FORM 20-F



United States Securities and Exchange Commission

Washington, DC  20549





[  ]	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934.



OR



[x ]	ANNUAL REPORT PURSUANT TO SECTIONS "13" OR "15(d)" OF THE SECURITIES EXCHANGE ACT OF 1934.



For the fiscal year ended .........December 31, 2006.......................................



OR



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.



For the transition period from .........................................................................



OR



[ ]		SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Date of event requiring this shell company report _________





Commission file number:





STREAM COMMUNICATIONS NETWORK & MEDIA INC.

________________________________________________________________________

(Exact name of registrant as specified in its charter)



Not Applicable

(Translation of registrant's name into English)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



Suite 1400 - 400 Burrard Street

Vancouver, British Columbia, V6C 3G2





(Address of principal executive offices)



Securities to be registered pursuant to Section 12(b) of the Act.



None.



Securities registered pursuant to Section 12(g) of the Act.



Common Shares, without par value.

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.



None.





Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.



71,396,491 common shares at December 31, 2006



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes: ___ü
___				No:



Indicate by checkmark which financial statement item the registrant has elected to follow:



Item 17 ___ü
____			Item 18 _______



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes: _______				No:



If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes:



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer    Accelerated Filer   Non-Accelerated Filer  ü



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes:



FORM 20-F





INDEX











































































































































































































CONVERSION TABLE



For ease of reference, the following conversion factors are provided:





|1 mile = 1.6093 kilometres | 1 metric ton (tonne) = 2,205 pounds    
|-------------------------- | ---------------------------------------
|1 foot = 0.305 metres      | 1 troy ounce = 31.103 grams            
|1 acre = 0.4047 hectare    | 1 imperial gallon = 4.546 litres       
|1 long ton = 2,240 pounds  | 1 imperial gallon = 1.2010 U.S. gallons







GLOSSARY OF NAMES AND TERMS



|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Broadband           | Broadband refers to telecommunication that provides multiple channels of data over a single communications medium, typically using some form of frequency or wave division.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|CATV                | Community Antenna Television, the original name for Cable TV.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Coaxial cable       | Coaxial cable is called "coaxial" because it includes one physical channel that carries the signal surrounded (after a layer of insulation) by another concentric physical channel, both running along the same axis. The outer channel serves as a ground. Many of these cables or pairs of coaxial tubes can be placed in a single outer sheathing and, with repeaters, can carry information for a great distance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Czestochowa         | A city of southern Poland north of Katowice. It is heavily industrialized. Population:  251,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Digital             | Describes any system based on discontinuous data or events. Computers are digital machines because at their most basic level they can distinguish between just two values, 0 and 1, or off and on. There is no simple way to represent all the values in between, such as 0.25. All data that a computer processes must be encoded digitally, as a series of zeroes and ones. The opposite of digital is analog. A typical analog device is a clock in which the hands move continuously around the face. Such a clock is capable of indicating every possible time of day. In contrast, a digital clock is capable of representing only a finite number of times (every tenth of a second, for example).                                                                                                                                                                                                             
|EU (European Union) | An economic association of European countries founded by the Treaty of Rome in 1957 as a common market for six nations. It was known as the European Community until January 1, 1994 and since 1 May 2004 comprises 25 European countries. Its goals are a single market for goods and services without any economic barriers, and a common currency with one monetary authority. The 25 countries are Austria, Belgium, the Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovenia, Slovakia, Spain, Sweden and the United Kingdom.                                                                                                                                                                                                                                                      
|Euro                | The basic unit of currency among 12 European Union countries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|GSM                 | Global System for Mobile communications. A world standard for digital cellular communications using narrowband TDMA (Time Division Multiple Access), which allows up to eight calls at a time on 900 MHz and 1800 MHz frequencies. Introduced in 1991, it is the standard most commonly used in Europe and Asia, but not in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Headend             | A headend is the originating point of a signal in a cable television system (distribution center). Headend equipment receives satellite and local broadcast TV signals and converts them to a form that can travel down coaxial cable to subscribers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|HFC                 | A hybrid fibre coaxial (HFC) network is a telecommunication technology in which optical fibre (glass or plastic wire) cable and coaxial cable are used in different portions of a network to carry broadband content (such as video, data, and voice). Using HFC, a local CATV company installs fibre optic cable from the cable head-end to serving nodes located close to business and residential users and from these nodes uses coaxial cable to individual businesses and homes. An advantage of HFC is that some of the characteristics of fibre optic cable can be brought close to the user without having to replace the existing coaxial cable that is installed all the way to the home and business. Both cable TV and telephone companies are using HFC in new and upgraded networks and, in some cases, sharing the same infrastructure to carry both video and voice conversations in the same system.
|ISDN                | Integrated Services Digital Network, a fast method of service access and transferring data world-wide and an international communications standard for sending voice, video, and data over digital telephone lines or normal telephone wires.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Katowice            | A city of southern Poland 50 miles west-northwest of Krakow. Chartered in 1865, it is an important mining and industrial center. Population: 314,550.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Krakow              | A city of southern Poland on the Vistula River south-southeast of Warsaw. Founded in the eighth century A.D., it was the national capital from 1305 to 1595. Population: 756,267.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|KRRiT               | National Council for Radio and Television in Poland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|MDU                 | Multiple dwelling units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|PIKE                | The Polish Cable Communications Chamber of Commerce with headquarters in Warsaw unites 136 companies. Its members are cable TV operators representing over 80% of the domestic cable TV market as well as manufacturers and distributors of equipment and services used by operators in their business activity. Services rendered by operators - members of the Chamber - are used by 4.5 million households in the whole country. PIKE is a member of the National Economic Chamber and the European Cable Communication Association.                                                                                                                                                                                                                                                                                                                                                                               
|Rzeszów             | A city, capital of Podkarpackie Province in southeastern Poland. Population: 163,508.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Silesia             | Region in Southwest Poland bordering on the Sudety Mountains                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|UKE                 | Office of Electronic Communications in Poland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|UOKiK               | Office of Competition and Consumer Protection in Poland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Voice mail          | A computerized system for receiving, recording, and sometimes forwarding audio messages. A voice mail system plays a pre-recorded message to the caller when the line is not answered, and may provide choices such as paging, talking to an operator, or selecting a number by touchtone to choose between message boxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|VoIP                | An acronym for Voice Over Internet Protocol. An emerging technology, voice delivered using the Internet Protocol, is a term used in IP telephony for a set of facilities for managing the delivery of voice information using the Internet Protocol (IP). In general, this means sending voice information in digital form in discrete packets rather than in the traditional circuit committed protocols of the public switched telephone network. A major advantage of VOIP and Internet telephony is that it avoids the tolls charged by ordinary telephone service.                                                                                                                                                                                                                                                                                                                                               
|Warsaw              | The capital of Poland, in the east-central part of the country on the Vistula River. Founded in the 13th century, it replaced Krak??w as Poland's capital in 1596. Warsaw was ruled by Russia as an independent kingdom (1815-1917) and became capital of Poland again in 1918. Warsaw was rebuilt after 1945 and is today a major cultural, commercial, and industrial center. Population: 1,702,139.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Wroclaw             | A city of southwest Poland on the Oder River, assigned to Poland by the Potsdam Conference (1945). Population: 634,630.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               





FORWARD-LOOKING STATEMENTS

Stream Communications Network & Media Inc. ("we", "us" and "our", as the context requires) (the "Company") cautions you that certain important factors (including without limitation those set forth in our Form 20-F) may affect our actual results and could cause such results to differ materially from any forward-looking statements that may be deemed to have been made in this Form 20-F annual statement, or that are otherwise made by us or on our behalf. For this purpose, any statements contained in this annual statement, that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "except," "believe," "anticipate," "intend," "could," estimate," or "continue," or the negative or other variations of comparable terminology, are intended to identify forward-looking statements.



PART 1



Not applicable





Not applicable









The following table sets forth our selected consolidated financial data for the years ended December 31, 2006, December 31, 2005, December 31, 2004, December 31, 2003 and December 31, 2002 prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). The table also summarizes certain corresponding information prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). This selected consolidated financial data include the accounts of the Company and our subsidiaries.



|                                                     | Year ended
December 31 | Year ended
December 31, | Year ended
December 31 | Year ended
December 31, | Year ended
December 31,
|---------------------------------------------------- | ---------------------- | ----------------------- | ---------------------- | ----------------------- | -----------------------
|                                                     | 2006                   | 2005                    | 2004                   | 2003                    | 2002                   
|                                                     | $CDN                   | $CDN                    | $CDN                   | $CDN                    | $CDN                   
|Revenues                                             | 6,472,905              | 5,816,112               | 4,415,461              | 3,700,160               | 3,736,716              
|Net loss from continuing operations                  |                        |                         |                        |                         |                        
|Canadian GAAP                                        | (4,485,893)            | (5,811,359)             | (6,564,715)            | (6,254,620)             | (3,626,325)            
|US GAAP                                              | (4,444,561)            | (4,977,876)             | (4,533,705)            | (8,064,275)             | (3,626,325)            
|Net loss from discontinued operations                |                        |                         |                        |                         |                        
|Canadian GAAP                                        | -                      | -                       | -                      | -                       | (2,362,877)            
|US GAAP                                              | -                      | -                       | -                      | -                       | (2,362,877)            
|Loss per share basic and diluted                     |                        |                         |                        |                         |                        
|Canadian GAAP                                        | (0.08)                 | (0.14)                  | (0.22)                 | (0.21)                  | (0.21)                 
|US GAAP                                              | (0.05)                 | (0.12)                  | (0.15)                 | (0.27)                  | (0.19)                 
|Total assets                                         |                        |                         |                        |                         |                        
|Canadian GAAP                                        | 14,622,107             | 13,112,108              | 14,131,087             | 10,204,158              | 17,582,966             
|US GAAP                                              | 14, 622,107            | 13,112,108              | 14,131,087             | 10,204,158              | 17,582,966             
|Long-term debt                                       | 5,239,352              | 4,873,760               | 5,051,009              | 67,997                  | 52,975                 
|Capital stock                                        | 43,941,186             | 41,129,499              | 36,005,421             | 33,209,455              | 31,229,685             
|Weighted average number of common shares outstanding | 59,629,483             | 42,953,922              | 30,027,489             | 29,333,427              | 28,023,911             







In this report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars ("CDN"). Equivalents will be given in U.S. dollars ("USD") or Polish zloty ("PLN"), or Canadian dollars where the first currency stated indicates that a contract, a fee or agreement was made pursuant to a currency other than the Canadian dollar.



Since June 1, 1970, the Government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar against the U.S. dollar.  The high and low exchange rates, the average rates (average of the exchange rates on the last day of each month during the period) and the end of the period rates for Canadian dollars, expressed in U.S. dollars, from January 1, 2002 to December 31, 2006 was as follows:



U.S. DOLLARS PER $1.00 (CDN)



|              | Year ended
December 31,
2006 | Year ended
December 31,
2005 | Year ended
December 31,
2004 | Year ended
December 31,
2003 | Year ended
December 31,
2002
|------------- | ---------------------------- | ---------------------------- | ---------------------------- | ---------------------------- | ----------------------------
|High          | .9134                        | .8748                        | .8532                        | .7747                        | .6653                       
|Low           | .8479                        | .7851                        | .7138                        | .6327                        | .6175                       
|Average       | .8806                        | .8262                        | .7701                        | .7163                        | .63724                      
|End of Period | .8569                        | .8580                        | .8303                        | .7727                        | .6344                       





In this report, several references are made to business in Poland and the Polish currency, the zloty. The high and low exchange rates, the average rates (average of the exchange rates on the last day of each month during the period) and the end of the period rates for Polish zloty (PLN), expressed in U.S. dollars, from January 1, 2002 to December 31, 2006 were as follows:



U.S. DOLLARS PER 1 POLISH ZLOTY (PLN)



|              | Year ended
December 31,
2006 | Year ended
December 31,
2005 | Year ended
December 31,
2004 | Year ended
December 31,
2003 | Year ended
December 31,
2002
|------------- | ---------------------------- | ---------------------------- | ---------------------------- | ---------------------------- | ----------------------------
|High          | .3506                        | .3442                        | .3366                        | .2825                        | .3065                       
|Low           | .3042                        | .2877                        | .2453                        | .2428                        | .2325                       
|Average       | .3230                        | .3099                        | .2757                        | .2577                        | .2463                       
|End of Period | .3442                        | .3070                        | .3339                        | .2665                        | .2603                       





N/A





We have not been profitable in the past. The aggregate of our net losses (accumulated deficit) of $46,886,979 to December 31, 2006, has been financed by debt, private placements of equity securities, equity issued on settlement of debt and the exercise of stock options and warrants. We may not be profitable in the future.

The continued development and improvement of our business will require substantial amounts of additional financing. If we are unable to secure such financing on acceptable terms and on a timely basis, our financial results may be adversely affected.

In addition, our future prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing new businesses, which can be characterised by intense competition and rapidly changing events. Our auditors have included an explanatory paragraph disclosing substantial doubt regarding our ability to continue as a going concern as disclosed in the notes to the financial statements for the year ended December 31, 2006. The financial statements have been prepared on a going concern basis as we are confident that we will be able to continue as a going concern.

There can be no assurance that our financial plans will be achieved.

We may encounter difficulties in future acquisitions of new cable television and Internet access businesses

The completion of acquisitions and the integration of acquired cable television and Internet access businesses constitute a material part of our growth strategy. Before acquiring a new network or operator, we endeavor to perform a detailed analysis of integration-related costs and technical requirements, the financial standing of the business to be acquired, and our own capacity to finance the additional development of the acquired networks.  We may encounter difficulties in the future in acquiring new businesses that meet growth and profitability criteria or difficulties in integrating acquired businesses, which may result in additional costs and in the frustration of our development strategy. We cannot rule out the possibility that future acquisitions of other cable television operators may be more time-consuming than originally assumed.  Furthermore, we may not be able to acquire cable operators on terms and conditions that are advantageous.  While we seek to mitigate these risks, any of the foregoing may adversely affect our business and financial performance.



We operate in markets that are open to a variety of competitors, including large, well-established companies in the cable, satellite (the so called, digital platforms) and Internet access businesses, among others. The current legal environment makes it possible for competitors to build parallel and competing networks in the same regions in which we operate.

Currently, based on our own research, less than 20% of our aggregate networks are overbuilt by competitors. These competitors are typically not wiring the same subscribers as we do. However, if competitors are willing to significantly overbuild our networks and are able to obtain programming that is appealing to subscribers at reasonable costs and we are unable to do so, our business may be materially adversely affected.

In addition, the cable television and Internet access businesses are subject to rapid and significant changes in technology. Currently, no single method of television signal transmission or internet access dominates in Poland. We use flexible and modern technology which enables us to adjust to technological changes with relative ease, but we cannot predict the effect of technological changes. We anticipate that the role of cable in the transmission of television signals and data will continue to grow.  However, the introduction of other methods of transmission may adversely affect our business. Rapid technological changes and the profitability of transmission technology other than cable may adversely affect our business.

In addition, should competitors with better access to funding sources prove swifter in adjusting to technological changes than us, it may adversely affect our business.

We also face competition from other means of television and Internet distribution, including television direct-to-home satellite TV and terrestrial broadcasting, and from alternative forms of entertainment and information provision.



Approximately 30% of our network has been constructed using pre-existing conduits of the Polish national telephone company, TPSA. Compared to most of our competitors, this represents a relatively small portion of our network.  Agreements with TPSA provide that we may use TPSA conduits to offer services over our network and gain access to the conduits to upgrade, repair, and maintain the network.

Our agreements with TPSA permit TPSA to terminate these agreements without penalty at any time, either immediately (upon the occurrence of certain conditions relating principally to substantial breaches of the agreement, misuse of conduits or a change in control) or upon three to six months' notice (without cause).  TPSA is the top provider of Internet access services in Poland; it is, therefore, a competitor to us.  We believe that it is unlikely that a termination of these agreements will occur.  Nevertheless, if these agreements were terminated, we could, at least for a period of time, be prevented from accessing its network, in which case we would have to incur significant expenditures to build or lease alternative conduits to continue providing our services.



We compete with other cable television providers for qualified operating, sales, marketing, administrative and technical personnel. Our success will significantly depend upon our ability to hire and retain such personnel. We may not be able to attract, recruit and retain sufficient qualified personnel. Furthermore, we are currently managed by a small number of key management and operating personnel. Our business success depends significantly on the efforts and abilities of these individuals. If we were to lose the services of key management and operating personnel, our business could be negatively affected unless suitable replacements were found.



Cable television operators in Poland are regulated by various regulatory bodies and are required to comply with laws providing for, among other things, intellectual property rights protections.

Cable operators are required to register at the Polish telecommunications regulatory (the "UKE", The Telecommunication and Post Regulation Office).  UKE has the right to verify the technical quality of the networks.

Our program channels have to be registered at the National Council for Radio and Television (the "KRRiT"). A registration is valid for the periods ranging from one year to indefinite. The channels have either valid registration or appropriate application for registration have been made. KRRiT has the authority to reject applications to extend existing registrations for program channels if any such channels violate the Radio and Television Broadcasting Act.  Our applications to register or extend the registration of the registration of program channels have never been rejected.  In the unlikely event that a regulatory body was to refuse the extension of or amendment to our telecommunication approval, the extension of existing program registrations or the approval of additional program registrations, our business could be materially adversely affected.

The president of the

We cannot be sure that existing laws and regulations affecting our operations, or the interpretation or enforcement thereof, will not change.  Some changes, including the implementation of new provisions in connection with Poland's accession to the European Union, might have an adverse effect on our business. Changes could include rules restricting the prices that we may charge for cable television subscriptions or Internet access, or regulations concerning the level of fees we may be required to pay to organizations for collective copyright administration and protection.



Before May 1, 2004 (i.e. the date of Poland's accession to the European Union), cable operators in Poland, including us, re-transmitted works that were broadcast by radio and television stations in a given area pursuant to a so-called "statutory licence".  In order to be effective, the statutory licence required the cable operator to broadcast all programmes simultaneously and integrally with the primary broadcast. With an effective statutory licence, it was possible to show such works without being required to enter into separate agreements with their primary broadcasters, except in the case of encoded programmes.

The amendments to the Polish Copyright Act made on July 25, 2003 removed the statutory licence scheme, making it necessary for cable operators to enter into separate agreements with broadcasters. These amendments became effective on May 1, 2004. As a result, we are required to possess agreements with the broadcasters of all radio and television programmes which are broadcast on Stream's networks. Time and market pressure might adversely affect the terms and conditions of the agreements negotiated with these broadcasters, potentially resulting in higher fees payable by us to them.  Our operating costs and costs per viewer may be significantly increased, and our programming offerings containing its most expensive programming may be curtailed.  In addition, if broadcasters are not granted the right to broadcast their programmes within Poland, they will not be able to enter into agreements with us, also causing curtailment of our programme offerings. Reduced programme offerings or increased costs or subscriber fees may harm our business.

In addition, we are required to enter into agreements with organisations responsible for the collective management of copyrights and to pay through them remuneration to authors for our re-broadcasting of the authors' works.  Pursuant to such agreements, we are obliged to pay remuneration at the rates specified in tariffs approved by the government-appointed Copyright Commission.  Polish law does not impose a ceiling on remuneration to be collected by such organisations.

Polish law at present does not contemplate cable operators entering into one agreement for each programme channel covering the copyrights of all material broadcast over that channel.  Instead, Polish cable operators, including us, must negotiate licence agreements with the associations responsible for the collective management of copyrights of a certain category, e.g. of directors, actors, composers (in exchange for a fee set by tariff).  Even if we enter into a licence agreement with an association for a given category, we cannot be assured that such an agreement will fully cover all copyrights and related rights with respect to such category.

We expect that any cost increase resulting from these additional fees paid to broadcasters and organisations responsible for the collective management of copyrights will be offset by the reduction of other operating costs as a result of the anticipated increase in the number its subscribers. However, there is no certainty that we will be able to offset these costs.  If our costs increase as a result of this uncertainty, we expect that the costs of our competitors also will increase for the same reasons.  The legislative process with respect to this issue is ongoing.



We do not hedge currency risk. Our revenues are generated in Pln, while our programming costs (constituting 21% of our revenues in 2006) and our expenditures for technical equipment purchases, among certain other costs, are denominated in foreign currencies. Accordingly, significant fluctuations of the Pln in relation to those currencies may adversely affect our business and our financial results.



As at October 31, 2007, the company have issued a further 10,200,000 shares as a private placement in addition to 71,396,491 shares issued as at December 31, 2006. There exist options to purchase a total of 1,370,000 of our shares and warrants to purchase an additional 14,849,142 shares (16,219,142 shares in total). If all of these options and warrants were exercised, shares issued as a result of such exercise would constitute 19.04% of all of our outstanding shares. The exercise of these options and warrants and the resale of the resulting shares on a public market may adversely affect the market price of our shares and our ability to raise future equity financing upon favourable terms.

As of October 31, 2007, our constituent documents authorise the issuance of up to 150,000,000 shares of common stock. Consistent with our strategy, we may issue some or all of such shares to acquire one or more businesses or other types of property or to provide additional financing. In addition, we may grant additional options and issue additional warrants in the future. The issuance of those shares may result in a reduction of the market price of our outstanding shares. The issuance of any additional shares will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change of our voting control.



It is possible that a holder of a large number of our shares will be able to control (individually or jointly with others) our activities or exert a significant influence on our governing bodies or our business, including the ability to effect changes to our constituent documents and other material issues.

We believe that there presently is no shareholder able to exercise such control. However, the concentration of share ownership in the hands of a few shareholders in the future may make it impossible, without the consent of such shareholders, to effect a change in control or to appoint or remove a director. Possible conflicts among shareholders holding large numbers of our shares and possible conflicts between such shareholders and minority shareholders may adversely affect us.



We are a corporation incorporated under the laws of British Columbia, Canada. The rights of holders of our shares are governed by the laws of the province of British Columbia and the federal laws of Canada and by our constituent documents. These rights may differ in certain respects from the rights of shareholders in the United States.



While most of our assets are located in Poland, a majority of the members of our board of directors and officers are not permanent residents of Poland. As a result, it may be more difficult for holders of our shares to effect service of process on us, our directors and our officers and to enforce against us, our assets or these persons any judgements in civil and commercial matters. In addition, a Canadian court may not permit holders of our shares to enforce in Canada a judgement by a non-Canadian court related to claims under securities or other laws or otherwise related to their ownership of our shares. Canada is not a signatory to the Lugano Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters.



As a British Columbia corporation, income and dividend payments to shareholders are subject to Canadian tax laws and regulations. Depending on the jurisdiction of residence of our investors and on tax treaties, laws and regulations applicable to them, our investors may be subject, directly or indirectly, to various Canadian tax laws and regulations. We advise our investors to contact their tax advisors to determine how the tax laws and regulations of Canada and other jurisdictions applicable to them apply to them and their investments in us.











We have business interests in the country of Poland. Our principal business is providing cable TV and high-speed Internet access.

We were incorporated on March 28, 1979 under the name of "Clear Mines Ltd." by registration of its Memorandum and Articles under the Company Act of British Columbia, Canada (the "British Columbia Company Act"). We consolidated our shares on a one new for 3.9 old shares basis and changed our name to "Redwood Resources Inc." on August 16, 1985. We again consolidated our shares on a one new for three old shares basis and changed our name to "Trooper Explorations Ltd." on May 29, 1992.

On May 4, 1995 we changed our name to "Trooper Technologies Inc." and on October 19, 2001 we changed our name to "Stream Communications Network, Inc.". On August 9, 2004 we changed our name to "Stream Communications Network & Media Inc." ("Stream"). We changed our year-end from October 31 to December 31 in 2001.

Our authorized capital is 150,000,000 common shares without par value.

Our registered office is Suite 703-938 Howe Street, Vancouver, British Columbia, V6Z 1N9, Canada. Our principal offices are located at 1400 - 400 Burrard Street, Vancouver, British Columbia, V6C 3G2, Canada, telephone (604) 669-2826.

We have the following operating subsidiary companies:

1. Stream Communications Sp. z o.o. ("Stream Poland") was incorporated on October 26, 1999, under the laws of Poland. We own a 100% interest in Stream Poland which is in the business of operating cable television and high-speed Internet in Poland. Stream Poland's growth is being accomplished through acquisitions of small, independent cable TV and high-speed Internet providers and through its own marketing efforts. Stream Poland is located at al. 29 Listopada 130, 31-406 Krakow, Poland.
2. Streamline Media Sp. z o.o., (formerly Polvoice.com, "Streamline") is a wholly owned subsidiary of our Company, being organized on August 11, 1999, under the laws of Poland. Streamline is acting for and on behalf of Stream Poland acquiring Cable TV System, which subsequently are re-organized and transferred to Stream Poland as an integral part to existing Cable TV Systems.

The following company is a subsidiary, but no longer has an operating business. We had previously decided to dispose of this company as there was no purpose to it; as a result thereof the liquidation of the company has commenced in the second half of 2007 and is expected to be completed by the end of 2008.

1.	IEWS S.A. (formerly International Eco-Waste Systems "IEWS") is a wholly owned subsidiary of our Company being incorporated on September 24, 1996 under the laws of Poland.

We are a reporting issuer in the Province of British Columbia, Canada and our common shares are listed for trading on the OTC BB under the trading symbol "SCNWF". Our shares also trade on the Frankfurt exchange under the symbol "TPJ".



We utilized about 1,000 square feet of office space in Vancouver, British Columbia. Our rent is $1,700 per month. In addition, we paid approximately $1,500 per month for office support that includes a photocopier, telephones, a fax machine, computers, printers, scanners, secretarial services, reception services and consumables.

As at October 2007, the lease for the premises in Canada has been cancelled; however the company will continue to be registered in Canada.













We own and control business activities in Poland through a group of companies, in particular through our wholly owned subsidiary Stream Communications Sp. z o.o. ("Stream Poland") with a registered office in Krakow, ul. Aleja 29 Listopada 130, 31-406 Krakow, and indirectly, through the following subsidiaries of Stream Poland:

Bielsat.com Sp. z o.o. ("Bielsat")

Telewizja Kablowa Gimsat Sp. z o.o. ("Gimsat")

ASK Stream Sp. z o.o.  ("ASK")

Vega Sp. z o.o. ("Vega")





Stream Communications Network & Media Inc. and Stream Poland are collectively referred to as "Stream". Stream provides cable television services and high-speed Internet access in the Polish districts of Slaskie, Malopolskie, Swietokrzyskie, and Podkarpackie through its hybrid fibre coax ("HFC") networks.  Recently, it has also begun offering limited Internet telephony services based on Voice over Internet Protocol ("VoIP"). As of December 31, 2006, based upon the company's subscriber database, Stream has 58,673 cable television subscribers, which represents a penetration rate of 69.83% of homes passed in its network region. Cable television services accounted for over 87% of its consolidated revenue in 2005, and 84% in 2006 with internet services increasing from 11% in 2005 to 15% in 2006. Stream has a growing number of Internet subscribers. The Company has introduced high-speed Internet access to its networks and has 5,716 Internet subscribers along with 740 premium TV subscribers making the total of 64,389 revenue generating units (RGU).

Stream conducts its business in Southern Poland's most densely populated region, which, as per data from the Main Statistical Office (GUS), has approximately 11.5 million inhabitants and 3.2 million television homes and according to the estimates by PIKE about 1.1 million cable subscribers. Stream originally targeted this area of Poland because of the number of mid-sized cities which at that time remained underserved by larger cable operators. Stream has funded its growth and operations principally through debt and equity issuances. Stream's management possesses cable-business expertise and experience and, in particular, knowledge of its local target markets.

Most of Stream's networks have an 862 MHz bandwidth and potentially are able to transmit up to 94 analogue television channels and 68 radio stations. A portion of Stream's networks can already be used for two-way transmission, which is necessary for Internet access and other interactive services.  Stream's policy is to upgrade the networks it has acquired, including for the provision of two-way data transmission.

Stream Poland has made a number of cable television acquisitions, all of which have been successfully integrated into its business.  These acquisitions include:





|Date                 | Name of acquisition                                                        | Region of operation                
|-------------------- | -------------------------------------------------------------------------- | -----------------------------------
|April 2005           | Vega II                                                                    | Czestochowa                        
|April 2005           | Internet in Bytom                                                          | Bytom                              
|Oct 2004             | 98% of Vega                                                                | Czestochowa                        
|Sept 2004            | Miechowice                                                                 | Bytom                              
|May 2004             | 60% of ASK                                                                 | Sosnowiec                          
|March 2004           | Channel 69                                                                 | Sosnowiec                          
|June 2001            | 100% of Gimsat                                                             | Jaslo, Sanok, Brzozow              
|July 2001            | MTK                                                                        | Czestochowa                        
|July 2001            | A portion of the assets of AZART S.C.:                                     |                                    
|AZART SC Telekom     | Kielce                                                                    
|AZART TK Trybinowski | Busko, Zdroj                                                              
|September 2000       | A portion of the assets of Elektromontaz Rzeszow S.A. El-Rzeszow "Telekab" | Rzeszow, Bochnia, Sankomierz       
|August 2000          | A portion of the assets of Bister Sp.     Z o.o.                           | Jaworzno, Czechowice-Dziedzice     
|July 2000            | A portion of the assets of Telemedia Sp. Z o.o.                            | Czestochowa                        
|July 2000            | A portion of the assets of Marsat S.C.                                     | Czestochowa                        
|June 2000            | 51% of the shares of Bielsat                                               | Beilsko-Biala, Czechowice-Dziedzice





Stream Poland is one of the founders of Bielsat and since Bielsat was incorporated on March 8, 2000, has held 51% of its shares.  PPUH Bielsat owns the remaining 49% of its shares.

Stream Poland has an option to acquire the outstanding 49% in Bielsat, of which the option is valid until 2009. In the same period there is a 'drag-along' clause whereby PPUH Bielsat is obliged to sell its shares in Bielsat to Stream Poland, should Stream Canada decide to dispose of Stream Poland.



Stream Poland owns 100% of Gimsat, having made the final payment in May 2004.



ASK was purchased on May 5, 2004, wherein we paid $200,000 for a 60% interest in share capital of ASK. ASK currently has approximately 1,313 Internet subscribers.

Stream Poland has a call option to buy the outstanding 40% shares in ASK. In July 2007 this option was executed and the acquisition of the outstanding shares for a total proceed of 554.000 Pln will be completed by October 27, 2007, which is the date of payment for the shares.



Approximately 4,300 CATV subscribers were purchased in September 2004 in the Bytom region. In April 2005, approximately 2,000 Internet subscribers were purchased in the same region. As of December 31, 2006 the network and its subscribers have been fully integrated and absorbed into Stream Poland Sp. z o. o.



A 98% interest in Vega was purchased in October 2004 by Stream Poland to acquire approximately 4,200 subscribers. The balance of the ownership, consisting of a 2% interest, was acquired in 2005. A provision in the 2004 agreement allowed for the successful completion of a 10 year contract with an outside party that occurred in 2005 and formed part of the purchase price in 2005.

Our operating companies consist primarily of highly penetrated, mature broadband systems that generate stable cash flow.  We also operate a number of earlier stage broadband businesses.  Our primary goal in the majority of these regions is to capitalize on the opportunity to increase revenues and cash flows through the introduction of new and expanded programming and the delivery of Internet access services and telephony over our cable communications networks.



Stream Poland currently offers four programme packages:

- Bronze (Lifeline Tier): targeted to reach up to 8 channels for most subscribers, including all four Polish public television channels and Stream Poland's own information channel;
- Silver (Intermediate Tier): targeted to reach up to 18 channels for most subscribers, including all Basic Tier channels, plus Polish terrestrial channels and channels received free-of-charge;
- Gold (Basic Tier): targeted to reach up to 45 channels for most subscribers, including all Intermediate Tier channels and certain pay channels including  e.g. Viasat History and Explorer, Eurosport, National Geographic, Fox Kids, BBC Prime, Polsat Sport and three music channels of VIVA;
- Live (Premium Tier): targeted to reach up to 45 channels for most subscribers, including all Top Tier channels and premium channels Canal+. Canal+ Film and Canal+ Sport;

The different programming packages are designed to attract the maximum number of subscribers in a given franchise area, in order to obtain the highest possible penetration.  Stream markets to subscribers of lower priced tiers to encourage them to move to higher priced tiers.  In the future Stream intends to offer add-on premium channel packages of additional channels.

Because Stream has acquired its cable television networks through acquisitions, the exact channels in program packages offered to customers vary across the network.  One of Stream's strategic goals is to unify channel offerings, which it has already begun doing.  Over the longer term, Stream also intends to unify pricing structures across its networks. To the extent Stream has so far unified programs and prices, it has not experienced high levels of customer churn.

Because regulatory authorities in Poland do not currently set or oversee retail prices for either cable television subscriptions or Internet access services, Stream is free to charge a market price for these services.

Stream performs regular audits of customer installations to prevent piracy and maintains technology to help minimize potential signal piracy.  Stream does not believe that its signals are pirated extensively enough to have a material adverse effect on its business.



Polish cable television operators have more than 200 channels from which to choose when building their program offerings.  These channels are transmitted via satellites, the most popular of which are the Eutelsat and Astra satellites.  When deciding which channels to offer its subscribers, Stream takes into account program demand analysis, subscribers' opinions, and cost. Most of the license agreements that Stream has entered into relating to program purchases will be in effect for the next three to five years and may be extended.  Most of these license agreements also provide that as Stream's subscriber base increases, Stream may be able to modify the agreements to obtain more favorable terms.

Stream's programming providers are: (a) Polish public television; (b) Polish privateterrestrial television stations licensed by KRRiT; (c) Polish and foreign satellite program providers; and (d) local program producers.

The table below contains the list of programs for which Stream has signed license agreements or obtained broadcasting permits from program providers.









|Channel No. | Name                | Characteristics     | Language
|----------- | ------------------- | ------------------- | --------
|1           | TVP 1               | Public television   | Polish  
|2           | TVP 2               | Public television   | Polish  
|3           | TVP POLONIA         | Public television   | Polish  
|4           | TVP 3               | Public television   | Polish  
|5           | POLSAT              | Private terrestrial | Polish  
|6           | TVN                 | Private terrestrial | Polish  
|7           | TVN 7               | Entertainment       | Polish  
|8           | POLSAT 2            | Entertainment       | Polish  
|9           | TV 4                | Private terrestrial | Polish  
|10          | TV Puls             | General             | Polish  
|11          | Polonia 1           | Entertainment       | Polish  
|12          | Tele 5              | Entertainment       | Polish  
|13          | TV Trwam            | Catholic            | Polish  
|14          | BBC World           | Information         | English 
|15          | BBC Prime           | Entertainment       | English 
|16          | POLSAT Sport        | Sport               | Polish  
|17          | TVN Meteo           | Weather             | Polish  
|18          | TVN Turbo           | Cars                | Polish  
|19          | TVN 24              | Information         | Polish  
|20          | Explorer            | Science             | Polish  
|21          | History             | Science             | Polish  
|22          | MINI MINI           | Children            | Polish  
|23          | Kino Polska         | Movies              | Polish  
|24          | TVN Style           | Entertainment       | Polish  
|25          | Ale Kino!           | Movies              | Polish  
|26          | Zig Zap             | Children            | Polish  
|27          | National Geographic | Science             | Polish  
|28          | Planete             | Documentary         | Polish  
|29          | VIVA  PL            | Music               | Polish  
|30          | VIVA                | Music               | German  
|31          | VIVA+               | Music               | German  
|32          | RTL                 | Entertainment       | German  
|33          | RTL 2               | Entertainment       | German  
|34          | SAT 1               | Entertainment       | German  
|35          | VOX                 | Entertainment       | German  
|36          | Club                | Entertainment       | Polish  
|37          | Jetix               | Children            | Polish  
|38          | Discovery           | Science/Documentary | Polish  
|39          | Animal Planet       | Science             | Polish  
|40          | Superstacja         | Entertainment       | Polish  
|41          | Eurosport           | Sport               | Polish  
|42          | Canal+              | Entertainment       | English 
|43          | Canal+ sport        | Entertainment       | English 
|44          | Canal+ film         | Entertainment       | English 



For most subscribers, Channels 1-6 are available in Stream's Lifeline Tier and Channels 1-14 are available in Stream's Intermediate Tier. Stream includes all these programs in its Top Tier offering.  These offerings are subject to change as Stream effects the licensing changes required under the recent amendments to the Polish Copyright Act.

In compliance with Polish law, Stream carries the Polish terrestrial television channels for its subscribers.  Stream is currently involved in discussions to obtain rights to new channels.  Stream is not dependent on any one program provider.



Data transmission over HFC networks is much faster and more reliable than over telephone lines.  Stream intends to upgrade 100% of its network to make high-speed Internet access available to all individual and business customers.



These services offer substantial decreases in the costs of long distance and international calls as well as calls to mobile networks due to sound compression and the use of VoIP for transmission instead of standard voice channels.  At this time Stream has some VoIP customers and will continue to offer VoIP services based on demand.



Most of the cable television providers that Stream has acquired did not advertise or market their services.  Stream does advertise and market its services in order to both retain its subscriber base and to add more subscribers.

Stream's marketing and sales strategy is currently delivered through the use of professionally trained salespeople working at eight permanent customer care and marketing offices and through periodicpromotions of its services.  Stream also uses a preview channel, an information channel, promotional material mailed with monthly invoices and its website (www.streamcn.pl) to inform its customers of existing and new programs and services.  Stream undertakes a number of additional marketing initiatives, including market research, radio advertising, newspaper advertising and subscriber contests.  All these efforts are aimed at limiting customer churn, moving customers into more expensive tiers of service and helping Stream gain market acceptance.

Stream has registered its trademark, its logo, and the names of its cable television program packages.



Poland has approximately 38.1

In more recent years, due in part to Poland's economic development and the introduction of cable industry regulations, Poland's cable industry has developed rapidly.  In addition, large cable operators, such as @Entertainment (later: UPC; United Pan-Europe Communications), have constructed high-quality cable systems and offered numerous programming choices.

Despite these developments, the Polish cable television market remains underdeveloped.  According to PIKE, there were at June 30, 2007, 600 cable TV operators with 1,086 networks providing services to 4.5 million of the country's 12.5 million TV-homes, of which 70% are passed by cable. The average monthly salary in Poland in August 2007 was $1,089 (2,885 Pln) per the Polish Central Statistical Office, while the average monthly cable subscription rates of the five biggest Polish cable operators was approximately $17 as per Stream own research.

Stream believes that there is significant potential for further consolidation among Polish cable television providers. Stream believes that currently the top 10 operators (including Stream) control approximately 65% of the built-out market, with the remaining 35% serviced by about 600 operators.  Stream expects consolidation among these providers, particularly as smaller operator's face the regulatory compliance burdens of being required to meet minimum cable television network technical standards and pay for programming produced by others.

Stream believes that there are several reasons why Poland represents a favorable market for the provision of multi-channel cable services.

First, Poland is one of the largest single-language markets in Central Europe.

Second, watching television is a significant leisure activity in Poland, partly because cable television provides relatively inexpensive entertainment. Latest research by PIKE, indicates that each Polish household watches an average of 252 minutes of television per day.

Third, middle-income families living in multiple dwelling units, or MDU's, account for approximately 70% of residential housing in Polish cities. This high housing density results in comparatively low costs for building cable television networks. Currently Stream's average network density is about 320 homes passed per kilometer of cable plant. By comparison, the average housing density in the United States is 48 homes per kilometer of cable plant.

Fourth, in Poland the right to build cable television networks reaching MDU's is acquired through agreement with the owner of the MDU and does not require any permits from regulatory telecommunications authorities.  Under such agreements, the operator is allowed to connect all apartments located in a given building to its network.  Stream has entered into such agreements with renewable terms varying from ten to twenty years.



One of the most important aspects of Stream Poland's strategy is the acquisition of other cable television networks from various operators.  These networks have different organisational structures and marketing policies and use differing equipment of varying capabilities. Valid telecommunications permits are in place for all acquired networks.



A modern CATV network generally follows the scheme at left.  Networks that are constructed as in this scheme have a hybrid structure based on both fibre-optic and coaxial cables and are referred to as HFC, or hybrid fibre coax, networks.

When acquiring systems from other cable operators, Stream Poland also acquires the existing infrastructures of those systems. When evaluating these infrastructures, Stream Poland focuses particularly on the number of subscribers connected to each headend, the configuration of the existing network, the configuration of the network within subscribers' buildings and the network transmission bandwidth.

So far, the operators that Stream Poland has acquired have been small, and it is inherent in small cable network systems that subscribers' plug-ins are in close proximity to the headends.  Because of their proximity, small cable networks usually do not use fibre optic cables to connect headends with plug-ins. In the context of the figure above, this would be illustrated by replacing the headend with a fibre optic node.

As a result of past acquisitions, Stream Poland now has more headends than are required to meet its current subscriber demand. The benefits of reducing the number of headends include a substantial decrease in network maintenance costs and in the costs of adapting headends when introducing new services.

The process of merging headends is related to the construction of new fibre optic cables, which, to the extent possible, are laid in a ring as shown in the diagram above.  In this process, a part of the network and headends are being replaced with fibre optic nodes.  This will allow the number of series or cascade amplifiers to be reduced, leading to improved signal quality and reduced line maintenance costs.  Additionally, whilst modernising the network, Stream Poland intends to replace local power sources with a smaller number of power supplies equipped with stand-by power capability.  This will help eliminate power failure as the principal reason for network disruption.

Almost all of the network installations at subscribers' premises have already been modernised and now possess a "radial" structure.  A radial structure allows for the simultaneous powering of subscriber plug-ins, which both removes signal disturbance and allows Stream Poland to disconnect subscribers more easily should the need arise.

The frequency spectrum is divided into different bands that are allocated by the applicable Polish  regulatory body (UKE) for the use of telecommunications operators. The following bands are available to cable television operators:

- 5.0 - 60.0 MHz for path return;
- 87.5 - 108.0 MHz for radio channels; and
- 110.0 - 862.0 MHz for television channels.

The nominal capacity of Stream Poland's networks is 68 radio channels with a bandwidth of 0.3 MHz and 94 television channels with a (European) bandwidth of 8.0 MHz.  The actual capacity of the networks is smaller because some frequencies are used by governmental bodies, mobile telephone operators and terrestrial radio and television operators.

At present, 81% of Stream Poland's networks are engineered for the 862 MHz bandwidth, 14% operate at the 606 MHz bandwidth and 5% operate at 550 MHz.  Stream Poland estimates that, by the end of 2008, 95% of its networks will have been upgraded to the maximum 862 MHz bandwidth.

As part of Stream Poland's efforts to adopt a common set of programme offerings across its network, all channels are processed at 720 MHz and the higher band is reserved for future transmission of a digital signal.

The cable television networks purchased by Stream Poland consist of equipment of varying quality, age and manufacturers.  Stream Poland constructs and upgrades the networks using equipment of recognised manufacturers.  The growth of cable television in Poland has led to the presence of representatives in Poland of the leading manufacturers of such equipment, including Scientific Atlanta, Motorola, Cisco and Times Fibre.  As it increases the size of its networks, Stream Poland expects to be able to negotiate better prices for future equipment purchases.



Stream Poland has a total of

Stream Poland experienced customer churn of approximately 10.7 % in 2006 and approximately 9.6% in 2005 and approximately 11.45% in 2003.

Stream Poland's primary market is located in south-eastern Poland and includes the following districts: Slaskie, Malopolskie, Swietokrzyskie and Podkarpackie.  The map below illustrates the locations of Stream Poland's cable television networks.

Locations of Stream Poland's cable television networks







Stream Poland's market has approximately 11.5 million people, 3.2 million television households and 1.1 million cable television subscribers.  Stream's market locations are the most densely populated in Poland, containing roughly 30% of the nation's population. There are 92 towns with more than 50,000 inhabitants in all of Poland and 35 of them are located in this region.

Competition among cable television operators is not as strong in Stream Poland's market as in the largest Polish towns, where the market is relatively mature and where competing networks often overlap. Stream Poland believes that there are good acquisition opportunities in its market because the operators who initially moved into this market were, and generally remain, small and independent.



In general, the cable television market in Poland is not overbuilt. At present, Stream Poland's competitors have overbuilt only approximately 20% of Stream Poland's network area. The following is a list of major cable television operators in Poland, who together hold approximately 50% of the Polish cable television market but currently have limited presence in the markets where Stream Poland focuses its business. They may, however enter Stream Poland's markets in the future, and also may compete with Stream Poland in acquiring network assets. They are:

- UPC Telewizja Kablowa, a subsidiary of the European cable television operator UGC Europe Inc. (formerly United Pan-Europe Communications) with more than 1,000,000 subscribers in eight out of the ten of largest cities in Poland.
- Vectra, with approximately 643,000 subscribers in Poland and operates in Wroclaw, Walbrzych, Bielsko Biala, Elblag, Olsztyn, Slupsk, Bialystok, Radom, Zabrze, and 80 other Polish cities.
- Aster, a subsidiary of a consortium of investments funds, with 416,000 subscribers in Warsaw (Aster), Krakow (Autocom) and Zielona Gora (ZTP).
- Multimedia Polska, with approximately 601,000 subscribers in Poland, mainly in Kalisz, Szczecin, Gorzow Wielkopolski, Lublin, Rzeszow, Gdynia, Torun and Plock.

Direct-to-home satellite television (the so-called digital platform), which is widely accessible in Poland, also competes with cable television. Two entities provide high quality direct-to-home satellite services in Poland:

- Cyfra+, which has approximately 850,000 subscribers, and
- Polsat Cyfrowy, which has approximately 1,500,000 subscribers.

There are up to six terrestrial channels available in Poland that also competes with cable television. However, in most cases the reception of aerial signals is generally so poor that, with the exception of the largest cities, most viewers are only able to receive some of these channels. The majority of viewers require access to cable television in order to receive even these six channels.



Radio and Television Act

The Polish Radio and Television Act regulates the broadcasting of radio and television programmes and of cable channels.  The Radio and Television Act established the National Radio and Television Council ("KRRiT").  KRRiT's mandate is to support freedom of speech in radio and television, to support the independence of broadcasting organisations, to protect viewers' interests and to ensure the open and pluralistic nature of radio and television.  KRRiT also seeks to prevent steps aimed at the establishment of a monopoly in radio and television, to eliminate censorship and to ensure, through its licencing policy, the pluralistic nature of the audio-visual mass media.  KRRiT also functions as the oversight authority for all activities of broadcasting organisations.

The Radio and Television Act ensures the independence of broadcasting organisations as they transmit information, entertainment, cultural and artistic events and other ideas by imposing on broadcasters norms and conditions for their programming structures and by allocating broadcasting time to specific programme items.  Such norms also apply to advertising, tele-shopping and sponsoring.  In order to enforce such restrictions, KRRiT is entitled to monitor the contents and reception of all radio and television programmes broadcast in Poland.

The Radio and Television Act requires cable operators to obtain a licence to produce and broadcast radio and television programmes.  In addition, cable operators who distribute entire channels of a domestic or foreign broadcasting organisation must register such channels in the register kept by the Chairman of KRRiT.  The Chairman of KRRiT is authorised to issue such licences and to register channels.  The registration requirement applies to all channels, except for nation-wide public radio and television and other programmes of domestic broadcasting organisations which can be received within such cable operator's area with common aerial reception equipment.

The application for registration of a channel must be filed no later than two months prior to the start of distribution.  A cable operator may commence transmission two months after the filing of the application for registration unless the Chairman of KRRiT has denied the registration within that time.  After the registration of a channel, a cable operator is obliged to notify KRRiT within 14 days if the contents of such channel have materially changed.

KRRiT may refuse to register a channel if a cable operator does not have a valid broadcasting licence or otherwise is not in material compliance with applicable law.  KRRiT may also refuse to register a channel if the content of the channel itself is in violation of applicable law.

A broadcasting organisation is also obliged to introduce its channels into the network in a specified order.  The Chairman of KRRiT may allow for a different sequence than indicated by law under justifiable circumstances.

The Radio and Television Act also provides for the possibility that the broadcasting of a particular channel may be prohibited if such broadcasting would violate any provisions of the Radio and Television Act or if the cable operator fails to broadcast its channels in the prescribed order, introduces changes to a channel, or fails to broadcast such channel in full or simultaneously.

At present, the Polish legislature is in the process of reviewing the Radio and Television Act.  Proposed modifications would be applicable to cable network operators, specifically concerning the registration of channels, the statutory channel sequence, the contents of channel registration applications and the criteria on which denial of registration or the prohibition of a channel offering would be based.

Copyrights

Cable operators broadcast the works of authors whose rights are protected by copyrights. The Copyright Act protects such copyrights.

Under the Copyright Act, cable operators may broadcast protected works only pursuant to an agreement with an organisation responsible for the collective management of copyrights or related rights.  Cable operators are required to pay a fee for the use of such works as specified in tariffs approved by the Copyright Commission, which in turn is appointed by the Minister of Culture and National Heritage.  At present, Polish law does not limit the amount payable to authors under such agreements. The Arbitration Commission of the Copyright Commission settles any disputes arising from the tariffs applied and, as of 1 May 2004, also settles disputes arising from agreements entered into by cable operators and the organisations responsible for the collective management of copyrights.

Although it has been assumed that the latest amendments to the Copyright Act would fully conform its provisions to EU law, Polish law does not reflect EU law completely.  For instance, there is no clear provision for so-called "general contracts" whereby copyrights as well as related rights are collectively managed.  General contracts are permitted in EU countries to ensure that cable operators can acquire all rights associated with a work. Consequently, the lack of such regulation in Poland means that many agreements may have to be negotiated with organisations responsible for the collective management of copyrights without a cable operator being able to ascertain that such agreements would fully cover all copyrights and related rights.

The amended Copyright Act, which became effective as of 1 May 2004, removed a statutory licence that enabled cable operators to broadcast the works broadcast by other radio and television broadcasters in a given area provided the programme was broadcasted simultaneously and integrally with the primary broadcast, it being understood that the initial broadcaster retained its right to remuneration. The removal of the statutory licence follows from the approximation of the Copyright Act to EU law, in particular to the provisions of Directive No. 93/83 on the Co-ordination of Certain Rules Concerning Copyright and Rights Related to Copyright Applicable to Satellite Broadcasting and Cable Broadcasting of 27 September 1993.

As the statutory licence is no longer available, it is now necessary for cable operators, including Stream Poland, to enter into agreements with all broadcasters, organisations responsible for the collective management of copyrights and television organisations for related rights protecting programmes produced by them.

Telecommunications lawAll Polish telecommunications activities are regulated under the Polish Telecommunications Act, which took effect on September 3, 2004. The Telecommunications Act imposes regulations on telecommunications activities and technical requirements for equipment to be used for telecommunications activities.  The term "telecommunications activity" is defined as business activity consisting in the provision of telecommunications services, the provision of telecommunications networks or associated facilities.  Moreover, the Telecommunications Act contains detailed provisions concerning telecommunications permits, radio permits, frequency usage, telecommunications secrecy, the connection of networks, the co-operation of operators, telecommunications infrastructure and the functioning and organization of the Office of Electronic Communications  ("UKE"), among other provisions. The Telecommunications Act replaced provisions concerning telecommunications activities contained in the Communications Act of July 21, 2000.



Under the Telecommunications Act, a permit is required to use the public telephone network. To operate a public network to broadcast or retransmit radio or television programmes a registration application is required, solely.  The Telecommunications Act does not contain any detailed prohibitions or restrictions on the area of telecommunications activity or the kind of services a cable operator may provide.



The Telecommunications Act does not separately regulate Internet telephony services, because these services are considered data transmission services rather than the operation of a public telephone network. As described above, Stream Poland needs only to notify UKE that it is providing such services. Since UKE's President did not object to Stream Poland providing these services, Stream Poland is permitted to provide them throughout Poland.

Competition and consumer protection

The Polish Competition Protection Act regulates, among other things, conditions that further competition, procedures for counteracting competition-restraining practices and the violation of consumer interests.  The governmental office responsible for enforcing the Act is the President of the Office of Competition and Consumer Protection ("UOKiK").  Detailed provisions applicable to entities operating in the telecommunications industry, and in particular relating to dominant or significant market positions, are also contained in the Telecommunications Act.

Competition Protection Act

The threshold question of whether the Competition Protection Act applies turns on whether the entity in question holds a dominant market position.  A dominant market position typically exists if the entity is able to prevent efficient competition in a given market by being able to operate to a large extent independently of its competitors, business partners and consumers.  The Competition Protection Act assumes that an entity holds a dominant position when its market share exceeds 40%.  The Competition Protection Act prohibits any activities that are designed to restrict competition through the acquiring or strengthening of a dominant position in the relevant market.  Therefore, the Competition Protection Act prohibits specific activities aimed at the elimination or the restriction of competition; a list of such activities is contained in the Competition Protection Act.

Activities related to the concentration of entities are also subject to regulation.  The Competition Protection Act imposes an obligation to notify the President of UOKiK of specific transactions, including any intended merger, share exchange, acquisition, or other transaction having a consolidating effect.  The President of UOKiK may prohibit such business combinations if, following such a transaction, the entities involved would acquire or strengthen a dominant position in the affected market that would substantially restrict competition.  If an entity fails to notify the UOKiK or takes other steps that violate the Competition Protection Act, UOKiK may levy fines against all parties participating in the combination and the individual members of their governing bodies.

The above notification requirement with regard to intended mergers applies to all entities whose total sales in the financial year preceding the year of notification exceed an equivalent of EUR 50,000,000.  However, the notification requirement does not apply if the turnover of the proposed target did not exceed the equivalent of EUR 10,000,000 in the two financial years preceding the notification.  In addition, no notification is required if the combined market share of both entities does not exceed 20% or if the concentration is affected by entities belonging to the same capital group.  According to an official interpretation of UOKiK, transactions among foreign entities that exert influence on market conditions in Poland may also be required to file a notification with the President of UOKiK.

Competition and the Telecommunications Act

The Telecommunications Act contains several provisions applicable to entities that hold a dominant or significant market position.  Whether a public operator holds a dominant position in a given market is determined under the provisions of the Competition Protection Act.  In order to establish whether a cable operator holds a significant market position in a given market, a cable operator must have a market share of at least 25%.  On the basis of certain criteria, it is also possible to establish that a cable operator whose market share is less than 25% holds a significant market position.  The President of UKE, acting jointly with the President of UOKiK, decides whether a cable operator in a given area holds a dominant or significant market position.

The Telecommunications Act imposes several obligations on cable operators that hold dominant or significant market positions.  Such obligations, depending on the position of such operator, may include submission to the review of common services agreements (and amendments thereto) or of bylaws for the provision of common services (and amendments thereto).  Such obligations may also include following certain procedures to establish rates for common services or that require that services be provided in accordance with certain rules.  In connection with such obligations, the President of UKE may use several means of enforcement against operators holding a significant market position.

The President of UKE publishes a list of operators that hold a significant and dominant position once a year. Stream is not yet on this list.

Special obligations in exceptional situations

Under the Telecommunications Act, operators are required to take into consideration, while planning, constructing, developing, using or merging telecommunications networks, the possibility of force majeure events, such as the imposition of martial or emergency laws or natural calamities.  Special obligations in such situations include, among other obligations, co-operating with officials, securing networks and telecommunications equipment, maintaining continuity of operation and ensuring access for emergency services and governmental officials to telecommunications equipment.

Certain special limitations are also imposed by the Act on Common Duty to Defend the Republic of Poland ("Defence Act") of November 21, 1967 (Journal of Laws 1992, No. 4, item, 16).  In the event of operational reviews conducted by the armed forces, military drills, training in civil defence or common self-defence in peacetime, as well as in the event of an announcement of army mobilisation or at time of war, operators may be obliged to provide material services to the armed forces, such as renting real property and movables to the armed forces or to further state defence.



As a Polish limited liability company, Stream Poland has two levels of management:

Management Board; and

Supervisory Board

The Management Board has the responsibility of making all executive management decisions, while the Supervisory Board has the responsibility of periodically monitoring and approving the activities of the Management Board.

The Supervisory Board directors of Stream Poland are elected by the shareholders (Parent Company) at each annual general meeting, or, in the event of a vacancy, they are appointed by the Supervisory Board of Directors then in office, to serve until the next annual general meeting or until their successors are elected and ratified.

Management Board:

Stream Poland's Management Board comprises of:



Krzysztof Czwartkiewicz	- Director

Zbigniew Tragarz		- Director



Supervisory Board:

Stream Poland's Supervisory Board currently comprises of the following members:



Iwona Kozak

Przemyslaw Aussenberg





Stream Poland currently rents 8,000 square feet in an office building, close to the centre of Krakow and is considered adequate for the company's head office needs for the foreseeable future. The customer database and the call centre (to manage customer calls) are also located here.

Stream Poland also maintains small separate offices in Rzeszow, Bielsko-Biala, Jaslo, Sanok, Sosnowiec and Czestochowa to act as a base for local customer service and sales representatives. These local offices are connected with the head-office in Krakow and are able to access its database on-line.



Stream Poland utilizes about 8,000 square feet of office space in Krakow, Poland. Stream Poland's rent is approximately $17,512 per month. The lease of the premises expires in 2010.



IEWS was in the business of constructing and operating rendering plants in Poland. IEWS is inactive and currently does not have any rendering plants in operation.

In view of developments and uncertainty with BSE (Bovine Spongiform Encephalopathy or "mad cow disease") issues and as a result of our focus on cable TV and the operations of Stream Poland, we decided that the operations of IEWS did not fit with our current objectives.

Stream owns 100% of shares of IEWS. Stream has liquidated the business affairs of IEWS and intends to launch new activities compatible with the telecommunication services.



Since October of 1999, Polvoice had been working on the development of software to offer Internet services in Poland. In November of 1999, Polvoice applied to the Ministry for Telecommunication in Poland for a license that is essential for Polvoice to operate in that sector in Poland. Polvoice received its telecommunications license as of August 22, 2000.

Polvoice's business objective was to become an Internet, data transmission, and VoIP provider in Poland. Polvoice services did include VoIP services, data transmission, teleconferencing, web site development, and maintenance.

Streamline Media was in 2006 're-activated' and preparing market research on potential acquisition target on the polish cable TV market, with the view that Streamline Media will be acting as an agent for and on behalf of Stream Poland acquiring new cable TV systems.





Stream Communications Network & Media, Inc. is not subject to any unresolved SEC issues, comments or disputes.







We prepare our financial statements in Canadian dollars and in accordance with Canadian GAAP reconciled to US GAAP.

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada, or Canadian GAAP. To the extent applicable to our consolidated financial statements, the principles conform in all material respects with generally accepted accounting principles in the United States, or US GAAP, except as described in note 21 to our audited consolidated financial statements included elsewhere in this Form 20F and Annual Report.

In this annual report on Form 20F we use Adjusted EBITDA, which we defined as operating loss/earnings before amortization and write-down of capital assets, plus other income (expenses). Adjusted EBITDA is not a measure of performance under Canadian GAAP or US GAAP. We have included Adjusted EBITDA is this Form 20F because we believe that, in addition to net income, Adjusted EBITDA provides readers with a basis to evaluate our operating performance. To evaluate Adjusted EBITDA, the components of Adjusted EBITDA, such as net income and interest and the variability of such components over time, should also be considered. Readers should be cautioned, however, that Adjusted EBITDA should not be constructed as an alternative to net income (loss) (as determined in accordance with Canadian GAAP or US GAAP) as an indicator of our operating performance. Our method of calculating Adjusted EBITDA may differ from the methods used by other companies and, as a result, Adjusted EBITDA measures presented in the From 20F may not be comparable to other similar titled measures disclosed by other companies.

Our core business is considered to be our cable TV operations. From the beginning of our operations in Poland until December 31, 2006 approximately $16.5 million had been spent on the acquisition and modernization of cable television network equipment and $7.7 million on the acquisition of licenses and subscribers. Our future business growth is expected to consist of buying subscribers from independent operators, building networks in areas where existing operators are unwilling to sell us their subscribers, buying interests in existing cable operations and reconstructing old systems by preparing them for the transmission of new services, including pay-per-view, internet, and video-on-demand.





Year ended December 31, 2006 compared to the year ended December 31, 2005

Stream Communications Network & Media, Inc. is reporting a negative Adjusted EBITDA of $(502,984) for the year ended December 31, 2006 (2005 - $(2,547,755) 2004 - $(2,297,842)). The improved Adjusted EBITDA is a result of increased revenue and decreased operating expenses following a corporate restructuring, moving all corporate functions from Canada to Poland.



Revenue increased by 11% in the current year as compared to 2005, as result of a focused effort to increase rates for cable TV services, as well as launch of internet services to Cable TV Subscribers on recently modernized part of the networks. The number of Cable TV internet subscribers' increased by 110% from December 31, 2005 to December 31, 2006.



The company is actively seeking to increase the sales of added services (internet and telephony) and launched a program modernizing existing networks, to be able to provide such services. The program was launched in the 2nd half of 2006 and by December 31, 2006 approximated 50% of the networks were able to provide triple-play capability. As a result thereof it was possible to offer internet service to a broader audience and increase subscribers.



Operating Expenses



Programming and System lease expenses increased by effective by 120% from December 31, 2005 to December 31, 2006, however the effective increase was 22% as the company recorded all expenses in respect of Programming and System lease as such - and not as in previous years recording part of the expense as 'Office Expenses'. The Company has not restated previous years in that respect. The effective increase of 22% was primarily a result of:

- Improved program offering following the price increase of cable TV services, and new government imposed requirements; and
- The launch of internet services requiring the company to purchase incremental internet access to provide our subscribers with a quality experience.



The most significant cost decrease was 'Investor relations' which decreased by 92%. In 2005, the company made a large effort to raise new capital, creating significant awareness about Stream Communications Network & Media Inc. allowing the company to follow the leads generated through the 2005 Campaign.



Amortization the amortization charge for the year was $2,388,716 compared to $2,650,139 in 2005, a decrease of 10% as the cable TV systems acquired in 2002 and earlier are fully amortized.



Other Operating Expenses (Income) as of December 31, 2006 the company had incurred a restructuring expense of $209,523 with respect to severance pay and similar costs resulting from moving our headquarters from Canada to Poland.



Financial and Other Items: In 2006, the company had expense of $1,021,140 versus $516,899 in 2005. This increase is due to three main items: (1) a Standby Guarantee of $5,826,826 the company obtained from two shareholders at the expense of $798,289, (2) in 2005 the company reversed an accrual for the IPO expenses related to a potential listing on the Warsaw Stock Exchange, and (3)sufficient equity was raised to repay the loan from Quest Capital Corp as well as other supplier debts.



Income Taxes



All together, the Company ended 2006 with a net loss of $4,485,893 versus a net loss of $5,811,359 in 2005.



Although the company ended 2006 with a working capital deficiency of $1,787,498 in 2006 it was a significant improvement over prior year where the company had a negative working capital of $2,552,174.







Summary of Quarterly Results







|                   | Total revenues | Net loss for the period | Net loss per share (basic and diluted)
|------------------ | -------------- | ----------------------- | --------------------------------------
|December 31, 2006  | 1,707,026      | 2,217,700               | 0.04                                  
|September 30, 2006 | 1,651,997      | 356,981                 | 0.01                                  
|June 30, 2006      | 1,545,990      | 1,403,298               | 0.02                                  
|March 31, 2006     | 1,567,892      | 507,914                 | 0.01                                  
|December 31, 2005  | 1,507,689      | 826,874                 | 0.01                                  
|September 30, 2005 | 1,435,392      | 859,350                 | 0.02                                  
|June 30, 2005      | 1,445,359      | 1,517,202               | 0.04                                  
|March 31, 2005     | 1,437,672      | 2,607,933               | 0.06                                  





Year ended December 31, 2005 compared to the year ended December 31, 2004

Revenue increased by 31.7% in the current year as compared to 2004. We continued to make acquisitions of subscribers, build out and offer new services, increase channels for viewing and spend money on marketing campaigns. In 2005, we acquired approximately 8,100 subscribers. The average number of RGU's during 2005 was 60,700, as compared to 2004 where the average number had been 48,600. At the end of 2005 the total number of RGU's was approximately 64,250.



Operating Expenses



Loss from operations for the year was $5,267,499. Included in the loss are stock-based compensation charges of $873,983 being a non-cash expense created from the granting of stock options in 2005. The investor relations campaign was costly and it did not produce any immediate results. The program did create a lot of awareness however it is unknown as to the long-term benefits. The expenses of running a head office in Vancouver excluding investor relations costs amounted to approximately $2 million. This includes the cost of settlement of the departure of the president for a cost of approximately $210,000. Removing the cost of head office in total gives a positive Adjusted EBITDA of $1.377 million from operations. Although the cost of a head office cannot be removed in total, a combination of reduced costs in Vancouver and Poland could make a significant difference. It was the company's objective to reduce as many costs as possible in 2006.



Amortization





Our working capital deficiency as at December 31, 2006 was $1,787,498, compared to the working capital at December 31, 2005, which was a negative $2,552,174 and December 31, 2004, which was a negative $2,845,579, representing a significant improvement.



The company has made a focused effort to reduce the amount of accounts payable outstanding, improving the company's overall standing and its relationship with its key suppliers. Compared with its accounts payable balance at December 31, 2005, Stream Communications Network & Media Inc. has reduced the balance of accounts payable outstanding by 15% year-over-year.



The reduction in accounts payables combined with an increase in current assets, mainly through higher VAT receivables in the Non Canadian operations, has enabled the company to improve its working capital year-on-year.



To finance operations and investments in property, plant and equipment, the company in the course of 2006 made a number of private placements raising a total of $2,641,246 through the issue of 16,101,664 shares and an equivalent amount of warrants



In addition to private placements, and an effort to reduce debt and pay for services, 3,534,819 shares were issued for wages, legal services, restructuring cost and interest expense.



On June 12, 2006, the company secured future financing obtaining a standby guarantee of $5,000,000 USD, which is guaranteed by two shareholders. The fee for such guarantee was $750,000 USD pay in shares (3,807,107 shares).



The standby guarantee provides that the Guarantor will be providing Stream with financing as follows:







$ 2,500,000 USD loan for a term of 3 years, with such loan to bear interest at the rate of 10% per annum payable quarterly in arrears. The loan will be convertible on default at the option of the Guarantor into common shares of Stream utilizing a conversion price being the average closing price of the shares of Stream on the OTCBB or such other stock exchange or electronic trading facility on which the greatest volume of Stream's shares then trade for the ten trading days immediately preceding the date of notice of exercise less 20%.









Stream Communications Network & Media Inc. is actively focusing on roll-out of internet services throughout its networks and is scheduling a launch of telephony in 2007. Being able to offer three services (Television, Internet and Telephony) to all its clients will allow the company to increase revenue generating units (RGU) while only marginal increased cost, as the same infrastructure is used to provide all three services.



From 2005 to September 2007, the company has successfully acquired new subscribers both on cable TV services but also internet services:



|                             | Dec 2005 | Dec 2006 | Sep 2007
|---------------------------- | -------- | -------- | --------
|Cable TV Subscribers         | 59,588   | 58,673   | 59,668  
|Internet Subscribers (HFC)   | 1,182    | 2,491    | 4,250   
|Internet Subscribers (A-Lan) | 3,361    | 3,225    | 2,478   
|                             | 64,131   | 64,389   | 66,696  



While the cable TV market in Poland is becoming a mature market, with a transparent service offering, internet and telephony are still new markets with room to grow; however, especially for internet, the competition from Telco's is visible, and it is expected to lead to lower rates in this market segment.



Stream Communications Network & Media Inc. has in 2007 continued the strategy it embarked upon in 2006, upgrading existing networks offering triple-play services to an increasingly larger number of its clients, growing revenue using the existing technical infrastructure.



The company will continue to improve its technical infrastructure aiming at offering all clients triple-play by the end of 2008.



In 2007, the company will complete a mid-term bond issue of $5,601,792 (Pln 14,000,000) which will enable it to finance the modernization of existing networks and also re-finance its current liability.











Contractual obligations at December 31, 2006 are as follows:



|                            | Total      | Less than 1 year | 1-3 years | 3-5 years | More than 5 years
|--------------------------- | ---------- | ---------------- | --------- | --------- | -----------------
|Long-term debt              | $5,466,902 | 357,176          | 830,109   | 4,279,618 | nil              
|Capital lease obligations   | $289,668   | 160,042          | 129,625   | nil       | nil              
|Operating lease Obligations | $77,548    | 56,919           | 20,630    | nil       | nil              
|TOTAL                       | $5,834,118 | 574,137          | 980,364   | 4,279,618 | nil              





Programming Commitments









The Company has not entered into any off-balance sheet arrangements.







The company is maintaining its accounting records in accordance with general accepted accounting principles in Canada and, for the non Canadian operations, in accordance with general accepted accounting principles in Poland. The latter set of accounting records are translated and restated to conform to generally accepted accounting principles in Canada.



The results for the December 31, 2005 and 2004 financial statements have been restated to reflect the difference between Canadian and US GAAP related to stock-based compensation under APB 25 and its related interpretations. The Company's previously issued consolidated financial statements did not give effect to an adjustment for stock-based compensation. For the years ended December 31, 2005 and 2004, net loss, restated, under US GAAP was reduced by $833,483 and $2,031,010 respectively.



When reconciling the Financial Statements to US GAAP, there is a difference in 2006 related to the following:

- The proportionate amount of the foreign currency translation was recognized in net income on a partial disposition of the investment of a self-sustaining foreign subsidiary. Under US GAAP, such recognition occurs only when there is a complete realization of the investment.



The Company also records the following differences in previous years:



- Stock-Based Compensation which under Canadian GAAP is an expense to the Company is excluded from the Statement of Operations under US GAAP.













Management has made certain judgments and estimates that affect the reported amount and other disclosure in our financial statements.

Loss Contingencies. Our estimates of our loss contingencies for legal proceedings are based on various management judgments and assumptions regarding the potential resolution or disposition of the underlying and associated costs.

Valuation of Long-Lived Assets. On an annual basis, we review the long-lived assets held and used by us (primarily Cable TV Equipment and Conduit) for impairment. Assessing the appropriate valuation of the affected assets requires us to make judgments, assumptions and estimates. In general, write-downs for impairment are recognized when book values exceed our estimate of undiscounted future net cash flows associated with the assets. We review the carrying value of our capital assets, including construction in progress and believe that our reported values are reasonable based on current circumstances.

Amortization. Amortization of property, plant and equipment is principally based on a declining balance method where the cost of equipment is amortized evenly over the conservative estimate of its useful life, salvage, or residual value.

Future Income Taxes. We record future income tax assets, including potential tax benefit for operating loss carry-forwards and future income tax liabilities. The amount that we record for these assets and liabilities are based upon various management judgments, assumptions and estimates. These include judgments regarding the tax rates that will be applicable to the future income tax amount and the likelihood that we will generate sufficient taxable income or gains to utilize future income tax assets. Due to the numerous variables associated with our judgments, assumptions and estimates relating to the valuation of our future income tax assets and liabilities, and the effects of changes in circumstances affecting these valuations, both the precision and reliability of the resulting estimates are subject to uncertainties and, as additional information becomes known, we may change our estimates.

Subscriber Base. Subscriber Base is recognized at the acquisition of new cable TV or LAN systems. On an annual basis, we review the carrying value of Subscriber Base for impairment. Assessing the appropriate valuation of the affected assets requires us to make judgments, assumptions and estimates. In general, write-downs for impairment are recognized when book values exceed our estimate of undiscounted future net cash flows associated with the assets. We estimated the carrying value of our Subscriber Base in 2006 and believe that our reported values are reasonable based on current circumstances.

Goodwill. Goodwill and other intangible assets that are deemed to have an indefinite life are tested for impairment on an annual basis, and otherwise when indicators of impairment are determined to exist by applying a fair value based test. The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgments at many points during the analysis. In testing for potential impairment, the estimated fair value of the reporting unit, as determined based upon discounted cash flow forecasts, is compared to the book value of the reporting unit.







There was no change in accounting policies in 2006.







In 2006, Stream Poland Sp. z o. o., a subsidiary of the company, appointed MediaForum Sp. z o. o. as Advertising Agency for the Company's Polish operations. During 2006, MediaForum Sp. z o. o. rendered services for the amount of $58,498 (Pln 146,200), which were fully paid as of December 31, 2006. The Director and Owner of MediaForum Sp. z o. o. is a related party to Mr. Rynkiewicz.



On June 12, 2006, the Company arranged for Standby Guarantee of USD $5,000,000, which can be exercised on or after March 2, 2007, provided the company has not managed to raise a minimum of USD $5,000,000 in financing by way of debt and of equity before March 1, 2007.



The standby guarantee has been issued by:



Trasco Sp. z o. o. and Jan S. Rynkiewicz		USD$ 3,000,000

Blueagle Investments and Miroslaw Tomaszewski		USD$ 2,000,000



Stream Communication paid a fee of USD $750,000 to the guarantors of the stand by guarantee. The fee was paid in shares - 3,807,107 Shares at a price of USD $0.197 per Share.



The standby guarantee provides that the Guarantor will be providing Stream Communication with financing as follows:







USD $2,500,000 loans for a term of 3 years, with such loan to bear interest at the rate of 10% per annum payable quarterly in arrears. The loans will be convertible on default at the option of the Guarantor into common shares of Stream utilizing a conversion price being the average closing price of the shares of Stream on the OTCBB or such other stock exchange or electronic trading facility on which the greatest volume of Stream's share then trade for the ten trading days immediately preceding the date of notice of exercise less 20%.







The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and long-term debt approximate their carrying values due to the short term or demand nature of these instruments. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.









Our board of directors is elected by our shareholders as indicated in our Articles. Directors have not entered into any service agreements and do not receive any remuneration. Our executive officers are appointed by our board of directors and have service agreements with us. The normal notice period for executive officers is 12 months. In the case of Stream Poland, both the Supervisory Board and the Management Board are elected by the General Meeting of Shareholders (in practice - by the only shareholder i.e. the Parent Company). The following sets out our directors and officers.









Stream Communications Network & Media, Inc.



Robert Wussler							Chairman of the Board, Director

Jan S. Rynkiewicz						President, Director

Iwona Kozak							Director

Przemyslaw Aussenberg						Non-Executive Director

George H. Bathurst						Non-Executive Director

Jens Chr. Christensen						Chief Financial Officer





Stream Poland Sp. z o. o.



Adam C. Ilczuk							President

Krzysztof Czwartkiewicz					Director

Zbigniew Tragarz						Director

Jens Chr. Christensen						Chief Financial Officer

Jan S. Rynkiewicz						Supervisory Board

Iwona Kozak							Supervisory Board







Robert Wussler





Jan Rynkiewicz (54)became a Director of the Company on January 18, 2006, having previously been a director from April 24, 1998 to February 1, 2002 and from May 29, 2003 to May 31, 2004. A graduate of the School of Banking and Insurance in Warsaw, Jan Rynkiewicz moved to the UK in 1974, residing there for the next sixteen years. In 1977, he founded Courtfield Construction Ltd., a London-based building construction company.  From 1986 through 1993, Mr. Rynkiewicz became an associate of Invesco in Poland and serves as Chair of the Board of Directors of Castle holding Ltd. of Warsaw, a consulting company with expertise in facilitating development of Polish industry privatization. Mr. Rynkiewicz was notably President of Zywiec S.A. (one of Poland's brewing group) during a period when this company successfully undertook an expansion program, secured Heineken as a major strategic investor, and became a capitalized company on The Warsaw Stock Exchange.





Iwona Kozak (46) since 1 March 1996 she has been a Director and Vice President for Corporate Affairs and since 23 April 1999 she has been its Secretary. Born in Poland, she has been living in British Columbia since 1984. She graduated from the British Columbia Institute of Technology with a diploma in marketing. She has a broad experience in the area of marketing and public relations. She perfected her managerial and business skills as the co-founder and president of a division of the Canadian Polish Chamber of Commerce in British Columbia. In the years 1993-1995 she published a magazine dedicated to economics called "Partners with Poland" ("Partnerstwo z Polska") and provided advisory services to Canadian companies in the area of investments in Polish markets.





Przemyslaw Aussenberg (39) Mr. Aussenberg brings over 15 years of experience in business management and has held a number of executive positions, including Financial Director for ITI Group, a media conglomerate in Poland active in various sectors of entertainment, such as television, multiplex cinemas and movie production companies. Mr. Aussenberg was also Chief Financial Officer and a Board member with TVN, a leading commercial television company in Poland. He served as Chief Financial Officer of Elektrim S.A., an energy and telecom conglomerate listed on the Warsaw Stock Exchange which indirectly controlled 25% of PTC, the largest mobile telephone operator in Poland. Since 2004, Mr.Aussenberg has been a Board member of Kouri Capital, responsible for business development and restructuring.





George H. Bathurst





Jens Chr. Christensen





Adam Ilczuk (50) brings more than ten years of experience in the telecommunications / multimedia business. Most recently, throughout 2004 and 2005, Mr. Ilczuk worked in Russia as the Commercial Director of Comcor-TV and as Vice President of Sales and Marketing of its holding company Moscow CableCom Corp. Mr. Ilczuk managed the project of wiring the city of Moscow to provide broadband services including cable television, high-speed Internet access and IP-based telephony to residential and business customers. Previously, Mr. Ilczuk spent 6 years working initially as a Financial Director, and later as Business Development Director and Regional Director for United Pan-Europe Communications (UPC) in Poland, and its predecessor company, Polska Telewizja Kablowa (later called @Entertainment). Mr. Ilczuk grew the business in one of his regions from 15,000 to 240,000 subscribers through aggressive acquisitions and new construction while raising the ARPU by over 200%. @ Entertainment was acquired in June 1999 by UPC, the largest cable operator in Europe for $1.1 billion. Mr. Ilczuk holds an MBA in Finance from the University of New Haven. Mr. Ilczuk also attended the Warsaw School of Economics, where he studied International Business. He is also fluent in English, Polish, German and Russian.



Krzysztof Czwartkiewicz



Zbigniew Tragarz







For the purpose of this annual statement, the following words and phrases shall have the following meanings:



"Equity security" means securities of a company that carry a residual right to participate in earnings of that company and, upon liquidation or winding up of that company, its assets;



"Option" means all options, share purchase warrants and rights granted by a company or any of its subsidiaries (if any) as compensation for services rendered or otherwise in connection with office or employment;



"LTIP" means a long-term incentive plan, which is any plan providing compensation intended to serve as incentive for performance to occur over a period longer than one financial year, whether the performance is measured by reference to financial performance of the company or an affiliate of the company, the price for the company's securities, or any other measure, but does not include Option or SAR plans or plans for compensation through restricted shares or restricted share units.



The following table details the compensation paid to our executive officers for the year ended December 31, 2006





|Summary Compensation Table
|--------------------------
|Name                      
|Jan Rynkiewicz            
|Iwona Kozak               
|Adam Ilczuk               
|Krzysztof Czwartkiewicz   
|Zbigniew Tragarz          
|Jens Christensen          



Management Contracts



Jan Rynkiewicz 	has been appointed for a 5 year period commencing on June 12, 2006 at a basic remuneration of $120,000 payable monthly in equal parts. In addition Mr. Rynkiewicz is entitled to the use of a vehicle of the value not exceeding $ 900 per month including lease and operating expenses.



As a Supervisory Board member in Stream Poland and subsidiaries, Mr. Rynkiewicz receives a remuneration of Pln 228,000 ($91,299) annually paid in equal monthly installments.



Mr. Rynkiewicz is entitled to participate and receive bonus, stock options and other long-term incentive schemes the company may provide to its employees.



Iwona Kozak



Jens Chr. Christensen



Mr. Christensen is entitled to participate and receive bonus, stock options and other long-term incentive schemes the company may provide to its employees.



Adam Ilczuk



Mr. Ilczuk is entitled to participate and receive bonus, stock options and other long-term incentive schemes the company may provide to its employees.



Krzysztof Czwartkiewicz



Mr. Czwartkiewicz is entitled to participate and receive bonus, stock options and other long-term incentive schemes the company may provide to its employees.



Zbigniew Tragarz



Mr. Tragarz is entitled to participate and receive bonus, stock options and other long-term incentive schemes the company may provide to its employees.



Directors' fees



Independent directors are paid an annual fee of USD $15,000 as a base director's fee and an additional fee of USD $1,500 per board meeting held outside their place of residency. The Chairman is paid a base director's fee of USD $35,000.



Long-term Incentive Plans - Awards in most recently completed financial period



During our most recently completed financial year, and for the two previously completed financial years, we have not awarded or instituted any LTIP's in favour of our executive officers.



Defined Benefit Plans



We do not have, and at no time during our most recently completed financial year have we had, any defined benefit or actuarial plans in respect of which any of our executive officers were eligible to participate.







In order to create a mechanism for the recruiting of and providing incentives to certain persons and to recognise and reward their contributions to our growth, the Board of Directors adopted the Stock Option Plan ("Plan"). The purpose of the Plan is to encourage such persons to acquire our shares and perceive such transaction as a long-term investment. Options to purchase shares under the Plan are granted to Directors, employees and affiliates of the foregoing.



The Board of Directors is entitled, at its own discretion, to determine which persons will be granted options under the Plan. If the Board of Directors grants any options, it will specify the number of shares that may be purchased pursuant to the option.



While the decision to grant options is in the sole discretion of the Board of Directors, they may base decisions to grant options on the following factors: the annual remuneration of the person in relation to the total of the remuneration paid by us, the duration of employment of such person and the quality of work done by such person, amongst other factors.



As a confirmation of the option grant, the option holder is issued a certificate specifying the date, number of the shares allocated, share purchase price, and the period of time during which the option may be exercised. The Plan and the granting of options constitutes neither a guarantee to potential option holders that they will continue to perform their functions nor a guarantee that we will continue to employ such persons.



The Plan was amended at the Annual General Meeting of the shareholders held on June 30, 2004 where the shareholders authorized the directors to issue up to 5,941,135 stock options to directors, employees and consultants. At the Annual General Meeting to be held on June 29, 2005, the shareholders are being asked to amend the Plan to the maximum number of stock options allowable to 7,992,212. Other than the maximum number of shares allowable for distribution there are no other changes to the Plan. In summary the basic restrictions are:



(a) One person may not receive more than 5% of the outstanding shares;



(b) Options granted to one person in a given year may not exceed 5% of the outstanding shares;



(c) Shares allocated to all persons employed in contacts with investors may not exceed 2% of the outstanding shares, unless the rules of the TSX allow for a different limit; and



(d) Shares earmarked for consultants may not exceed 2% of the outstanding shares.



In the event that an option has lapsed for any reason whatsoever without having been exercised in full, the shares with respect to which the option has lapsed may again be issued for the purposes of the Plan. The expiration date of an option is the date determined by the Board of Directors with respect to individual options, which date, however, may not be later than ten years after the option was granted.



The Board of Directors is also exclusively entitled to determine the purchase price of shares by option holders.



The board of Directors have, in accordance with the SEC guidelines, established the following an Audit, Compensation and Corporate Governance Committee. The members of each committee are appointed by at the Annual Shareholders meeting of the company for a period until the next Annual Shareholders meeting.



Committees of the Board of Directors



Our board of directors has established an audit committee. Our audit committee will recommend a firm to be appointed as independent auditors to audit financial statements and to perform services related to the audit, review the scope and results of the audit with the independent auditors, review with management and the independent auditors our annual operating results and consider the adequacy of the internal accounting procedures and the effect of the procedures relating to the auditors' independence. In addition, the audit committee will monitor the board's corporate governance practices, propose nominees annually for election to the board, make recommendations as to the composition of the committees of the board and review the functioning of the board and the powers, mandates and performance of the committees.



Audit Committee Members:

1.	Przemyslaw Aussenberg - independent director with financial experience

2.	Jan Rynkiewicz

3.	Robert Wussler - independent director with financial experience



Our board of directors has established a compensation committee to review remuneration paid to senior officers of the Company.

Compensation Committee Members:

1.	Iwona Kozak

2.	Jan Rynkiewicz

3.	Robert Wussler



Our board of directors has established a corporate governance committee to (1) identify and select qualified individuals to serve as directors of the Company and nominate such individuals for election as directors at the Company's annual meeting of shareholders (2) develop and establish corporate governance policies and procedures for the Company and (3) administer the Code of Ethics adopted by the Company.



Corporate Governance Committee Members:

1.	Iwona Kozak

2.	George H. Bathurst

3.	Robert Wussler



Employees



The average number of employees was as follows:





|        | Year ended December 31, 2006 | Year ended December 31, 2005 | Year ended December 31, 2004
|------- | ---------------------------- | ---------------------------- | ----------------------------
|Company | 3                            | 3                            | 5                           
|Poland  | 81                           | 81                           | 75                          













To the best of our knowledge, we are not owned or controlled, directly or indirectly, by another corporation or by any foreign government.



As at the date of this annual statement the following persons or groups are known to us to each own more than 10% of our issued and outstanding common shares, which as of August 31, 2007 was.



|Name and Address of Shareholder                                                                                    | Number of Securities owned | Percentage of Securities owned
|------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------
|CDS & Co
NCI Account
25 The Esplanade
Toronto, Ontario, M5W 1G5, Canada
(Canadian depository for brokerage houses) | 22,521,586
Common shares   | 27.88%                        
|Jan Rynkiewicz
23 Ross Close
Lincoln, UK, LN2 4WQ                                                                  | 14,135,307
Common shares   | 17.32%                        













The Company has received invoices from a creditor for amounts due for work performed in regards to an IPO on the Warsaw exchange in 2003.  The amount claimed is USD $3,145,885 of which $NIL has been accrued at December 31, 2006 (December 31, 2005 - $NIL). The Company is of the opinion that these amounts are due if the IPO on the Warsaw Exchange is completed.



The Company is defending an action from Stikeman Elliot, Vancouver, British Columbia pursuant to unpaid legal invoices. The lawsuit demands the sum of $280,245. Management disputes the invoice as the legal costs charged to the Company were too high, in many cases not required and not directed by the Company or on its behalf











Our common shares were listed on the OTC BB Exchange in the United States, under the symbol "SCNWF". We started trading on the OTC BB on March 11, 2004. On July 17, 2007, the company was moved to the Pink Sheets trading under the same symbol.



Trading on the OTC BB and Pink Sheets





The following table sets forth the high and low sale prices on the OTC BB for our common shares for each monthly period in the past 21 months.





|Period  | Volume    | High  | Low  
|------- | --------- | ----- | -----
|2007-08 | 398,575   | 0.180 | 0.050
|2007-07 | 591,661   | 0.215 | 0.130
|2007-06 | 907,168   | 0.210 | 0.110
|2007-05 | 1,397,930 | 0.200 | 0.110
|2007-04 | 3,031,449 | 0.255 | 0.160
|2007-03 | 2,165,186 | 0.330 | 0.200
|2007-02 | 3,561,310 | 0.300 | 0.145
|2007-01 | 1,673,039 | 0.169 | 0.100
|2006-12 | 854,279   | 0.150 | 0.120
|2006-11 | 1,078,330 | 0.160 | 0.100
|2006-10 | 1,783,806 | 0.270 | 0.140
|2006-09 | 896,669   | 0.240 | 0.130
|2006-08 | 657,920   | 0.290 | 0.225
|2006-07 | 585,494   | 0.349 | 0.225
|2006-06 | 2,558,232 | 0.330 | 0.170
|2006-05 | 752,100   | 0.190 | 0.170
|2006-04 | 1,010,600 | 0.260 | 0.190
|2006-03 | 1,424,500 | 0.250 | 0.160
|2006-02 | 2,203,500 | 0.200 | 0.160
|2006-01 | 1,709,600 | 0.210 | 0.170
|2005-12 | 2,059,600 | 0.160 | 0.140













Our authorized share capital as at December 31, 2005 was 150,000,000 common shares without par value. At December 31, 2006 our issued and outstanding share capital was 71,396,491.

In the course of 2006, the Company issued shares as follows:



- Service of Debt	885,000 Shares

- Restructuring Expenses	550,000 Shares

- Payment for Services	2,099,819 Shares

- Payment for Standby Guarantee	3,807,107 Shares

- Fund Raising through Private Placements	16,101,664 Shares





Outstanding Shares per December 31, 2005	47,952,901 Shares

Outstanding Shares per December 31, 2006	71,396,491 Shares



Subsequent to December 31, 2006, the Company raised USD $800,000 on the issuance of 8,000,000 Shares.



All our shares, both issued and unissued, are common shares of the same class and rank equally as to dividends, voting powers and participation in assets upon liquidation. At any general meeting, subject to the restrictions on joint registered owners of our common shares, on a show of hands every shareholder who is present in person and entitled to vote has one vote and on a poll every shareholder has one vote for each share of which he or she is the registered owner and may exercise such vote either in person or by proxy. Our directors may, from time to time, declare and authorize payment of dividends. No common shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights. There are no provisions for surrender, sinking or purchase funds. There are no issued and outstanding escrow or performance shares.



Options to acquire common shares granted to our directors and officers are described under "Item 6 - Directors, Senior Management and Employees - Executive Compensation.







We are registered in British Columbia, Canada, certificate of incorporation No. 188691. We do not have any stated "objects" or "purposes" as the Company Act of the Province of British Columbia does not require it. Our memorandum ("Memorandum") has authorized 150,000,000 common shares without par value.



Pursuant to the laws of British Columbia, the province has enacted the Business Corporations Act. We registered our transition documents with the registrar of companies, we obtained shareholder approval at the June 30, 2004 Annual General Meeting to change to the provisions of the new company act and we filed on August 9, 2005 to be registered under the new company act. Our new articles ("Articles") contain the following provisions:



Voting Rights



1. Shareholders shall have the right to receive notice of, to attend and to vote at all general meetings. Except as otherwise provided in the Articles of Association, on a show of hands each holder of shares present in person and entitled to vote shall have one vote and upon a poll each such holder who is present in person or by proxy and entitled to vote shall have one vote in respect of every share held by him.

Variation of Class Rights and Alteration of Capital



1. We may by ordinary resolution increase the share capital, and cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person.







Transfer of Shares









Directors





























Borrowing Powers









Dividends and Distributions on Liquidation to Shareholders



















General Meetings

















There is no law or government decree of regulation in Canada that restricts the export or import of capital, or that affects the remittance of dividends, interest or other payments to a non-resident holder of common shares, other than withholding tax requirements.

There is no limitation imposed by Canadian law or by the articles or other charter documents of a company on the right of a non-resident to hold or vote common shares of a company, other than as provided in the Investment Canada Act, as amended (the "Investment Act").

The Investment Act generally prohibits implementation of a reviewable investment by an individual, government, corporation, partnership, trust or joint venture that is non-Canadian unless the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. If an investment by a non-Canadian is not a reviewable investment, it requires the filing of a short notice.

An investment in common shares of a company by a non-Canadian that is a "WTO investor" would be reviewable if the value of the assets of the Company equalled or exceeded $184 million, the threshold established for 1999. In subsequent years, the threshold amount may be increased or decreased in accordance with the provisions of the Investment Act. A WTO investor is a member of the World Trade Organization, current members of which include the European Community, Germany, Japan, Mexico, the United Kingdom and the United States, or a WTO investor-controlled entity, as defined in the Investment Act.

An investment in common shares of a company by a non-Canadian, other than a WTO investor, would be reviewable under the Investment Act if it were an investment to acquire control of a company and the value of the assets were $5.0 million.

The Investment Act would not apply to certain transactions in relation to our common shares, including:

An acquisition of common shares of a company by any person made in the ordinary course of that person's business as a trader or dealer in securities;

An acquisition of control of a company by an amalgamation, merger, consolidation or corporate reorganization following which the control of the Company remains unchanged.

A company with foreign share holdings formed in Poland is under Polishlaw andtreated in the same manner as a company with Polish share holdings. Full repatriation of after-tax profits and capital is allowed, and companies with 100% foreign participation are permitted. Capital introduced into Poland by foreign investors may be freely withdrawn. Full repatriation of profits and divided payments is allowed without obtaining a permit. Companies must account for withholding tax to the Polish Tax authorities on any distributed dividends unless a treaty provided otherwise. To avoid double taxation, Poland has devised tax treaties with more than 60 countries.



This section is to make United States persons aware and caution them as to some of the consequences of investing in the Company (a Canadian company). Taxation of our Company in Poland from a business perspective is discussed in the immediately following section.



A brief description of certain provisions of the tax treaty between Canada and the United States is included below. The consequences of state and local taxes are not considered. The following information is general and security holders should seek the advice of their own tax advisors.

TAXATION OF DIVIDENDS

A holder of a common share who is not resident in Canada for purposes of the Income Tax Act will be subject to Canadian withholding tax on dividends paid or credited to the holder of the common share. The rate of withholding tax on dividends is 25% of the amount of the dividend. This rate may be reduced under the provisions of an international tax treaty to which Canada is a party. Under the tax treaty that Canada has entered into with the United States, the rate of Canadian withholding tax is generally reduced to 15%, or 5% in the case of a corporate holder which owns 10% or more of the voting shares. A foreign tax credit for the tax withheld may be available to a holder resident in the United States against U.S. federal income taxes.

DISPOSITION OF COMMON SHARES

A non-resident holder of a common share will not be subject to tax under the Income Tax Act in respect of a capital gain realized on the disposition of a common share unless the common share is a "taxable Canadian property" (as defined in the Income Tax Act). Shares of a corporation that are listed on a prescribed stock exchange are generally not considered to be taxable Canadian property. Taxable Canadian property includes any common share held by a non-resident if used in carrying on a business (other than an insurance business) in Canada. A non-resident whose common shares constitute taxable Canadian property will realize upon disposition, a capital gain (or a capital loss).

One-half of any capital gain realized by a holder (a taxable capital gain) will be included in computing the holder's income.

Non-residents are advised to consult their tax advisers with regard to the availability of a treaty exemption and their own particular circumstances.

Passive Foreign Investment Company

A foreign corporation with one or more U.S. shareholders is a PFIC if 75% or more of its income is passive income or if at least 50% of its assets would be invested in instruments which produce interest, dividends and/or capital gains. Unlike a controlled foreign corporation or a foreign personal holding company, there is no minimum percentage ownership by U.S. shareholder to trigger application of the PFIC rules. If a foreign corporation has a high enough percentage of passive income or assets, it is a PFIC as regards any U.S. shareholder no matter how small their ownership percentage of the foreign corporation and regardless of whether the U.S. shareholders, individually or in the aggregate, have the ability to control the business or investments of the foreign corporation.

If a person owns shares in a PFIC and sells them for a profit, that person must generally pro-rate its profit over all the years it held the shares in the PFIC, pay U.S. income tax on the profit allocated to each year at the highest U.S. rate in effect for that year, and pay interest on all the prior year's tax, computed from the tax return due date for the year to which the income is attributable.

The above rule may not apply if a person elects to treat its investment as a "Qualified Electing Fund" (QEF). This election is made by attaching Form 8621 to the annual tax return. This will permit the annual inclusion of the QEF in a person's pro-rata share of ordinary income and long-term capital gains.

We do not believe the Company was a passive foreign investment company during the fiscal period ended December 31, 2006 or any other year.

Future Developments

The foregoing discussion is based on existing provisions of the United States tax laws, existing and proposed regulations thereafter, and current administrative rulings and court decisions, all of which are subject to change. Any such changes could affect the validity of this discussion. In addition, the implementation of certain aspects of the PFIC rules requires the issuance of regulations which in many such instances have not yet been promulgated and which may have retroactive effect. Furthermore, legislation has been proposed which would replace the PFIC provisions with a consolidated anti-deferral regime. While this legislation was vetoed, it may be re-introduced in subsequent years.

ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES.

Taxation in Poland

The Polish tax system has been modernized in recent years. In 1992, corporate income tax and personal income tax were introduced, followed by value-added tax (VAT) in 1993. Poland also taxes real property, transport vehicles, inheritance and gifts.

Corporate Profits Tax

Polish resident companies are subject to corporate income tax on their worldwide income, while non-residents are subject to corporate income tax only on income derived in the territory of Poland. Worldwide income is a tax base for business entities with registered offices or seats or places of management in Poland. Other entities are taxed on profits earned in Poland only.

Corporations are subject to corporate income tax at a rate of 19% in 2006, 2005, and 2004.

Depreciation and depletion

Tax depreciation is carried out in accordance with the Corporate Income Tax Act. Tax depreciation generally follows the straight - line method, although accelerated depreciation may be available in some circumstances.

Net operating losses

A Polish corporate has the right to carry forward a loss incurred in an accounting period by deducting the loss from its taxable income over the next five years to a maximum of 50% in any one year. No loss carry backs are allowed.

Payments to foreign affiliates

A Polish corporate can deduct royalties, management services and interest charges paid to foreign affiliates, provided exchange control regulations and transfer-pricing restrictions are observed.

Deduction for taxes paid

Taxes on income are not deductible. However, input VAT is deductible for corporate income tax purposes if it cannot be offset against the company's output VAT. Other taxes that are part of expenses are deductible in full.

Non-deductible expenditures

A Polish corporate may not deduct certain expenditures, including the following:

Costs of assets subject to depreciation,

Expenditure borne on abandoned investments,

Unrealised foreign exchange losses,

Non-public advertising costs in excess of 0.25 percent of turnover.



Value-Added Tax

VAT applies to the goods sold and the services provided. The standard rate is 22% and may be reduced to rate of 7% for e.g. food products, children's clothing, and other goods and services. Exports are not taxed; however a number of conditions must be met for export of services to have zero tax rates. Exempt from VAT are e.g. agricultural products and finance and insurance services.

Cable television services were subject to 22% VAT till 30 April 2004. Since 1 May 2004, cable television services are subject to 7% VAT.

Internet services were subject to 7% VAT till 30 April 2004. Since 1 May 2004, Internet services were either exempt from VAT for individual subscribers or subject to 22% VAT for the other subscribers. Since 1 March 2005, all Internet services are subject to 22% VAT.









We are exposed to changes in financial market conditions as a result of transacting in various foreign currencies and funding of foreign operations.

We determine our market risk utilizing sensitivity analysis, which measures the potential losses in fair value resulting from one or more selected hypothetical changes in foreign currency exchange rates.

We do not hedge currency risk. The functional currency of the Company is the Canadian dollar. All of the business operations are in Poland and the Stream Poland's functional currency is the Polish Zloty.

If there were a large fluctuation in the exchange rates between Poland and Canada this will impact on the operating results of the company. This could impact in a positive or negative manner. If the Canadian dollar increased against the zloty, then any Canadian funds invested in Poland would be exchanged for a larger number of zloty, thereby making more money available in Poland for the businesses. The converse would create a shortfall of funding. We have no control over currency rates and the results of operations will be subject to the swings in currency rate changes. In the case of funding either for acquisition or building out, it is important to minimize the time interval from when the money is raised and when it is spent to avoid issues of being short as a result of currency swings. The Company intends to grow by acquisition, so this aspect of funding is important where funds are raised other than in zloty

We do not presently believe we have material exposure to potential change in fair value of market sensitive instruments, near-term losses in future earnings and/or cash flows from reasonably possible near-term changes in market rates.

We did not have any foreign currency derivatives outstanding at December 31, 2006. Accordingly, no market risk existed for such instruments at this date.

Stream is exposed to the risk of exchange rate fluctuations. Programming costs, which constituted about 20.97% of revenue in 2006, are incurred primarily in US dollars, while all revenues are realised in Polish zlotys. Certain other costs such as head office costs are incurred in Canadian dollars. Under its subscription agreements, Stream may modify its subscription rates to adjust for major fluctuations of currency exchange rates. However, high increases in subscription rates could decrease demand for Stream's services. Most of Stream's technical equipment is purchased locally, but some prices in Poland tend to be indexed in US dollars.

The table below reflects changes in the exchange rates of the currencies in which Stream conducts its operations as at the end of and as average during each year.

Rates of exchange in the years 2005-2006



|        | December 31,  2006 | Average Rate
for 2006 | December 31, 2005 | Average Rate
for 2005
|------- | ------------------ | --------------------- | ----------------- | ---------------------
|USD/PLN | 2.9125             | 3.1077                | 3.2673            | 3.2382               
|EUR/PLN | 3.8565             | 3.9055                | 3.8634            | 4.0288               
|CAD/PLN | 2.4992             | 2.7409                | 2.8033            | 2.6757               
|USD/CDN | 1.1664             | 1.1346                | 1.1660            | 1.2117               



The effect of foreign currency fluctuations has affected the book value of property, plant and equipment and intangibles. The operations of the Company are situated in the country of Poland along with most of its assets. The foreign exchange rates for the Canadian dollar and the Polish zloty are as follows:

|     | Rate at the end of the year | Average rate for the year
|---- | --------------------------- | -------------------------
|2006 | 2.4992                      | 2.7409                   
|2005 | 2.8033                      | 2.6757                   
|2004 | 2.4898                      | 2.8049                   
|2003 | 2.9029                      | 2.7850                   









In the past, we issued warrants as part of our private placements. The terms and conditions governing these warrants are provided for in applicable subscription agreements and warrant certificates. Shares that will be issued pursuant to these warrants contain certain restrictions, including resale restrictions. The following table shows the number of shares to which each warrant holder is entitled after exercise of the warrants:



Shares issued upon exercise of a warrant may not be resold until the hold period on the private placement has ended. There are no hold periods on the above-mentioned warrants.







Balance per December 31, 2004		3,126,579		2,976,579		1.84	$	2,025,447

Granted		2,052,600		1,026,300		0.98		287,851

Granted		1,344,014		672,010		0.33		126,386



Balance per December 31, 2005		3,396,614		1,698,310		0.72		2,439,684

Granted		2,366,666		1,183,333		0.32		209,532

Granted		1,733,334		866,667		0.33		153,194	Granted		2,400,000		1,200,000		0.25		190,771	Granted		4,468,3302,234,1650.25		614,634

Granted		333,334		166,667		0.25		45,017



Balance per December 31, 2006		19,498,2789,749,1420.35		3,825,648





PART II







Not applicable









Not applicable









Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal controls over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the CEO and CFO, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:



All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can only provide reasonable assurances with respect to financial statement preparation and presentation. In addition, any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions in the future.



Disclosure Controls and Procedures



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.



As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act. This evaluation was done under the supervision and with the participation of our principal executive officer and principal financial officer. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treasury Commission. Based on their evaluation of our disclosure controls and procedures, our principal executive officer and principal financial officer have concluded that during the period covered by this report, such disclosure controls and procedures were not effective to detect the inappropriate application of US GAAP as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and that we consider "material weaknesses". The Public Company Accounting Oversight Board has defined a material weakness as a "significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected."

We identified significant deficiencies in our internal controls and disclosure controls related to the application of US GAAP for stock-based compensation; inappropriate treatment of future income taxes; and inappropriate classification of balance sheet and income statement balances. These deficiencies, when taken together, resulted in a conclusion that the Company's controls suffered from a material weakness.

Because of the identification of the misapplication of U.S. GAAP, our management has concluded that, as of December 31, 2006, our internal controls over financial reporting were not effective.

Remediation of Material Weakness

We have started to formulate a program which we believe will remedy the material weaknesses described above.

We have appointed a new Chief Financial Officer who is more experienced in U.S. GAAP. We are reviewing and revising our internal accounting policies and procedures, increasing the training of our accounting personnel in the application of U.S. GAAP, and, as appropriate, expanding the resources allocated to our accounting department, including hiring new personnel experienced in the financial reporting and the financial control function.

We also expect to review and, as appropriate, revise our accounting and management information systems software. We also expect to increase the areas to be reviewed and discussed with the board of directors.

We will continue these efforts until we are satisfied that all "material weaknesses" have been eliminated. We expect that resolution of all of these issues will take several months.

Remediation of Other Weaknesses

As part of the internal control design assessment performed in 2006, we identified certain weaknesses in our internal controls over financial reporting which to some extent were remediated in 2006 while the company intends to address others through a plan being implemented in 2007 and 2008 leading to being fully Sarbanes Oxley compliant.



Whistleblower Policy was issued in 2006, clearly stating and encouraging all members of staff to report misconducts or concerns of wrong doing to any member of the Corporate Governance Committee or the Audit Committee.



Access Rights to confidential information and information systems were reviewed in 2006 to ensure that users had the appropriate access to each system and other information.



Authorized Signatories on disbursement of funds was reviewed in 2006 to ensure that all bank transfers require two signatures of which at least one has to be by a director.



Purchase procedures of goods and services were reviewed in 2006 and 2007 and the company implemented a paper-based purchase order system covering all large (in excess of $ 2,000) purchase, requiring acceptance of a Director.



Sarbanes Oxley



Changes in Internal Control over Financial Reporting

Except as set forth above, there have been no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



For the year ending December 31, 2008, we expect to comply with S.404 of the Sarbanes-Oxley Act, which requires a report on management's assessment of the effectiveness of internal controls over financial reporting. This Report is expected to contain, among other matters, an assessment of the operating effectiveness of our internal control over financial reporting. In 2007 and 2008, further remediation efforts will likely be required in order to ensure operating effectiveness of our internal controls as at December 31, 2008. The process of designing and implementing an effective system of internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments.













The chairman of our audit committee is Mr. Robert Wussler. Mr. Wussler is an independent director of the Company. His attributes as an audit committee expert are:

(1) An understanding of US generally accepted accounting principles and financial statements;

(2) The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;

(3) Experience preparing, auditing, analysing or evaluating financial statements;

(4) An understanding of internal controls and procedures for financial reporting; and

(5) An understanding of audit committee functions.







Our Principal Executive Officer, Chief Financial Officer, and other senior executives and principal accounting officers are bound to adhere to the company's Code of Ethics, which applies to Senior Financial Officers and all employees.

A copy of the Code of Ethics is available upon request.







During the financial years ended 2004 to 2006 we employed the following auditing firms. Their remuneration and services performed are as follows:



Year ended December 31, 2006

|Firm                                                               | Services   | Fees    
|------------------------------------------------------------------ | ---------- | --------
|Deloitte & Touche LLP
Independent Registered Chartered Accountants | Audit fees | $120,000



Year ended December 31, 2005

|Firm                              | Services                  | Fees           
|--------------------------------- | ------------------------- | ---------------
|MacKay LLP, Chartered Accountants | Audit fees

Disbursements | $65,000

$5,031



Year ended December 31, 2004

|Firm                              | Services                  | Fees           
|--------------------------------- | ------------------------- | ---------------
|MacKay LLP, Chartered Accountants | Audit fees

Disbursements | $60,000

$7,665



No other audit related, tax or other fees were paid by the company.





PART III









See Consolidated Financial Statements attached hereto.



























Refer to Item 17 - Financial Statements.







Report of Independent Registered Chartered Accountants



To the Shareholders of

Stream Communications Network & Media Inc.



We have audited the consolidated balance sheet of Stream Communications Network & Media Inc. (the "Company") as at December 31, 2006 and the consolidated statements of operations and deficit and cash flows for the year then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  These standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2006 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.



The Company is not required to have, nor have we been engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financing reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financing reporting.  Accordingly, we express no such opinion.



The consolidated financial statements of the Company for the years ended December 31, 2005 and December 31, 2004, prior to adjustments for changes to the reconciliation to United States generally accepted accounting principles as disclosed in Note 21, were audited by other auditors whose report, dated March 27, 2006 except for Notes 15 and 16 dated June 5, 2006, expressed an unqualified opinion on those statements.  We have audited the adjustments to the December 31, 2005 and 2004 financial statements as disclosed in Note 21, and in our opinion, such adjustments, in all material respects, are appropriate and have been properly applied.



/s/ DELOITTE & TOUCHE LLP

Independent Registered Chartered Accountants

Vancouver, Canada

November 6, 2007



Comment by Independent Registered Chartered Accountants on Canada-United States of America Reporting Difference



The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements.  Although we conducted our audit in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the shareholders dated November 6, 2007 is expressed in accordance with Canadian reporting standards which do not permit a reference to such conditions and events in the auditors' report when these are adequately disclosed in the financial statements.



/s/ DELOITTE & TOUCHE LLP

Independent Registered Chartered Accountants

Vancouver, Canada

November 6, 2007











Report of Independent Registered Chartered Accountants





To the Shareholders of

Stream Communications Network & Media Inc.



We have audited the consolidated balance sheet of Stream Communications Network & Media Inc. as at December 31, 2005 and the consolidated statements of operations and deficit, and cash flows for the years ended December 31, 2005 and 2004.  These financial statements are the responsibility of the company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with generally accepted auditing standards in Canada and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2005 and the results of its operations and its cash flows for the years ended December 31, 2005 and 2004 in accordance with Canadian generally accepted accounting principles.













"MacKay LLP"

Vancouver,  Canada.	Chartered Accountants

March 27, 2006, except for notes

15 and 16 dated June 5, 2006





Comments by Auditors for U.S. Readers on Canada - United States Reporting Differences



In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the consolidated financial statements.  Our report to the shareholders is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors report when they are adequately disclosed in the financial statements.











"MacKay LLP"

Vancouver, Canada	Chartered Accountants

March 27, 2006, except for notes

15 and 16 dated June 5, 2006





|Stream Communications Network & Media Inc.      
|------------------------------------------------
|Consolidated statement of operations and deficit
|year ended December 31,                         
|(Expressed in Canadian dollars)                 
|                                                
|                                                
|                                                
|                                                
|                                                
|Revenues                                        
|                                                
|Operating expenses                              
|Programming and system lease                    
|Amortization                                    
|Payroll and related                             
|Management and professional fees                
|Office expenses                                 
|Travel and entertainment                        
|Occupancy costs                                 
|Stock-based compensation (Note 11)              
|Advertising and marketing                       
|Investor relations                              
|                                                
|                                                
|Restructuring expenses (Note 14)                
|Loss on disposal of assets                      
|Foreign exchange gain (loss)                    
|                                                
|Loss from operations                            
|Financial and other items                       
|Standby guarantee (Note 13)                     
|Recovery of IPO expenses                        
|Financing income (expense)                      
|Interest expense                                
|Other income (expenses)                         
|                                                
|Loss before income taxes                        
|Income taxes (Note 12)                          
|                                                
|Loss before non-controlling interest            
|Non controlling interest (Note 10)              
|                                                
|Net loss for the year                           
|Deficit, beginning of year                      
|Deficit, end of year                            
|                                                
|Basic and diluted loss per common share         
|(Note 15)                                       
|                                                
|Basic and diluted weighted average              
|number of common shares                         
|(Note 15)                                       







|Stream Communications Network & Media Inc.    
|----------------------------------------------
|Consolidated balance sheet                    
|as at December 31,                            
|(Expressed in Canadian dollars)               
|                                              
|                                              
|                                              
|Assets                                        
|Current assets                                
|Cash and cash equivalents                     
|Short-term investments                        
|Accounts receivable, net (Note 3)             
|GST and VAT receivables                       
|Prepaid expenses and other assets (Note 4)    
|Future income tax assets (Note 12)            
|                                              
|                                              
|Property, plant and equipment, net (Note 5)   
|Cable TV subscriber base (Note 6)             
|Other intangible assets (Note 7)              
|Non-current advances (Note 8)                 
|                                              
|                                              
|Liabilities                                   
|Current liabilities                           
|Accounts payable and accrued liabilities      
|Accounts payable pertaining to financing costs
|Deferred revenue                              
|Future income tax liabilities (Note 12)       
|Bank, leasing and other financing (Note 9)    
|                                              
|                                              
|Bank, leasing and other financing (Note 9)    
|                                              
|                                              
|Non-controlling interest (Note 10)            
|                                              
|Shareholders' equity                          
|Common shares (Note 11 (b))                   
|Authorized                                    
|150,000,000 common shares of no par value     
|Issued and fully paid                         
|Contributed surplus (Note 11 (d))             
|Private placement subscriptions               
|Warrants (Note 11 (e))                        
|Cumulative translation account                
|Accumulated deficit                           
|                                              
|                                              
|                                              
|Continuing operations (Note 1)                
|Commitments and contingencies (Note 18)       
|Subsequent events (Note 20)                   
|                                              
|Approved by the Board                         
|                                              
|/s/ Jan S. Rynkiewicz                         
|Jan S. Rynkiewicz, Director                   





|Stream Communications Network & Media Inc.          
|----------------------------------------------------
|Consolidated statement of cash flows                
|year ended December 31,                             
|(Expressed in Canadian dollars)                     
|                                                    
|                                                    
|                                                    
|                                                    
|Operating activities                                
|Net loss for the year                               
|Items not involving cash                            
|Amortization                                        
|Loss on disposal of property, plant                 
|and equipment                                       
|Unrealized foreign exchange                         
|Stock-based compensation                            
|Restructuring expenses                              
|Issuance of shares for business development         
|Issuance of shares for services and financial       
|expenses                                            
|Non-controlling interest                            
|Issuance of shares for standby guarantee fee        
|                                                    
|Change in non-cash working capital                  
|Accounts receivable                                 
|Prepaid expenses and other assets                   
|Accounts payable and accrued liabilities            
|Future income taxes                                 
|Deferred revenue                                    
|                                                    
|                                                    
|Investing activities                                
|Purchase of property, plant and equipment           
|Sale of property, plant and equipment               
|Purchase of short-term investments                  
|Acquisition of subsidiaries, net of cash acquired   
|                                                    
|                                                    
|Financing activities                                
|Issuance of shares and warrants for cash            
|Subscriptions received for private placement        
|Proceeds from loans and leasing contracts           
|Proceeds from Quest Capital Corp. loan              
|Repayment of Quest Capital Corp. loan               
|Repayments of loans and leasing contracts           
|                                                    
|                                                    
|Foreign exchange effect on cash and cash equivalents
|                                                    
|Increase (decrease) in cash and cash equivalents    
|Cash and cash equivalents, beginning of year        
|Cash and cash equivalents, end of year              
|                                                    
|Supplemental cash flow information                  
|Interest received                                   
|Interest paid                                       
|Income taxes paid                                   

Stream Communications Network & Media Inc.

Notes to the consolidated financial statements

December 31, 2006

(Expressed in Canadian dollars)



1.	Continuing operations



Stream Communications Network & Media Inc. ("Stream" or the "Company") provides cable television ("TV") and high-speed internet access in Poland through its subsidiaries in the country.  The Company was incorporated on March 28, 1979 by registration of its Memorandum and Articles under the Company Act of British Columbia, Canada.  On October 19, 2001 the Company changed its name from Trooper Technologies Inc. to Stream Communications Network, Inc. and on August 9, 2004 to Stream Communications Network & Media Inc.



These financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has recurring operating losses, an accumulated deficit of $46,886,979 and negative working capital of $1,787,498 at December 31, 2006.  The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future.



The Company is actively pursuing additional funding to continue its current projects.  Management continues to develop the Company's operating capabilities in order to improve cash flow from operations.



Management has prepared these financial statements on the basis that it will be able to continue as a going concern.  Accordingly, these financial statements do not reflect adjustments to the carrying value of assets and liabilities, the reported revenues and expenses and balance sheet classifications used that would be necessary if the going concern assumption were not appropriate.  Such adjustments could be material.





2.	Significant accounting policies



These consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles ("GAAP") applicable in Canada. Canadian GAAP differs in certain respects from accounting principles generally accepted in the United Stated ("US GAAP") as explained in Note 21.  A summary of the significant accounting policies are as follows:



(a)	Consolidation



These consolidated financial statements include the accounts of the Company and the following subsidiaries. All significant intercompany transactions and balances have been eliminated.

|                                                   | Country of    | Percentage ownership
|-------------------------------------------------- | ------------- | --------------------
|                                                   | incorporation | 2006                
|                                                   |               |                     
|Stream Communication Sp. z o. o. ("Stream Poland") | Poland        | 100%                
|Gimsat Sp. Z o. o. ("Gimsat")                      | Poland        | 100%                
|Vega Sp. z o. o. ("Vega")                          | Poland        | 100%                
|Bielsat.com Sp. z o. o. ("Bielsat")                | Poland        | 51%                 
|Ask Stream Sp. z o. o. ("Ask")                     | Poland        | 60%                 
|Streamline Media Sp. z o. o. ("Streamline")        | Poland        | 100%                
|IEWS SA ("IEWS")                                   | Poland        | 100%                



2.	Significant accounting policies (continued)



(b)	Uncertainty in management estimates



The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions which affect the reported amounts of accounts receivable recoverability; property, plant and equipment and depreciation of intangibles, fair value of stock-based compensation and warrants; accounts payable and accrued liabilities, income taxes, fair value of net assets acquired in business combinations and the disclosure of contingent assets and liabilities at the date of the financial statements and expenses for the periods reported.  Actual results could differ from those estimates.



(c)	Cash and cash equivalents



Cash and cash equivalents include cash and liquid investments with an original maturity of three months or less.



(d)	Property, plant and equipment



Property, plant and equipment are recorded at cost less accumulated amortization. Amortization is provided for using the declining-balance method at the following rates per annum:





|Automobiles                                    | 20 - 30% per annum 
|---------------------------------------------- | -------------------
|Computer software                              | 20 - 100% per annum
|Cable television network equipment and conduit | 4.5 - 45% per annum
|Furniture, fixtures and equipment              | 20 - 30% per annum 



Plant construction-in-progress consists of assets not yet used and accordingly no amortization is recorded.  No interest is capitalized in construction-in-progress.  When the asset is substantially complete and ready for use, the cost are transferred to their respective asset class and amortized.



Property, plant and equipment are carried at cost, net of accumulated depreciation.  Property, plant and equipment are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and an impairment loss is measured as the amount by which their carrying amounts exceed their fair value using the estimated future undiscounted cash flows.  Any resulting write-downs to fair value are charged to the results of operations.  No such losses have been recorded in these consolidated financial statements.



(e)	Intangible assets



The Company's intangible assets consist primarily of cable TV subscribers.  Intangible assets are amortized over the estimated useful life ranging from two to five years.  Judgment is used to estimate an intangible asset's useful life and is based on an analysis of all pertinent factors, including expected use of the intangible asset, contractual provisions that enable renewal or extension of the intangible asset's legal or contractual life without substantial cost, and renewal history.



Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  An impairment loss is recognized when the carrying value of a long-lived asset intended for use exceeds the sum of the undiscounted cash flows expected from its use and eventual disposition.  The impairment loss is measured as the excess of the carrying value of the asset over its fair value.



2.	Significant accounting policies (continued)



(e)	Intangible assets (continued)



The intangible assets impairment test had no impact on the Company's results for the years ended December 31, 2006, 2005 and 2004.



(f)	Foreign currency translation



The Company's financial statements are presented in Canadian dollars.  The Company's non-Canadian operations are translated into Canadian dollars using the current rate method of translation. Under this method, foreign assets and liabilities are translated into Canadian dollars, at the rate of exchange at the balance sheet date.  Revenues and expenses are translated into Canadian dollar equivalents at the average rate of exchange throughout the period.  Gains and losses arising from translation of the financial statements are disclosed as a separate component of shareholders' equity.



Transactions that are denominated in foreign currency are initially recorded at the rate of exchange prevailing at the date of the transaction.  Thereafter, monetary assets and liabilities are adjusted to reflect the exchange rate in effect at the balance sheet dates.  Gains and losses resulting from the adjustment are included in earnings.



For the year ended December 31, 2006, the Company recorded an unrealized translation gain of $1,438,087 (2005 - ($1,103,560)) resulting from the strengthening of the Polish Zloty relative to the Canadian dollar.  The Company also realized $41,332 (2005 - $Nil) of the cumulative translation adjustment gain due to a reduction in the net investment in the self-sustaining foreign subsidiary.



(g)	Revenue recognition



Substantially all revenues are derived from cable TV and internet subscriber fees.  Subscriber fees are recorded as revenue in the period the service is provided. Funds received in advance are deferred.  At present initial hook-up fees are nominal and are recorded as revenue when charged.



(h)	Stock-based compensation



The Company applies the fair value method of accounting for all stock option awards.  Under this method, the Company recognizes compensation expense for stock options awarded using the Black-Scholes model based on the fair value of the options at the later of the date of grant or the date of shareholder approval of any new share option plan from which options were granted.  The fair value of the options is expensed over the expected life of the options.





2.	Significant accounting policies (continued)



(i)	Income taxes



The Company follows the asset and liability method of accounting for income taxes whereby future income taxes are recognized for the future income tax consequences attributable to differences between the financial statement carrying values and their respective income tax bases (temporary differences) and loss carry forwards.  Future income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess. Future income tax assets and liabilities are adjusted for changes in tax laws and rates on the date of the enactment or substantive enactment.



(j)	Loss per common share



Basic loss per common share is calculated using the weighted average number of common shares outstanding during the period.  Diluted earnings per common share are presented using the treasury stock method and are calculated by dividing net earnings applicable to common shares by the sum of the weighted average number of common shares outstanding and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued.  For all periods presented, the effect of the assumed conversion of stock options and warrants was anti-dilutive.



(k)	Recent accounting pronouncements



(i)	Financial instruments



AcSB issued CICA Handbook Section 3855, Financial Instruments--Recognition and Measurement, which establish the standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2006.



AcSB issued CICA Handbook Section 3861, Financial Instruments--Disclosure and Presentation, which establishes standards for presentation of financial instruments and non-financial derivatives, and identifies the information that should be disclosed about them. The presentation paragraphs deal with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset. The disclosure paragraphs deal with information about factors that affect the amount, timing and certainty of an entity's future cash flows relating to financial instruments. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2006.









(k)	Recent accounting pronouncements (continued)







AcSB issued CICA Handbook Section 3862, Financial Instruments--Disclosures, which requires entities to provide disclosures in their financial statements that enable users to evaluate (a) the significance of financial instruments for the entity's financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the balance sheet date, and how the entity manages those risks. The principles in this section complement the principles for recognizing, measuring and presenting financial assets and financial liabilities in Section 3855, Financial Instrument--Recognition and Measurement, Section 3863, Financial Instruments--Presentation, and Section 3865, Hedges. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007.



AcSB issued CICA Handbook Section 3863, Financial Instruments--Presentation, which is to enhance financial statement users' understanding of the significance of financial instruments to an entity's financial position, performance and cash flows. This section establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007.



Management is assessing how the Company's financial reports will be affected by the new recommendations.



(ii)	Hedges



AcSB issued CICA Handbook Section 3865, Hedges, which describe when and how hedge accounting may be applied. The section is effective for years beginning on or after October 1, 2006. Management is assessing how the Company's financial reports will be affected by the new recommendation.



(iii)	Shareholders' equity



AcSB issued CICA Handbook Section 1530, Comprehensive Income, which establishes standards for reporting and display of comprehensive income. This section is effective for years beginning on or after October 1, 2006.



AcSB also revised CICA Handbook Section 3250, Surplus, and reissued it as CICA Handbook Section 3251, Equity. The section is also effective for years beginning on or after October 1, 2006. The changes in how to report and disclose equity and changes in equity are consistent with the new requirements of Section 1530, Comprehensive Income.





2.	Significant accounting policies (continued)



(k)	Recent accounting pronouncements (continued)



(iii)	Shareholders' equity (continued)



AcSB issued CICA Handbook Section 1535, which establishes standards for disclosing information about an entity's capital and how it is managed. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007.



Management is assessing how the Company's financial reports will be affected by the new recommendations.



(iv)	Accounting changes



AcSB issued CICA Handbook Section 1506. The main features of this new standard are (a) voluntary changes in accounting policy are made only if they result in the financial statements providing reliable and more relevant information; (b) changes in accounting policy are applied retrospectively unless doing so is impracticable (as defined in the section); (c) prior period errors are corrected retrospectively; and (d) new disclosures are required in respect of changes in accounting policies, changes in accounting estimates and correction of errors. This new standard is effective for fiscal years beginning on or after January 1, 2007. Management is assessing how the Company's financial reports will be affected by the new recommendation.



(v)	Investments



AcSB issued CICA Handbook Section 3051 to replace Section 3050 and to establish standards for accounting for investments subject to significant influence and for measuring and disclosing certain other non-financial instrument investments. This section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2006. Management is analyzing the requirements of this section and believes that its adoption will not have any significant impact on the Company's financial statements.



(vi)	Variable interest entities



In EIC-163, Determining the variability to be considered in Applying AcG-15, Consolidation of Variable Interest Entities, EIC reached a consensus that variability to be considered in applying AcG-15 shall be based on an analysis of the design of the entity as outlined in the following steps: (1) analyze the nature of the risks in the entity, and (2) determine the purpose(s) for which the entity was created and determine the variability (created by the risks identified in step 1) the entity is designed to create and pass along to its interest holders. This abstract is effective beginning the first day of the first interim or annual reporting period beginning on or after January 1, 2007.



Management is analyzing the requirements of this new abstract.



(l)	Comparative figures



Certain of the prior year's comparative figures have been reclassified to conform to the current year's presentation.



3.

|                                |  | 2006      |  | 2005     
|------------------------------- |  | --------- |  | ---------
|                                |  | $         |  | $        
|                                |  |           |  |          
|Accounts receivable             |  | 464,262   |  | 420,394  
|Provision for doubtful accounts |  | (192,980) |  | (126,496)
|                                |  | 271,282   |  | 293,898  























4.	Prepaid expenses and other assets



|           |  | 2006    |  | 2005  
|---------- |  | ------- |  | ------
|           |  | $       |  | $     
|           |  |         |  |       
|Prepayment |  | 116,000 |  | 75,035
|Inventory  |  | 9,702   |  | 8,459 
|           |  | 125,702 |  | 83,494



Stream Communications makes prepayments for services, goods and fixed assets purchases.



The Company policy is to keep only the most basic parts and supplies on inventory, as equipment suppliers in general are able to deliver ordered parts within 48 hours.  Thereby the Company reduces the working capital required to maintain inventory.





5.	Property, plant and equipment

|                               |            |  |              |  | 2006      
|------------------------------ | ---------- |  | ------------ |  | ----------
|                               |            |  | Accumulated  |  | Net book  
|                               | Cost       |  | amortization |  | value     
|                               | $          |  | $            |  | $         
|                               |            |  |              |  |           
|Automobiles                    | 458,950    |  | 152,114      |  | 306,836   
|Cable TV equipment and conduit | 16,542,175 |  | 5,605,700    |  | 10,936,475
|Furniture and fixtures         | 433,973    |  | 417,654      |  | 16,319    
|Software                       | 83,784     |  | 83,522       |  | 262       
|Construction-in-progress       | 481,825    |  | -            |  | 481,825   
|                               | 18,000,707 |  | 6,258,990    |  | 11,741,717













5.        Property, plant and equipment (continued)

|                               |            |  |              |  | 2005     
|------------------------------ | ---------- |  | ------------ |  | ---------
|                               |            |  | Accumulated  |  | Net book 
|                               | Cost       |  | amortization |  | value    
|                               | $          |  | $            |  | $        
|                               |            |  |              |  |          
|Automobiles                    | 408,786    |  | 122,563      |  | 286,223  
|Cable TV equipment and conduit | 13,076,881 |  | 4,276,677    |  | 8,800,204
|Furniture and fixtures         | 426,619    |  | 400,287      |  | 26,332   
|Software                       | 74,933     |  | 74,374       |  | 559      
|Construction-in-progress       | 253,694    |  | -            |  | 253,694  
|                               | 14,240,913 |  | 4,873,901    |  | 9,367,012



6.	Cable TV subscriber base

|                |           |  |              |  | 2006     
|--------------- | --------- |  | ------------ |  | ---------
|                |           |  | Accumulated  |  | Net book 
|                | Cost      |  | amortization |  | value    
|                | $         |  | $            |  | $        
|                |           |  |              |  |          
|Subscriber base | 5,652,718 |  | 4,371,610    |  | 1,281,108
|                |           |  |              |  |          



|                |           |  |              |  | 2005     
|--------------- | --------- |  | ------------ |  | ---------
|                |           |  | Accumulated  |  | Net book 
|                | Cost      |  | amortization |  | value    
|                | $         |  | $            |  | $        
|                |           |  |              |  |          
|Subscriber base | 5,530,997 |  | 2,681,744    |  | 2,849,253



7.	Other intangible assets

|         |         |  |              |  | 2006    
|-------- | ------- |  | ------------ |  | --------
|         |         |  | Accumulated  |  | Net book
|         | Cost    |  | amortization |  | value   
|         | $       |  | $            |  | $       
|         |         |  |              |  |         
|Licenses | 173,178 |  | 94,186       |  | 78,992  
|         |         |  |              |  |         

















|         |         |  |              |  | 2005    
|-------- | ------- |  | ------------ |  | --------
|         |         |  | Accumulated  |  | Net book
|         | Cost    |  | amortization |  | value   
|         | $       |  | $            |  | $       
|         |         |  |              |  |         
|Licenses | 154,392 |  | 75,878       |  | 78,514  



8.	Non-current advances



|                     |  | 2006    |  | 2005
|-------------------- |  | ------- |  | ----
|                     |  | $       |  | $   
|                     |  |         |  |     
|Non-current advances |  | 180,058 |  | -   



In 2001, the Company made an advance payment to PPHU Bielsat Sp. z o. o. of $180,058 (Pln 450,000) for an option to purchase the outstanding 49% of shares in Bielsat.  The advance will be deducted from the purchase price when the option is executed.  The purchase price of the outstanding shares in Bielsat has not yet been established.  In 2005, the advance was classified against the related non-controlling interest (Note 10).





9.	Bank, leasing and other financing



|                  |  | 2006      |  | 2005     
|----------------- |  | --------- |  | ---------
|                  |  | $         |  | $        
|Bank financing    |  |           |  |          
|Current           |  | 357,176   |  | 131,771  
|Non-current       |  | 830,108   |  | 482,146  
|                  |  | 1,187,284 |  | 613,917  
|                  |  |           |  |          
|Leasing contracts |  |           |  |          
|Current           |  | 160,043   |  | 168,595  
|Non-current       |  | 129,625   |  | 88,187   
|                  |  | 289,668   |  | 256,782  
|                  |  |           |  |          
|Other financing   |  |           |  |          
|Current           |  | -         |  | -        
|Non-current       |  | 4,279,618 |  | 4,303,427
|                  |  | 4,279,618 |  | 4,303,427
|                  |  | 5,756,570 |  | 5,174,126





















9.	Bank, leasing and other financing (continued)



Outstanding balances are as follows:

|                                                     |         | 2006      |         | 2005     
|---------------------------------------------------- | ------- | --------- | ------- | ---------
|                                                     |         | $         |         | $        
|Bank loan of $720,230 (Pln 1,800,000) secured by     |         |           |        
|the fixed assets of the Company repayable            |         |           |         |          
|at a rate of $12,635 (Pln 31,579) per month.         |         |           |         |          
|The loan bears an annual interest rate of 9.75%.     |         |           |        
|It was granted October 10, 2006 and matures          |         |           |         |          
|on September 5, 2009.                                |         | 419,912   |         | -        
|Revolving bank loan of $240,077 (Pln 600,000)        |         |           |         |          
|secured by the fixed assets of the Company           |         |           |         |          
|repayable at a rate of $4,801 (Pln 12,000) per       |         |           |         |          
|month.  The loan bears an annual interest rate       |         |           |         |          
|of 8.75%.  It was granted September 16, 2004         |         |           |         |          
|and matures on December 31, 2010.                    |         | 149,288   |         | 39,222   
|Revolving bank loan of $580,185 (Pln 1,450,000)      |         |           |         |          
|secured by the fixed asset of the Company            |         |           |         |          
|repayable at a rate of $11,376 (Pln 28,431) per      |         |           |         |          
|month.  The loan bears an annual interest rate       |         |           |         |          
|of 9.62%.  It was granted December 19, 2005          |         |           |         |          
|and matures on December 31, 2010.                    |         | 557,433   |         | 510,492  
|Bank loan of $80,025 (Pln 200,000) secured by the    |         |           |        
|fixed asset of the Company repayable at              |         |           |         |          
|a rate of $1,333 (Pln 3,333) per month.  The loan    |         |           |        
|bears an annual interest rate of 7.15%.  It was      |         |           |         |          
|granted June 15, 2005 and matures on June 6, 2010.   | 60,651  |           | 64,203 
|Automotive and equipment leasing contracts secured   |         |          
|by the asset being leased.  The leasing contracts    |         |           |        
|bear an average annual interest rate of 15.65%.      |         |           |        
|Maturity dates vary from June 2007 to June 2011.     | 289,668 |           | 256,782
|A loan bearing interest at 5%, compounded annually.  |         |          
|The principal amount due is $4,279,618               |         |           |         |          
|(US$3,690,281).  The loan is secured by the shares   |         |          
|in Stream Sp. z o. o.  Maturity date is December 28, |         |          
|2011                                                 |         | 4,279,618 |         | 4,303,427
|                                                     |         | 5,756,570 |         | 5,174,126













9.	Bank, leasing and other financing (continued)



The bank, leasing and other financing matures as follows:





|     |  | Bank      |  | Leasing   |  | Other     |  |          
|---- |  | --------- |  | --------- |  | --------- |  | ---------
|     |  | financing |  | contracts |  | financing |  | Total    
|     |  | $         |  | $         |  | $         |  | $        
|     |  |           |  |           |  |           |  |          
|2007 |  | 357,176   |  | 160,042   |  | -         |  | 517,218  
|2008 |  | 342,807   |  | 83,004    |  | -         |  | 425,811  
|2009 |  | 304,751   |  | 37,056    |  | -         |  | 341,807  
|2010 |  | 182,551   |  | 8,096     |  | -         |  | 190,647  
|2011 |  | -         |  | 1,469     |  | 4,279,618 |  | 4,281,087
|     |  | 1,187,285 |  | 289,667   |  | 4,279,618 |  | 5,756,570





10.	Non-controlling interests



(a)	Ask



The Company acquired 60% of Ask during 2004.  The acquisition was accounted for by the purchase method.  The effective date of acquisition was May 5, 2004, after which the operations of Ask are included in these consolidated financial statements.  Ask has cable TV networks in Sosnowiec, Poland.  As disclosed in Note 20



(b)	Bielsat



Stream formed a new company, Bielsat.com Sp z.o.o., during the year ended October 31, 2000.  Stream owns 51% of Bielsat's outstanding common shares.



The non-controlling interests of Bielsat and Ask are comprised of the following:



|                                                     |  |  |          | $      
|---------------------------------------------------- |  |  | -------- | -------
|                                                     |  |  |          |        
|Balance, December 31, 2004                           |  |  |          | 710,445
|Non-controlling interests' share of income           |  |  |          | 11,805 
|Foreign exchange related to non-controlling interest |  |  | (31,572)
|Balance, December 31, 2005                           |  |  |          | 690,678
|Non-controlling interests' share of income           |  |  |          | 42,701 
|Foreign exchange related to non-controlling interest |  |  |         
|and reclassification (Note 8)                        |  |  |          | 252,543
|Balance, December 31, 2006                           |  |  |          | 985,922





11. 	Share capital



(a)	Authorized



Stream Communications Network & Media, Inc. has an authorized share capital of 150,000,000 common shares at no par value.  The Company has issued 71,396,491 common shares as at December 31, 2006 (2005 - 43,941,186).



(b)	Issued shares

|                                         |  |             |  |            
|---------------------------------------- |  | ----------- |  | -----------
|                                         |  |             |  |            
|                                         |  | Number of   |  |            
|                                         |  | shares      |  | Amount     
|                                         |  |             |  | $          
|                                         |  |             |  |            
|Balance, December 31, 2004               |  | 37,833,800  |  | 36,005,421 
|Settlement of debts                      |  | 2,032,000   |  | 914,980    
|Guarantees by directors for loan payable |  | 400,000     |  | 271,524    
|Services                                 |  | 810,258     |  | 533,166    
|Private placement                        |  | 7,396,614   |  | 2,524,572  
|Acquisition of subsidiary                |  | 2,140,229   |  | 878,647    
|Stock options exercised                  |  | 340,000     |  | 251,366    
|Fair value of stock options exercised    |  | -           |  | 164,060    
|Net returned to treasury on settlement   |  |             |  |            
|of debts                                 |  | (3,000,000) |  | -          
|Value of warrants for private placements |  | -           |  | (414,237)  
|Balance, December 31, 2005               |  | 47,952,901  |  | 41,129,499 
|Settlement of debts                      |  | 885,000     |  | 225,635    
|Private placement                        |  | 16,101,664  |  | 2,641,246  
|Restructuring expenses                   |  | 550,000     |  | 76,378     
|Services                                 |  | 2,099,819   |  | 456,103    
|Standby guarantee                        |  | 3,807,107   |  | 798,289    
|Value of warrants for private placements |  | -           |  | (1,385,964)
|Balance, December 31, 2006               |  | 71,396,491  |  | 43,941,186 
|                                         |  |             |  |            





(c)	Stock options



The directors are authorized to issue stock options from time to time to employees, officers, consultants and directors of the Company up to 7,992,212 common shares of the Company at the time of such issue, at the minimum price allowed under the applicable securities laws.



The fair values of stock options granted during 2006 were determined using the Black-Scholes option pricing model.  The Company's estimates of expected volatilities are based on a weighted historical and market based implied volatility.  The Company uses historical data to estimate option exercises and employee terminations within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes.  The expected term of options granted is derived from the output of the stock option valuation model and represents the period of time that granted options are expected to be outstanding.  The risk free rate for periods within the contractual life of the stock option is based on the rate in effect at the time of the grant.





11.	Share capital (continued)



(c)	Stock options (continued)



The fair values of the Company's stock option were estimated using the following weighted average assumptions:

|                        |  | 2006   |  | 2005  |  | 2004 
|----------------------- |  | ------ |  | ----- |  | -----
|                        |  |        |  |       |  |      
|Expected life (years)   |  | 5.00   |  | 4.76  |  | 5.00 
|Expected volatility     |  | 154.1% |  | 85.6% |  | 56.6%
|Risk free interest rate |  | 4.36%  |  | 3.60% |  | 3.93%



Activity under the option plan during the years ended December 31, 2006, 2005 and 2004 was as follows:

|             |           |           |      | 2006     |           |           |      | 2005     |           |           |      | 2004    
|------------ | --------- | --------- | ---- | -------- | --------- | --------- | ---- | -------- | --------- | --------- | ---- | --------
|             |           |           |      | Weighted |           |           |      | Weighted |           |           |      | Weighted
|             |           |           |      | average  |           |           |      | average  |           |           |      | average 
|             |           |           |      | exercise |           |           |      | exercise |           |           |      | exercise
|             |           | Options   |      | price    |           | Options   |      | price    |           | Options   |      | price   
|             |           |           |      | $        |           |           |      | $        |           |           |      | $       
|Outstanding, |           |           |      |          |           |           |      |          |           |           |     
|beginning    |           |           |      |          |           |           |      |          |           |           |     
|of year      |           | 3,060,000 |      | 0.60     |           | 2,490,000 |      | 0.60     |           | 4,370,000 |      | 1.88    
|Granted      |           | 900,000   |      | 0.60     |           | 1,870,000 |      | 0.60     |           | 2,490,000 |      | 0.60    
|Exercised    |           | -         |      | -        |           | 340,000   |      | 0.60     |           | -         |      | -       
|Cancelled    |           | 2,590,000 |      | 0.60     |           | 960,000   |      | 0.60     |           | 4,370,000 |      | 1.88    
|Outstanding, |           |           |      |          |           |           |      |          |           |           |      |         
|end of year  | 1,370,000 |           | 0.60 |          | 3,060,000 |           | 0.60 |          | 2,490,000 |           | 0.60









Options outstanding and exercisable at December 31, 2006 are as follows:



|         |  |             |  | Weighted     |  |          |  |             |  |         
|-------- |  | ----------- |  | ------------ |  | -------- |  | ----------- |  | --------
|         |  |             |  | average      |  | Weighted |  |             |  | Weighted
|         |  | Number of   |  | remaining    |  | average  |  | Number of   |  | average 
|Exercise |  | options     |  | contractual  |  | exercise |  | options     |  | exercise
|price    |  | outstanding |  | life (years) |  | price    |  | exercisable |  | price   
|$        |  |             |  |              |  | $        |  |             |  | $       
|         |  |             |  |              |  |          |  |             |  |         
|0.60     |  | 695,000     |  | 2.42         |  | 0.60     |  | 695,000     |  | 0.60    
|0.60     |  | 400,000     |  | 2.96         |  | 0.60     |  | 400,000     |  | 0.60    
|0.60     |  | 100,000     |  | 1.54         |  | 0.60     |  | 100,000     |  | 0.60    
|0.60     |  | 175,000     |  | 1.00         |  | 0.60     |  | 175,000     |  | 0.60    
|         |  | 1,370,000   |  |              |  |          |  | 1,370,000   |  |         
|         |  |             |  |              |  |          |  |             |  |         



During the year ended December 31, 2006, the total compensation expense related to the fair value of stock options was $232,586 (2005 - $873,983) of which the entire amount was related to employees and directors.



11.	Share capital (continued)



(d)	Contributed surplus

|                              |  |  |  | $        
|----------------------------- |  |  |  | ---------
|                              |  |  |  |          
|Balance, December 31, 2004    |  |  |  | 2,167,551
|Fair value of options granted |  |  |  | 873,983  
|Stock options exercised       |  |  |  | (164,060)
|Balance, December 31, 2005    |  |  |  | 2,877,474
|Fair value of options granted |  |  |  | 232,586  
|Stock options exercised       |  |  |  | -        
|Balance, December 31, 2006    |  |  |  | 3,110,060







(e)	Warrants



The Company is issuing warrants together with private placement, whereby a subscriber will receive the same amount of warrants as shares.  The warrants expire two years from issue and are eligible to acquire half a share per one warrant.



The fair values of the warrants issued by the Company were estimated using the following weighted average assumptions:









|                        |  | 2006   |  | 2005  
|----------------------- |  | ------ |  | ------
|                        |  |        |  |       
|Expected life (years)   |  | 2      |  | 2     
|Expected volatility     |  | 144.2% |  | 109.1%
|Risk free interest rate |  | 3.6%   |  | 3.1%  





|                      |  |             |  |             |  | Weighted |  |          
|--------------------- |  | ----------- |  | ----------- |  | -------- |  | ---------
|                      |  |             |  |             |  | average  |  | Fair     
|                      |  | Number of   |  | Number of   |  | exercise |  | value of 
|                      |  | warrants    |  | shares      |  | price    |  | warrants 
|                      |  |             |  |             |  | $        |  | $        
|Balance, December 31, |  |             |  |             |  |         
|2004                  |  | 3,126,579   |  | 2,976,579   |  | 1.84     |  | 2,025,447
|Granted               |  | 2,052,600   |  | 1,026,300   |  | 0.98     |  | 287,851  
|Granted               |  | 1,344,014   |  | 672,010     |  | 0.33     |  | 126,386  
|Expired               |  | (3,126,579) |  | (2,976,579) |  | 1.84     |  | -        
|Balance, December 31, |  |             |  |             |  |         
|2005                  |  | 3,396,614   |  | 1,698,310   |  | 0.72     |  | 2,439,684
|Granted               |  | 2,366,666   |  | 1,183,333   |  | 0.32     |  | 209,532  
|Granted               |  | 1,733,334   |  | 866,667     |  | 0.33     |  | 153,194  
|Granted               |  | 2,400,000   |  | 1,200,000   |  | 0.25     |  | 190,771  
|Granted               |  | 4,468,330   |  | 2,234,165   |  | 0.25     |  | 614,634  
|Granted               |  | 333,334     |  | 166,667     |  | 0.25     |  | 45,017   
|Granted               |  | 4,800,000   |  | 2,400,000   |  | 0.26     |  | 172,816  
|Balance, December 31, |  |             |  |             |  |         
|2006                  |  | 19,498,278  |  | 9,749,142   |  | 0.35     |  | 3,825,648









11.	Share capital (continued)



(e)	Warrants (continued)



Outstanding warrants at December 31, 2006 are as follows:

|                   |           |           |           |           |      | Weighted |      | Weighted |         |         
|------------------ | --------- | --------- | --------- | --------- | ---- | -------- | ---- | -------- | ------- | --------
|                   |           |           |           |           |      | average  |      | average  |         | Fair    
|                   |           | Number of |           | Number of |      | exercise |      | exercise |         | value of
|                   |           | warrants  |           | shares    |      | price    |      | price    |         | warrants
|                   |           |           |           |           |      | US$      |      | $        |         | $       
|Expiry date        |           |           |           |           |      |          |      |          |         |         
|July 7, 2007       |           | 2,052,600 |           | 1,026,300 |      | 0.80     |      | 0.98     |         | 287,851 
|September 30, 2007 | 1,344,014 |           | 672,010   |           | 0.28 |          | 0.33 |          | 126,386
|February 27, 2008  |           | 2,366,666 |           | 1,183,333 |      | 0.28     |      | 0.32     |         | 209,532 
|March 24, 2008     |           | 1,733,334 |           | 866,667   |      | 0.28     |      | 0.33     |         | 153,194 
|May 8, 2008        |           | 2,400,000 |           | 1,200,000 |      | 0.23     |      | 0.25     |         | 190,771 
|June 15, 2008      |           | 4,468,330 |           | 2,234,165 |      | 0.23     |      | 0.25     |         | 614,634 
|June 29, 2008      |           | 333,334   |           | 166,667   |      | 0.23     |      | 0.25     |         | 45,017  
|December 11, 2008  | 1,800,000 |           | 900,000   |           | 0.15 |          | 0.26 |          | 64,806 
|December 18, 2008  | 3,000,000 |           | 1,500,000 |           | 0.15 |          | 0.26 |          | 108,010



12.	Income taxes



The Company has tax losses in Canadian dollars available for offset against future taxable income in various jurisdictions for the following approximate amounts:

|       |  |  |  | $         
|------ |  |  |  | ----------
|       |  |  |  |           
|Canada |  |  |  | 18,597,626
|Poland |  |  |  | 434,803   



Tax losses expire as follows:

|           |  | Canada     |  | Poland 
|---------- |  | ---------- |  | -------
|           |  | $          |  | $      
|           |  |            |  |        
|2007       |  | 1,748,000  |  | 434,803
|2008       |  | 345,500    |  | -      
|2009       |  | 3,073,000  |  | -      
|2010       |  | 2,208,000  |  | -      
|2011       |  | -          |  | -      
|Thereafter |  | 11,223,126 |  | -      
|           |  | 18,597,626 |  | 434,803





12.	Income taxes (continued)



|                                               |         | 2006        |         | 2005        |         | 2004       
|---------------------------------------------- | ------- | ----------- | ------- | ----------- | ------- | -----------
|                                               |         | $           |         | $           |         | $          
|                                               |         |             |         |             |         |            
|Statutory rates in Canada                      |         | 34.10%      |         | 34.10%      |         | 35.62%     
|                                               |         |             |         |             |         |            
|Recovery of income taxes at Canadian           |         |             |         |             |         |            
|statutory rates                                |         | (1,379,275) |         | (1,972,479) |         | (2,337,152)
|Difference in tax rates in other jurisdictions | 44,156  |             | 215,511 |             | 525,609
|Non-deductible expenses for tax purposes       | 268,610 |             | 313,587 |             | 753,431
|Non-taxable income                             |         | (23,336)    |         | -           |         | -          
|Tax effect of tax losses not recognized        |         | 1,488,243   |         | 1,458,537   |         | 1,058,112  
|Current and future tax expenses                |         | 398,398     |         | 15,156      |         | -          
|                                               |         |             |         |             |         |            
|Future income tax assets (liabilities)         |         |             |         |             |         |            
|Tax losses                                     |         | 6,341,790   |         | 5,645,721   |         | 4,746,721  
|Property, plant and equipment                  |         | -           |         | (39,592)    |         | (28,716)   
|Intangible assets                              |         | -           |         | 265,208     |         | (752,980)  
|Share issuance cost                            |         | -           |         | -           |         | 243,940    
|Timing difference in tax treatment             |         |             |         |             |         |            
|in other jurisdictions                         |         | 24,836      |         | -           |         | -          
|Future income tax assets                       |         | 6,366,626   |         | 5,871,337   |         | 4,208,965  
|Valuation allowance                            |         | (6,341,790) |         | (5,871,337) |         | (4,208,965)
|Net future income tax assets                   |         | 24,836      |         | -           |         | -          



13.	Standby guarantee



On June 12, 2006, the Company arranged for standby guarantee of $5,826,826 (US$5,000,000), which can be exercised on or after March 2, 2007, provided the Company has not managed to raise a minimum of $5,826,826 (US$5,000,000) in financing by way of debt and of equity before March 1, 2007.



The standby guarantee has been issued by Trasco Sp. z o. o. and Jan S. Rynkiewicz (a director) in the amount of $3,496,096 (US$3,000,000) and Blueagle Investments and Miroslaw Tomaszewski (a related party) in the amount of $2,330,730 (US$2,000,000).



Stream Communication paid a fee of $798,289 (US$750,000) to the guarantors of the standby guarantee.  The fee was by way of 3,807,107 shares at a price of $0.2097 (US$0.197) per share.



The standby guarantee provides that the guarantor will be providing Stream Communication with financing as follows:



(a)	$2,913,413 (US$2,500,000) equity investment in the Company at a share price for the purpose of such subscription equal to the average closing price of the shares of Stream on the OTCBB or such other stock exchange or electronic trading facility on which the greatest volume of Stream's share then trade for the 10 trading days immediately preceding the date of notice of exercise less 25%.



(b)	$2,913,413 (US$2,500,000) loans for a term of three years, with such loan to bear interest at the rate of 10% per annum payable quarterly in arrears.  The loans will be convertible on default at the option of the guarantor into common shares of Stream utilizing a conversion price being the average closing price of the shares of Stream on the OTCBB or such other stock exchange or electronic trading facility on which the greatest volume of Stream's share then trade for the 10 trading days immediately preceding the date of notice of exercise less 20%.



The standby guarantee has not yet been exercised.





14.	Restructuring expenses



In 2006, Stream Communications Network & Media, Inc. went through a corporate restructuring following a decision to relocate all corporate functions to Poland and minimize the presence in Canada.



The Company incurred the following expenses related to severance payments to staff in Canada and in Poland.  As at December 31, 2006, all amounts resulting from the restructuring had been paid.



|                     |  |  |  | 2006   
|-------------------- |  |  |  | -------
|                     |  |  |  | $      
|Severance payment in |  |  |  |        
|Cash                 |  |  |  | 133,145
|Shares               |  |  |  | 76,378 
|                     |  |  |  | 209,523





15.	Basic and diluted loss per common share



The calculation of the basic and diluted loss per share attributable to common shareholders is based on the following data:

|                                         |            | 2006         |            | 2005         |            | 2004        
|---------------------------------------- | ---------- | ------------ | ---------- | ------------ | ---------- | ------------
|                                         |            |              |            |              |            |             
|Net loss                                 |            | $(4,485,893) |            | $(5,811,359) |            | $(6,564,715)
|                                         |            |              |            |              |            |             
|Weighted average number of common shares | 59,629,483 |              | 42,953,922 |              | 30,027,489
|                                         |            |              |            |              |            |             
|Basic and diluted loss per common share  |            | $(0.08)      |            | $(0.14)      |            | $(0.22)     













16.	Segmented information

The Company operates primarily in one segment, being cable TV services and in two geographic locations, being Canada and Poland.



Geographic information (revenues are attributed to countries based on location of customer)

|                                    |  | 2006       |  | 2005       |  | 2004      
|----------------------------------- |  | ---------- |  | ---------- |  | ----------
|                                    |  | $          |  | $          |  | $         
|Revenue                             |  |            |  |            |  |           
|Canada                              |  | -          |  | -          |  | -         
|Poland                              |  | 6,472,905  |  | 5,826,112  |  | 4,415,461 
|                                    |  | 6,472,905  |  | 5,826,112  |  | 4,415,461 
|                                    |  |            |  |            |  |           
|Interest expense                    |  |            |  |            |  |           
|Canada                              |  | 215,708    |  | 423,710    |  | 217,282   
|Poland                              |  | 82,144     |  | 85,525     |  | 158,468   
|                                    |  | 297,852    |  | 509,235    |  | 375,750   
|                                    |  |            |  |            |  |           
|Amortization of property, plant and |  |            |  |            | 
|equipment and intangibles           |  |            |  |            |  |           
|Canada                              |  | 1,498      |  | 3,991      |  | 4,015     
|Poland                              |  | 2,387,218  |  | 2,646,148  |  | 1,394,089 
|                                    |  | 2,388,716  |  | 2,650,139  |  | 1,398,104 
|                                    |  |            |  |            |  |           
|Total expenditures for property,    |  |            |  |            |  |           
|plant and equipment                 |  |            |  |            |  |           
|Canada                              |  | -          |  | 5,783      |  | 2,295     
|Poland                              |  | 2,303,610  |  | 1,208,417  |  | 2,576,228 
|                                    |  | 2,303,610  |  | 1,214,200  |  | 2,578,523 
|                                    |  |            |  |            |  |           
|Total expenditures for intangibles  |  |            |  |            |  |           
|Canada                              |  | -          |  | 1,523,174  |  | -         
|Poland                              |  | 18,786     |  | 304,381    |  | 1,028,928 
|                                    |  | 18,786     |  | 1,827,555  |  | 1,028,928 
|                                    |  |            |  |            |  |           
|Property, plant, equipment and      |  |            |  |            |  |           
|intangibles                         |  |            |  |            |  |           
|Canada                              |  | 2,259      |  | 9,606      |  | 12,446    
|Poland                              |  | 13,099,559 |  | 12,263,290 |  | 13,147,980
|                                    |  | 13,101,818 |  | 12,272,896 |  | 13,160,426



17.	Financial instruments



(a)	Fair value



Financial instruments consist of cash and cash equivalents, short term investments, accounts receivable, accounts payable and accrued liabilities, accounts payable pertaining to financing costs, deferred revenue, and loans payable and leasing contracts, the fair value of which are considered to approximate their carrying value due to their short-term maturities or ability of prompt liquidation.



(b)	Credit risk



The Company is exposed to credit risk only with respect to uncertainties as to the timing and amount of collecting of accounts receivable.  The Company mitigates credit risk through standard credit and reference checks.



(c)	Currency risk



The Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatility of these rates.  The Company does not use derivative instruments to reduce its exposure to foreign currency risk.





18.	Commitments and contingencies



(a)	Commitments



The Company utilizes office space in Poland and Canada as follows:



(i)	Poland - Approximately 8,000 square feet of office space is utilized in Krakow.  The rent is approximately $17,512 per month of which the lease of the premises expires in year 2010.



(ii)	Canada - Approximately 1,000 square feet of office space is utilized in Vancouver, British Columbia.  The rent is $1,700 per month.  As of October 2007, the lease for the premises in Canada has been cancelled; however, the Company will continue to be registered in Canada.



(b)	Contingencies



The Company has received invoices from a creditor for amounts due for work performed in regards to an IPO on the Warsaw exchange in 2003.  The amount claimed is US$3,145,885 of which $Nil has been accrued at December 31, 2006 (2005 - $Nil).  The Company is of the opinion that these amounts are due only if the IPO on the Warsaw Exchange is completed.



The Company is defending an action from Stikeman Elliot, Vancouver, British Columbia pursuant to unpaid services, demanding the sum of $280,245.  The Company is of the opinion that these amounts are due only if the IPO on the Warsaw Exchange is completed.







19.	Related party transactions



The Company undertook the following related party transactions in the course of 2006:



(a)	Standby guarantee



On June 12, 2006, the Company arranged for standby guarantee of $5,826,826 (US$5,000,000), which can be exercised on or after March 2, 2007, provided the Company has not managed to raise a minimum of $5,826,826 (US$5,000,000) in financing by way of debt and of equity before March 1, 2007 (for further details please refer to Note 13 above).



The Company paid a total commission for the standby guarantee to:



|                                                         |  | $      
|-------------------------------------------------------- |  | -------
|Trasco Sp. z o. o. and Jan S. Rynkiewicz (Mr. Rynkiewicz |  |        
|is a director and CEO of the Company)                    |  | 478,973
|Blueagle Investments and Miroslaw Tomaszewski            |  |        
|(Mr. Tomaszewski is a related party to Ms. Kozak who is  |  |        
|a director of the Company)                               |  | 319,316





(b)	Advertising agency



In 2006, Stream Poland, a subsidiary of the Company, appointed MediaForum Sp. z o. o. as advertising agency for the Company's Polish operations.  During 2006, MediaForum Sp. z o. o. rendered services for the amount of $58,498 (Pln 146,200), which were fully paid as of December 31, 2006.



The director and owner of MediaForum Sp. z o. o. is a related party to Mr. Rynkiewicz.





20.	Subsequent events



(a)	Private placement



Subsequent to December 31, 2006 the Company has made a private placement for a total of US$800,000 issuing 8,000,000 shares and 8,000,000 warrants entitling to purchase 4,000,000 shares at US$0.15 per share.



(b)	Bond issue



The Company has successfully closed a bond issue guaranteed by a state owned Polish bank for the amount of $5,601,792 (Pln 14,000,000), to be used to finance modernization of existing cable TV equipment and conduits enabling the Company to offer triple play.



(c)	Debt instruments



(i)	Loan agreement between Stream and a private Polish company, whereby Stream borrowed $264,375 (US$250,000).  The loan bears an interest of 9% per annum payable quarterly.  The loan matures on August 29, 2009.



(ii)	Loan agreement between Stream and a private Canadian citizen, whereby Stream borrowed $31,725 (US$30,000).  The lender will receive an interest of 50,000 shares in the Company once the cease trade order has been lifted by the B.C. Securities Commission.  The loan matures on December 31, 2007.



(iii)	Loan agreement between Stream and a private Polish citizen, whereby Stream borrowed $211,500 (US$200,000).  The loan bears an interest of 9% per annum payable quarterly.  The loan matures on December 29, 2009.



(d)	Acquisitions















21.	Differences between Canadian and United States generally accepted accounting principles



The Company's consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which differ from those principles that the Company would have followed had its consolidated financial statements been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP").



The results for the December 31, 2005 and 2004 financial statements have been restated to reflect the difference between Canadian and US GAAP relating to stock-based compensation.



Material variations between financial statement items under Canadian GAAP and the amounts determined under US GAAP are presented in the following reconciliation.



Consolidated statement of operations and comprehensive income

For the year ending December 31,



|                                                |           |             |             |             |           |             | 2006 |  | 2005       |  | 2004      
|----------------------------------------------- | --------- | ----------- | ----------- | ----------- | --------- | ----------- | ---- |  | ---------- |  | ----------
|                                                |           |             |             |             |           |             | $    |  | $          |  | $         
|                                                |           |             |             |             |           |             |      |  | (Restated) |  | (Restated)
|                                                |           |             |             |             |           |             |      |  |            |  |           
|Net loss under Canadian GAAP                    |           | (4,485,893) |             | (5,811,359) |           | (6,564,715)
|Stock-based compensation (Note 21 (a))          |           | -           |             | 833,483     |           | 2,031,010  
|Foreign exchange loss (Note 21 (c))             |           | 41,332      |             | -           |           | -          
|Net loss under US GAAP                          |           | (4,444,561) |             | (4,977,876) |           | (4,533,705)
|Cumulative translation adjustment (Note 21 (b)) | 1,438,047 |             | (1,103,560) |             | 1,316,542
|Comprehensive loss under US GAAP                |           | (3,006,514) |             | (6,081,436) |           | (3,217,163)
|                                                |           |             |             |             |           |             |      |  |            |  |           
|Basic and diluted loss per share                |           | (0.05)      |             | (0.12)      |           | (0.15)     







21.	Differences between Canadian and United States generally accepted accounting principles (continued)



Consolidated statement of cash flows

For the year ending December 31, 2006, 2005 and 2004



There are no differences in each of the total operating, investing and financing activities as reported in the consolidated statement of cash flows between Canadian and US GAAP.



Notes to the reconciliation between Canadian and US GAAP as at and for the year ended December 31, 2006 and 2005



(a)	Stock-based compensation



Prior to 2006, under Canadian GAAP, the Company applied the fair value method of accounting for all stock option awards, recognizing compensation expense that was recorded as a charge against earnings.  Under US GAAP, the Company accounted for those awards under the recognition and measurement provisions of APB No. 25, Accounting for Stock Issued to Employees ("APB 25"), and its related interpretations.  During 2005, the Company granted options to consultants, of which stock-based compensation expense was recorded pursuant to APB 25.



Effective January 1, 2006, the Company adopted SFAS No. 123 (Revised 2004), Share-Based Payment ("SFAS No. 123(R)"), using the modified-prospective application transition method.  Results for prior periods have not been restated.  Because the fair value recognition provisions of SFAS No. 123, Stock-Based Compensation, and SFAS No. 123(R) were materially consistent under our equity plans, the adoption of SFAS No. 123(R) did not have a significant impact on our financial position or our results of operations.



The consolidated financial statements of the Company for the years ended December 31, 2005 and December 31, 2004 have been restated to reflect the difference between Canadian and US GAAP under APB 25 and its related interpretations.  The Company's previously issued consolidated financial statements did not give effect to an adjustment for stock-based compensation, as noted above.  For the years ended December 31, 2005 and 2004, net loss, restated, under US GAAP was reduced by $833,483 and $2,031,010, respectively.



(b)	Foreign currency translation



Under US GAAP, changes in the cumulative foreign currency translation account are included in comprehensive income and the cumulative foreign currency translation account balance is included as a component of accumulated other comprehensive income.



(c)	Foreign exchange loss



Under Canadian GAAP, a proportionate amount of the cumulative foreign currency translation account is recognized in net income on a partial realization or disposition of an investment in a self-sustaining foreign subsidiary.  Under US GAAP such recognition occurs only when there has been a substantially complete realization of the investment.





21.	Differences between Canadian and United States generally accepted accounting principles (continued)



(d)	Recent accounting pronouncements



In July 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes.  FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its consolidated financial statements uncertain tax positions that it has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction).  Under the model, the consolidated financial statements will reflect expected future income tax consequences of such positions presuming the taxing authorities' full knowledge of the position and all relevant facts, but without considering time values.  The evaluation of tax positions under FIN No. 48 will be a two-step process, whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position; and, (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the taxing authority.  FIN No. 48 also revises disclosure requirements and introduces a prescriptive, annual, tabular roll-forward of the unrecognized tax benefits.  The Company is reviewing the guidance (which is effective for the first quarter of 2007) to determine the potential impact, if any, on its consolidated financial statements.







SFAS No. 157, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute.  Accordingly, SFAS No. 157 does not require any new fair value measurements.  SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.



In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Post-retirement Plans - amendment of FASB Statements No. 87, 88, 106, and 132(R).  Under SFAS No. 158, employers must recognize a net liability or asset to report the funded status of their defined benefit pension and other post-retirement benefit plans on their balance sheets.  The guidance is effective for the Company's December 31, 2006 financial statements.  The Company is reviewing the guidance to determine the potential impact, if any, on its consolidated financial statements.





21.	Differences between Canadian and United States generally accepted accounting principles (continued)



(d)	Recent accounting pronouncements (continued)



In October 2006, the FASB issued FSP FAS 123(R)-5, Amendment to FASB Staff Position FAS 123(R)-1.  The FSP concludes that for stock-based compensation instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, no change in the recognition or remeasurement of the instruments will result if both (1) there is no increase in the fair value of the award (i.e., the holder is made whole), or the anti-dilution provision is not added to the terms of the award in contemplation of an equity restructuring, and (2) all holders of the same class of equity instruments are treated in the same manner.  The Company is reviewing the guidance to determine the potential impact, if any, on its consolidated financial statements.



In February 2007, the FASB has issued Statement 159, which permits an entity to measure certain financial assets and financial liabilities at fair value.  The Statement's objective is to improve financial reporting by allowing entities to mitigate volatility in reported earnings caused by the measurement of related assets and liabilities using different attributes, without having to apply complex hedge accounting provisions. Under Statement 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date.  The fair value option may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety.  The fair value option election is irrevocable, unless a new election date occurs.  The new Statement establishes presentation and disclosure requirements to help financial statement users understand the effect of the entity's election on its earnings, but does not eliminate disclosure requirements of other accounting standards. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet.  The guidance is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007.  The Company is reviewing the guidance to determine the potential impact, if any, on its consolidated financial statements.



Under US GAAP, the Company does not currently recognize embedded derivatives arising from its own stock, warrants or options.  This issue is currently under review by a working committee of the Emerging Issues Task Force of the FASB ("EITF"), EITF 07-05, Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock.  The working group will focus on developing a framework under which an instrument or embedded feature would be indexed to an entity's own stock if its ultimate settlement amount will equal the difference between the fair value of a fixed number of the entity's equity shares and a fixed strike price.  The company will review its accounting policy when the FASB ratifies guidance provided by the EITF task force.















12.2 	Certification pursuant to Section 302 of the Sarbanes-Oxley Act by CFO

























Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this annual statements to be signed on its behalf by the undersigned, thereunto duly authorized.







Dated: 	November 16, 2007



ON BEHALF OF THE COMPANY,

STREAM COMMUNICATIONS NETWORK & MEDIA INC.



Per:





/s/ Jan S. Rynkiewicz

Jan S. Rynkiewic

Chief Executive Officer and President