FS Dec 31 2002

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|Stream Communications Network, Inc.                                                    
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|Consolidated Financial Statements                                                      
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|For the year ended December 31,  2002                                                  
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|Stream Communications Network, Inc.                                                    
|Consolidated Balance Sheets                                                            
|As of December 31                                                                      
|(in Canadian dollars)                                                                  
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|                                                                                        |                                                               |                                                   |               |               |                              | 2002                               | 2001                       
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|ASSETS                                                                                  |                                                               |                                                   |               |               |                             
|                                                                                        | Current Assets                                                |                                                   |               |               |                              |                                   
|                                                                                        |                                                               | Cash and cash equivalents                         |               |               |                              | $394,234                           | $215,273                   
|                                                                                        |                                                               | Accounts receivable                               |               |               |                              | 221,346                            | 192,633                    
|                                                                                        |                                                               | Inventory                                         |               |               |                              | 14,373                             | 25,307                     
|                                                                                        |                                                               | Prepaid expenses and advances                     |               |               |                              | 74,330                             | 107,083                    
|                                                                                        |                                                               |                                                   |               |               |                              | 704,283                            | 540,296                    
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|                                                                                        | Net assets of discontinued operations (note 5)                |                                                   |               | -             | 2,270,958                   
|                                                                                        | Deposits                                                      |                                                   |               |               | 188,493                      | 3,670,742                         
|                                                                                        | Property, plant and equipment (note 6)                        |                                                   |               |               | 9,201,575                    | 7,193,088                         
|                                                                                        | Intangibles - (note 7)                                        |                                                   |               |               | 5,469,354                    | 2,281,795                         
|                                                                                        | Deferred charges - (note 8)                                   |                                                   |               |               | 2,019,261                    | 265,616                           
|                                                                                        |                                                               |                                                   |               |               |                              | $17,582,966                        | $16,222,495                
|LIABILITIES                                                                             |                                                               |                                                   |               |               |                             
|                                                                                        | Current Liabilities                                           |                                                   |               |               |                              |                                   
|                                                                                        |                                                               | Accounts payable and accrued liabilities (note 9) |               |               | $4,611,418                   | $1,611,039                        
|                                                                                        |                                                               | Deferred revenue                                  |               |               |                              | 187,672                            | 58,660                     
|                                                                                        |                                                               | Current portion of long-term debt (note 10)       |               |               | 108,825                      | 104,653                           
|                                                                                        |                                                               |                                                   |               |               |                              | 4,907,915                          | 1,774,352                  
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|                                                                                        | Long-term debt (note 10)                                      |                                                   |               |               | 52,975                       | 146,195                           
|                                                                                        | Non-controlling interest                                      |                                                   |               |               | 888,259                      | 926,458                           
|                                                                                        |                                                               |                                                   |               |               |                              | 5,849,149                          | 2,847,005                  
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|SHAREHOLDERS' EQUITY                                                                    |                                                               |                                                   |               |               |                             
|                                                                                        | Capital stock                                                 |                                                   |               |               |                              |                                   
|                                                                                        | Authorized                                                    |                                                   |               |               |                              |                                   
|                                                                                        | 150,000,000 common shares of no par value                     |                                                   |               |               |                             
|                                                                                        | Issued and fully paid (note 11)                               |                                                   |               |               | 31,229,685                   | 26,110,367                        
|                                                                                        | Contributed surplus                                           |                                                   |               |               | 96,041                       | 96,041                            
|                                                                                        | Warrants (note 11)                                            |                                                   |               |               | 2,740,669                    | 4,087,070                         
|                                                                                        | Cumulative translation account                                |                                                   |               |               | 1,437,814                    | 863,202                           
|                                                                                        | Deficit                                                       |                                                   |               |               | (23,770,392)                 | (17,781,190)                      
|                                                                                        |                                                               |                                                   |               |               |                              | 11,733,817                         | 13,375,490                 
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|                                                                                        |                                                               |                                                   |               |               |                              | $17,582,966                        | $16,222,495                
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|Nature of operations & going concern (note 1)                                           |                                                               |                                                   |               |               |                             
|Commitments (note 12)                                                                   |                                                               |                                                   |               |               |                             
|Subsequent event (note 16)                                                              |                                                               |                                                   |               |               |                             
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|                                                                                        |                                                               | signed by "Stan Lis"                              |               |               | signed by "Casey Forward"    |                                   
|                                                                                        |                                                               | President                                         |               |               | Chief Financial Officer      |                                   
|Stream Communications Network, Inc.                                                    
|Consolidated Statements of Operations and Deficit                                      
|(in Canadian dollars)                                                                  
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|                                                                                        |                                                               |                                                   |               |               | Year ended December 31, 2002 | Two months ended December 31, 2001 | Year ended October 31, 2001
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|Revenues                                                                                |                                                               |                                                   | $3,736,716    | $639,871      | $2,079,504                  
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|Expenses                                                                                |                                                               |                                                   |               |               |                             
|                                                                                        | Administration                                                |                                                   |               | 2,238,929     | 499,071                      | 2,235,352                         
|                                                                                        | Wages and benefits                                            |                                                   |               | 1,591,776     | 390,752                      | 932,849                           
|                                                                                        | Programming                                                   |                                                   |               | 757,375       | 197,561                      | 353,071                           
|                                                                                        | Telecommunications costs                                      |                                                   |               | 711,284       | 144,129                      | 314,701                           
|                                                                                        | Occupancy costs                                               |                                                   |               | 303,208       | 12,000                       | 228,353                           
|                                                                                        | Sales and marketing                                           |                                                   |               | 214,847       | 47,287                       | 147,622                           
|                                                                                        |                                                               |                                                   |               |               | 5,817,419                    | 1,290,800                          | 4,211,948                  
|Loss before undernoted items                                                            |                                                               |                                                   | (2,080,703)   | (650,929)     | (2,132,444)                 
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|Amortization of property, plant and equipment                                           |                                                               |                                                   | 906,972       | 75,811        | 553,914                     
|Amortization of intangibles and goodwill                                                |                                                               |                                                   | 284,064       | 17,453        | 50,665                      
|                                                                                        |                                                               |                                                   |               |               | 1,191,036                    | 93,264                             | 604,579                    
|Loss before other items                                                                 |                                                               |                                                   | (3,271,739)   | (744,193)     | (2,737,023)                 
|Other items                                                                             |                                                               |                                                   |               |               |                             
|                                                                                        | Interest income                                               |                                                   |               | (28,107)      | (8,735)                      | (49,032)                          
|                                                                                        | Financial expenses                                            |                                                   |               | 438,137       | 69,842                       | 32,042                            
|                                                                                        | Write-down of deposits                                        |                                                   |               | -             | -                            | 409,783                           
|                                                                                        | Gain on disposal of assets                                    |                                                   |               | -             | -                            | (6,170)                           
|                                                                                        |                                                               |                                                   |               |               | 410,030                      | 61,107                             | 386,623                    
|Loss from continuing operations before future income taxes and non-controlling interest |                                                               | (3,681,769)                                       | (805,300)     | (3,123,646)  
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|Future income tax recovery                                                              |                                                               |                                                   | -             | -             | 640,691                     
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|Loss from continuing operations before non-controlling interest                         |                                                               | (3,681,769)                                       | (805,300)     | (2,482,955)  
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|Non-controlling interest                                                                |                                                               |                                                   | 55,444        | 31,809        | 181,336                     
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|Loss from continuing operations                                                         |                                                               |                                                   | (3,626,325)   | (773,491)     | (2,301,619)                 
|Loss from discontinued operations (note 5)                                              |                                                               |                                                   | (2,362,877)   | (267,198)     | (2,231,941)                 
|Loss for the period                                                                     |                                                               |                                                   | (5,989,202)   | (1,040,689)   | (4,533,560)                 
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|Deficit, beginning of period                                                            |                                                               |                                                   | (17,781,190)  | (16,740,501)  | (12,206,941)                
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|Deficit, end of period                                                                  |                                                               |                                                   | $(23,770,392) | $(17,781,190) | $(16,740,501)               
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|Loss per share, basic and diluted                                                       |                                                               |                                                   |               |               |                             
|                                                                                        | Continuing operations                                         |                                                   |               | $(0.13)       | $(0.04)                      | $(0.11)                           
|                                                                                        | Discontinued operations                                       |                                                   |               | $(0.08)       | $(0.01)                      | $(0.10)                           
|                                                                                        | Basic and diluted loss per share                              |                                                   |               | $(0.21)       | $(0.05)                      | $(0.21)                           
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|Weighted average number of shares                                                       |                                                               |                                                   |               |               |                             
|                                                                                        |                                                               | Basic and diluted                                 |               |               | 28,023,911                   | 22,163,416                         | 21,837,002                 
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|Stream Communications Network, Inc.                                                    
|Consolidated Statements of Cash Flows                                                  
|(in Canadian dollars)                                                                  
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|                                                                                        |                                                               |                                                   |               |               | Year ended December 31, 2002 | Two months ended December 31, 2001 | Year ended October 31, 2001
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|Operating Activities                                                                    |                                                               |                                                   |               |               |                             
|                                                                                        | Loss from continuing operations                               |                                                   |               | $(3,626,325)  | $(773,491)                   | $(2,301,619)                      
|                                                                                        | Items not involving cash                                      |                                                   |               |               |                              |                                   
|                                                                                        |                                                               | Amortization                                      |               |               | 1,191,036                    | 93,264                             | 604,579                    
|                                                                                        |                                                               | Non-controlling interest                          |               |               | (55,444)                     | (31,809)                           | (181,336)                  
|                                                                                        |                                                               | Write-down of deposits                            |               |               | -                            | -                                  | 409,783                    
|                                                                                        |                                                               | Gain on disposal of assets                        |               |               | -                            | -                                  | (6,170)                    
|                                                                                        |                                                               | Stock-based compensation                          |               |               | -                            | 23,548                             | 72,493                     
|                                                                                        |                                                               | Future income tax recovery                        |               |               | -                            | -                                  | (640,691)                  
|                                                                                        | Changes in non-cash working capital items                     |                                                   |               |               |                             
|                                                                                        |                                                               | Accounts receivable                               |               |               | 20,321                       | 113,980                            | 511,032                    
|                                                                                        |                                                               | Inventory                                         |               |               | 13,873                       | 1,403                              | (2,586)                    
|                                                                                        |                                                               | Prepaid expenses and advances                     |               |               | 68,960                       | 507                                | (60,105)                   
|                                                                                        |                                                               | Accounts payable and accrued liabilities          |               | 954,333       | 484,502                      | 694,626                           
|                                                                                        |                                                               | Issuance of shares for issue costs                |               |               | -                            | -                                  | (35,770)                   
|                                                                                        |                                                               | Deferred revenue                                  |               |               | 119,415                      | (14,333)                           | 67,842                     
|                                                                                        | Net cash used in operating activities                         |                                                   |               | (1,313,831)   | (102,429)                    | (867,922)                         
|                                                                                        | Net cash provided (used) by discontinued operating activities | (173,848)                                         | 237,848       | (441,570)    
|                                                                                        | Net cash provided (used) by operating activities              |                                                   | (1,487,679)   | 135,419       | (1,309,492)                 
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|Financing Activities                                                                    |                                                               |                                                   |               |               |                             
|                                                                                        | Issuance of shares for cash                                   |                                                   |               | 3,772,917     | 1,557,095                    | 347,300                           
|                                                                                        | Share issue costs                                             |                                                   |               | -             | (119,043)                    | (83,273)                          
|                                                                                        | Share subscription                                            |                                                   |               | -             | -                            | 6,983,523                         
|                                                                                        | Long-term debt                                                |                                                   |               | (91,828)      | -                            | -                                 
|                                                                                        | Net cash provided by continuing financing activities          |                                                   | 3,681,089     | 1,438,052     | 7,247,550                   
|                                                                                        | Net cash provided by discontinued financing activities        |                                                   | -             | -             | -                           
|                                                                                        | Net cash provided by financing activities                     |                                                   |               | 3,681,089     | 1,438,052                    | 7,247,550                         
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|Investing Activities                                                                    |                                                               |                                                   |               |               |                             
|                                                                                        | Purchase of property, plant and equipment                     |                                                   |               | (312,756)     | (124,752)                    | (940,702)                         
|                                                                                        | Purchase of licences                                          |                                                   |               | -             | -                            | (42,608)                          
|                                                                                        | Proceeds from sale of equipment                               |                                                   |               | -             | -                            | 17,190                            
|                                                                                        | Acquisition of subsidiary, net of cash acquired               |                                                   | (3,698,554)   | -             | (1,784,418)                 
|                                                                                        | Deposits                                                      |                                                   |               | 3,487,543     | (1,067,188)                  | (2,152,489)                       
|                                                                                        | Investment in Stream Poland                                   |                                                   |               | -             | -                            | (147,671)                         
|                                                                                        | Deferred charges                                              |                                                   |               | (1,742,632)   | (90,497)                     | (160,256)                         
|                                                                                        | Net cash used in continuing investing activities              |                                                   | (2,266,399)   | (1,282,437)   | (5,210,954)                 
|                                                                                        | Net cash used in discontinued investing activities            |                                                   | -             | (332,612)     | (535,367)                   
|                                                                                        | Net cash used in investing activities                         |                                                   |               | (2,266,399)   | (1,615,049)                  | (5,746,321)                       
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|Foreign exchange effect on cash and cash equivalents                                    |                                                               | 251,950                                           | (145,382)     | (215,903)    
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|Change in cash and cash equivalents                                                     |                                                               |                                                   | 178,961       | (186,960)     | (24,166)                    
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|Cash and cash equivalents at beginning of period                                        |                                                               | 215,273                                           | 402,233       | 426,399      
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|Cash and cash equivalents at end of period                                              |                                                               |                                                   | $394,234      | $215,273      | $402,233                    
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|Supplemental cash flow information (note 3)                                             |                                                               |                                                   |               |               |