.3 0.2 1.0
Pretax margin* -41% -23% -18% -13% -9% -1% -7% -5% -2% -2% -1% 0% -1% 2% 2% 2% 1%
Income taxes - - - - - - - - - - - - -
Income taxes* - - - - - - - - - - - - -
Tax rate* - - - - - - - - - - - - -
Net income (13.9) (2.3) (1.8) (1.5) (1.3) (6.9) (2.4) (1.0) (0.9) (0.6) (4.9) (0.6) (0.7) (0.3) (0.5) (2.1) (0.1) (0.1) (0.1) (0.2) (0.6)
Net income* (10.6) (2.1) (1.7) (1.3) (1.1) (6.1) (0.1) (0.8) (0.6) (0.2) (1.7) (0.3) (0.1) 0.0 (0.1) (0.4) 0.3 0.3 0.3 0.2 1.0
Net margin* -31.4% -23.1% -17.5% -12.8% -9.4% -0.9% -6.7% -4.9% -1.6% -2.0% -0.6% 0.3% -0.7% 1.8% 1.6% 1.7% 1.1%

FC EPS: GAAP $ (2.69) $ (0.42) $ (0.29) $ (0.23) $ (0.18) (1.09) $ (0.33) $ (0.14) $ (0.12) $ (0.08) (0.67) $ (0.08) $ (0.09) $ (0.04) $ (0.07) (0.28) $ (0.01) $ (0.02) $ (0.01) $ (0.03) (0.07)
EPS: Proforma $ (2.05) $ (0.39) $ (0.26) $ (0.20) $ (0.15) (0.96) $ (0.01) $ (0.11) $ (0.08) $ (0.03) (0.24) $ (0.04) $ (0.01) $ 0.01 $ (0.01) (0.06) $ 0.04 $ 0.03 $ 0.04 $ 0.03 0.14
Shares outstanding* 5.2 5.4 6.3 6.7 7.1 6.4 7.3 7.4 7.4 7.6 7.4 7.6 7.5 7.4 7.4 7.5 7.5 7.5 7.5 7.5 7.5

Notes:
* Not including one-time charges
(1) one time charge excluded from pro-forma

Source: Company Reports and Canaccord Adams Estimates

e
Flash Update | 6
30 October 2008

Figure 4: FiberNet Balance Sheet


FiberNet Telecom Group Balance Sheet
(Dollars in millions)

Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08
Assets
Current assets
2.9
Cash and equivalents...........……………………………....... 1.9 2.2 2.3 1.9 3.6 4.3 5.1 6.8 5.0 6.7 7.1 8.2 6.7 6.1 7.5
Accounts receivable............................................. 4.3 2.5 2.1 2.0 2.3 3.0 2.1 2.8 3.2 3.4 2.6 3.4 3.8 4.0 4.3 4.2
Pre-paid expenses………………………… 0.7 0.5 0.7 0.7 0.4 0.4 0.5 0.6 0.7 0.6 0.7 0.7 0.6 0.6 0.7 0.6
Restricted Cash…………………………….. 1.9 1.9 1.9 - - - - - - - - - - - - -
Total current assets..................................................................
$9.7 $6.9 $6.8 $5.0 $4.6 $7.0 $6.9 $8.5 $10.7 $9.0 $10.0 $11.2 $12.7 $11.3 $11.2 $12.4
74.1 72.6 68.7
Property, plant and equipment................................................................................... 67.4 66.1 64.6 63.0 61.2 59.5 57.9 56.9 55.6 54.9 54.9 54.1 52.9
Goodwill……………………………………………………………………..
- - - - - - - - - - - - 1.6 1.6 1.6 1.6
Other Intangibles………………………………….. - - - - - - - - - - - - - - - -
Deferred Charges………………………………… 2.3 1.8 0.9 1.0 0.8 1.2 1.1 0.9 0.8 0.9 0.8 0.8 0.8 0.8 0.8 0.7
Other assets 1.6 1.5 1.5 1.5 1.6 1.6 0.9 0.8 0.8 0.7 0.7 0.7 0.9 0.9 1.0 0.9
Total assets.........................................................................
$87.7 $82.8 $77.9 $74.9 $73.2 $74.4 $71.9 $71.4 $71.7 $68.5 $68.4 $68.2 $70.9 $69.6 $68.6 $68.5
Current liabilities
Accounts payable.....................................................................................
4.4 3.7 3.8 4.0 3.8 3.9 2.8 3.6 3.5 2.7 3.1 2.7 3.6 5.2 4.1 3.8
Accrued expenses 3.3 3.6 4.2 4.6 4.3 3.8 4.0 3.9 4.7 3.8 3.9 4.5 7.2 4.5 5.1 6.1
Current portion of long term debt…………. 6.2 10.2 13.6 3.0 - - 0.1 0.3 0.4 0.7 1.1 1.4 1.6
Deferred revenue 3.4 1.3 1.4 1.5 1.2 1.6 1.6 1.7 1.7 1.5 1.4 1.4 1.3 1.2 1.2 1.2
Total current liabilities......................................................................
$17.3 $18.8 $22.9 $13.1 $9.2 $9.3 $8.5 $9.5 $9.9 $8.0 $8.4 $8.9 $12.8 $11.9 $11.8 $12.7
Long Term Debt 7.4 4.5 1.3 10.1 13.3 13.5 13.5 13.3 13.7 14.0 14.0 13.7 13.3 13.0 12.6 12.1
Deferred Revenue (non current) 3.3 3.4 3.3 3.7 3.8 4.0 3.8 3.7 3.7 3.6 3.5 3.4 3.4 3.2 3.6 3.5
Other non current liabilities 0.5 - - - 0.9 1.0 1.1 1.2 1.3 1.5 1.7 2.0 2.2 2.3 2.5 2.6

Stockholders' Equity.........................................................................
59.2 56.1 50.4 48.0 46.0 46.6 45.0 43.7 43.0 41.4 40.8 40.2 39.3 39.2 38.2 37.7
Total liabilities and
stockholders' equity.................................................................
$87.7 $82.8 $77.9 $74.9 $73.2 $74.4 $71.9 $71.4 $71.7 $68.5 $68.4 $68.2 $70.9 $69.6 $68.6 $68.5

Fundamental Data
Shares outstanding (in millions) 5.1 5.1 5.1 5.2 5.3 5.4 6.3 6.7 7.1 7.3 7.4 7.4 7.6 7.6 7.5 7.4
Tangible book value per share ($) 11.61 11.00 9.80 9.27 8.72 8.66 7.13 6.57 6.08 5.70 5.54 5.42 5.16 5.17 5.09 5.07
Net Cash and equivalents per share ($) (2.09) (2.52) (2.48) (2.08) (2.16) (1.84) (1.47) (1.28) (0.98) (1.24) (0.99) (0.93) (0.76) (0.96) (1.05) (0.83)
Current ratio 0.6 0.4 0.3 0.4 0.5 0.8 0.8 0.9 1.1 1.1 1.2 1.2 1.0 1.0 0.9 1.0

Working capital ($ in millions) (7.6) (11.9) (16.1) (8.1) (4.6) (2.3) (1.6) (1.0) 0.7 1.0 1.5 2.2 (0.1) (0.5) (0.6) (0.3)

Source: Company Reports and Canaccord Adams Estimates

e
Flash Update | 7
30 October 2008

APPENDIX: IMPORTANT DISCLOSURES


Analyst Certification: Each authoring analyst of Canaccord Adams whose name appears on the front page of this investment
research hereby certifies that (i) the recommendations and opinions expressed in this investment research
accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the
designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage
universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly,
related to the specific recommendations or views expressed by the authoring analyst in the investment
research.

Site Visit: An analyst has visited the issuer's material operations in the United States. No payment or reimbursement
was received from the issuer for the related travel costs.

Price Chart:*

* Price charts assume event 1 indicates initiation of coverage or the beginning of the measurement period.

Distribution of Ratings: Coverage Universe IB Clients


Global Stock Ratings Rating # % %
(as of 2 October 2008) Buy 372 63.9% 35.5%
Speculative Buy 57 9.8% 56.1%
Hold 135 23.2% 16.3%
Sell 18 3.1% 11.1%
582 100.0%

Canaccord Ratings BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.
System: HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.
SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.
NOT RATED: Canaccord Adams does not provide research coverage of the relevant issuer.

“Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the
designated investment or the relevant issuer.

Risk Qualifier: SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental
criteria. Investments in the stock may result in material loss.
Flash Update | 8
30 October 2008

Canaccord Adams Research Disclosures as of 30 October 2008


Company Disclosure
FiberNet Telecom Group 5, 7

1 The relevant issuer currently is, or in the past 12 months was, a client of Canaccord Adams or its affiliated
companies. During this period, Canaccord Adams or its affiliated companies provided the following services
to the relevant issuer:
A. investment banking services.
B. non-investment banking securities-related services.
C. non-securities related services.
2 In the past 12 months, Canaccord Adams or its affiliated companies have received compensation for
Corporate Finance/Investment Banking services from the relevant issuer.
3 In the past 12 months, Canaccord Adams or any of its affiliated companies have been lead manager, co-lead
manager or co-manager of a public offering of securities of the relevant issuer or any publicly disclosed offer
of securities of the relevant issuer or in any related derivatives.
4 Canaccord Adams acts as corporate broker for the relevant issuer and/or Canaccord Adams or any of its
affiliated companies may have an agreement with the relevant issuer relating to the provision of Corporate
Finance/Investment Banking services.
5 Canaccord Adams or any of its affiliated companies is a market maker or liquidity provider in the securities of
the relevant issuer or in any related derivatives.
6 In the past 12 months, Canaccord Adams, its partners, affiliated companies, officers or directors, or any
authoring analyst involved in the preparation of this investment research has provided services to the
relevant issuer for remuneration, other than normal course investment advisory or trade execution services.
7 Canaccord Adams intends to seek or expects to receive compensation for Corporate Finance/Investment
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9 The authoring analyst, a member of the authoring analyst’s household, or any individual directly involved in
the preparation of this investment research, has a short position in the shares or derivatives, or has any
other financial interest in the relevant issuer, the value of which increases as the value of the underlying
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10 Those persons identified as the author(s) of this investment research, or any individual involved in the
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month end if publication is within 10 days following a month end, the relevant issuer owned 1% or more of
any class of the total issued share capital in Canaccord Adams or any of its affiliated companies.
14 Other specific disclosures as described above.

Canaccord Adams is the business name used by certain subsidiaries of Canaccord Capital Inc., including
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Flash Update | 9
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Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2 or
disclosures@canaccordadams.com.
The authoring analysts who are responsible for the preparation of this investment research have received (or
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For Canadian Residents: This Investment Research has been approved by Canaccord Adams, a division of Canaccord Capital
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Canadian clients wishing to effect transactions in any Designated Investment discussed should do so through
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For United Kingdom This investment research complies with the Financial Services Authority's Handbook chapter on Conduct of
Residents: Business and is approved by Canaccord Adams Limited, which is authorized and regulated by the Financial
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in the United Kingdom. The information contained in this investment research is only intended for
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For United States Canaccord Adams Inc., a US registered broker-dealer, accepts responsibility for this Investment Research and
Residents: its dissemination in the United States. This Investment Research is intended for distribution in the United
States only to certain US institutional investors. US clients wishing to effect transactions in any Designated
Investment discussed should do so through a qualified salesperson of Canaccord Adams Inc.
Flash Update | 10
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For European Residents: If this Investment Research is intended for disclosure in any jurisdiction other than the United Kingdom, the
US or Canada, then the relevant rules and regulatory requirements of that jurisdiction will apply.

Additional information is available on request.


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