##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|                                            |  |                               
|------------------------------------------- |  | ------------------------------
|For the Fiscal Year Ended
December 31, 2002 |  | Commission File Number
1-13332

|                                                      
|------------------------------------------------------
|Cabletel Communications Corp.                         
|                                                      
|(Exact name of registrant as specified in its charter)

|                                                |  |                                   
|----------------------------------------------- |  | ----------------------------------
|Ontario, Canada                                 |  | 8647 8526                         
|                                                |  |                                   
|(Jurisdiction of incorporation or organization) |  | (Canadian Federal Tax Account No.)

|                                        
|----------------------------------------
|230 Travail Rd.                         
|Markham, Ontario, Canada L3S 3J1        
|                                        
|(Address of principal executive offices)

Registrants telephone number, including area code: (905) 475-1030
Securities registered
pursuant to Section 12(b) of the Act:

|                    |  |                                                       
|------------------- |  | ------------------------------------------------------
|                    |  | Name of each exchange                                 
|Title of each class |  | on which registered                                   
|                    |  |                                                       
|Common Shares       |  | The Toronto Stock Exchange
The American Stock Exchange

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

None.

Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
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 |  | [X] |  | No |  | [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [X]

Indicate by check mark the registrant is an accelerated filer as defined in
Rule 12b-2 of the Act.

|    |  |       |  |    |  |    
|--- |  | ----- |  | -- |  | ---
|Yes |  | [   ] |  | No |  | [X]

The aggregate market value of Common Shares (based upon the closing per share
price of the Common Shares on the American Stock Exchange on June 30, 2002, the
most recently completed second fiscal quarter) of Cabletel Communications Corp.
held by non-affiliates was approximately U.S. $2,561,173.

The number of Common Shares of the Registrant outstanding as at March 17, 2003
was 7,167,612.

DOCUMENTS INCORPORATED BY REFERENCE

NONE





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##### 



Exchange Rate of the Canadian Dollar

The accounts of Cabletel Communications Corp. (Cabletel or the
Company) are maintained in Canadian dollars. All dollar amounts contained
herein are expressed in Canadian dollars, except as otherwise indicated. As at
March 17, 2003, the rate in Canadian dollars was Cdn. $1.00 = U.S. $0.6773.

Set forth below are the exchange rates for the Canadian dollar equivalent
expressed in United States currency during the last 5 years.

|               |  |                                        |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|-------------- |  | -------------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ |  |  |  | ------ | 
|               |  | Years Ended December 31,              
|               |  | (All amounts in United States dollars)
|               |  |                                       
|               |  | 1998                                   |        | 1999 |  | 2000 |        | 2001 |  | 2002
|               |  |                                        |        |      |  |      |        |      |  |     
|At End of Year |  |                                        | 0.6520 |      |  |      | 0.6929 |      |  |      | 0.6669 |  |  |  | 0.6278 |  |  |  | 0.6339 | 
|Average        |  |                                        | 0.6759 |      |  |      | 0.6738 |      |  |      | 0.6733 |  |  |  | 0.6460 |  |  |  | 0.6369 | 
|High           |  |                                        | 0.7098 |      |  |      | 0.6929 |      |  |      | 0.6970 |  |  |  | 0.6700 |  |  |  | 0.6614 | 
|Low            |  |                                        | 0.6329 |      |  |      | 0.6533 |      |  |      | 0.6421 |  |  |  | 0.6237 |  |  |  | 0.6202 | 

Accounting Principles

Cabletels accounts are presented in accordance with Canadian generally
accepted accounting principles. A reconciliation to United States generally
accepted accounting principles is set forth in Note 15 to the Consolidated
Financial Statements included elsewhere in this Annual Report.

Foreign Private Issuer

The Company is a Foreign Private Issuer as defined in Rule 3b-4 under
the Securities Exchange Act of 1934, as amended (the Act). Although as a
Foreign Private Issuer the Company is eligible to file its annual report on
Form 20-F, the Company has voluntarily elected to file its annual report on
Form 10-K.

Pursuant to Rule 3a12-3(b) of the Act, securities registered by a Foreign
Private Issuer are exempt from the provisions of Sections 14(a), 14(b), 14(c),
14(f) and 16 of the Act.

2



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TABLE OF CONTENTS

|         |  |                                                                                       |  |     
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                       |  | Page
|         |  |                                                                                       |  |     
|Part I   |  |                                                                                       |  |     
|Item 1.  |  | Business                                                                              |  | 4   
|Item 2.  |  | Properties                                                                            |  | 8   
|Item 3.  |  | Legal Proceedings                                                                     |  | 8   
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 8   
|         |  |                                                                                       |  |     
|Part II  |  |                                                                                       |  |     
|         |  |                                                                                       |  |     
|Item 5.  |  | Market for a Registrants Common Equity and Related Stockholder Matters               |  | 9   
|Item 6.  |  | Selected Financial Data                                                               |  | 10  
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 11  
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 25  
|Item 8.  |  | Financial Statements and Supplemental Data                                            |  | 26  
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 26  
|         |  |                                                                                       |  |     
|Part III |  |                                                                                       |  |     
|         |  |                                                                                       |  |     
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 27  
|Item 11. |  | Executive Compensation                                                                |  | 29  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 34  
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 36  
|         |  |                                                                                       |  |     
|Part IV  |  |                                                                                       |  |     
|         |  |                                                                                       |  |     
|Item 14. |  | Controls and Procedures                                                               |  | 37  
|Item 15. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 37  
|         |  | Signatures                                                                            |  | 42  
|         |  | Certifications                                                                        |  | 76  

3



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PART I



|ITEM 1. |  | BUSINESS
|------- |  | --------

Unless the context otherwise requires, references to Cabletel the
Company, we, us or our are to Cabletel Communications Corp. and its
direct and indirect subsidiaries, including Cabletel Communications Corp. of
Markham, Ontario, on a consolidated basis.

GENERAL

Cabletel is primarily a Canadian distribution and manufacturing company
headquartered in Markham, Ontario with major offices and distribution
warehouses located in St. Hubert, Quebec; Delta, British Columbia; Dartmouth,
Nova Scotia; and Calgary, Alberta.

Cabletel was incorporated under the laws of the Province of Ontario,
Canada on October 19, 1985. In May 1994, Cabletel completed an initial public
offering (the Offering) of its Common Shares in certain provinces of Canada.
Cabletels Common Shares are listed on The Toronto Stock Exchange (the TSX)
and the American Stock Exchange (the AMEX).

Cabletel is a leader in Canada in providing the tools needed to build,
upgrade and maintain cable systems. Cabletels manufacturing division is
becoming a recognized leader in the design and manufacturing of connectors
world-wide for cable, satellite and wireless cable systems in over 32
countries. In 1999, the Company diversified and created Cabletel Technologies
to provide products to broadcasters, network providers and other companies
involved in connecting people and places.

The Company operates in three business segments, Distribution,
Manufacturing and Technology. The Distribution segment is carried on under the
Cabletel Communications Corp. name and is a full-service distributor of
broadband equipment to the Canadian television and telecommunications
industries, offering a wide variety of products required to construct, build,
maintain and upgrade broadcasting and telecommunications systems. Major
product lines include coaxial cable (cable consisting of an inner insulated
core of solid wire surrounded by an outer insulated flexible wire braid), fiber
optic cable (cable used in the transmission of visual, audio or data
information modulated on light which is constructed from many strands of
flexible and extremely narrow glass fibers contained in a protective sheath),
electronic signal modulators and transmitters, amplifiers, fiber optic
transmitters and receivers, test equipment, satellite reception apparatus and
hardware necessary for installing, operating and maintaining products sold by
the Company. Cabletel also supplies products to data communication, utility
and telephone companies. Net sales of Cabletels Distribution segment
represented approximately 79% of the Companys total net sales for the year
ended December 31, 2002. During the year ended December 31, 2002, virtually all
sales in the Distribution segment were to customers in Canada.

The Manufacturing segment is operated in Canada through Stirling
Connectors, a division of the Company, in the United States through a
wholly-owned subsidiary of the Company, Stirling Connectors, U.S.A., Inc., and
in Israel through a wholly-owned subsidiary of the

4



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##### 



Company, Stirling (Israel) Ltd. Stirling manufactures and sells brass and
aluminum coaxial connectors for use in cable distribution systems. The
majority of Stirlings sales are to foreign markets. Net sales of Stirling
represented approximately 17% of the Companys total net sales for the year
ended December 31, 2002. Stirling exported approximately 6% of its product to
Israel, 77% of its product to the United States and 6% of its product to other
foreign markets.

The Technology segment which is operated under the Cabletel Communications
Corp. name, provides products to broadcasters, network providers and a
wide-variety of companies building the infrastructure to support the Internet
economy. Net sales attributable to the Technology segment represented
approximately 5% of the Companys total net sales for year 2002. Virtually all
sales in the Technology segment for the year ended December 31, 2002 were to
customers in Canada.

For further segmented information, see Note 14 of the Consolidated
Financial Statements of the Company included elsewhere in this Annual Report.

THE CANADIAN CABLE TELEVSION INDUSTRY

The Canadian cable television industry has traditionally functioned as a
re-broadcaster of television and radio signals received from the point of
original transmission and then modulated, amplified and retransmitted to
subscribers homes. The industry is approximately 40 years old and currently
services over 8.2 million cable subscribers, of which approximately 7.6 million
subscribers are residential customers and 0.6 million are commercial
subscribers. This represents about 92% of all television households in Canada.
Prior to 1983, cable television was essentially restricted to providing
basic services consisting of distant signals received by way of antenna and
certain limited public service channels. Pay-TV was approved by the Canadian
Radio-television and Telecommunications Commission in 1983 and consists of a
variety of subscription channels providing recently released movies, concerts,
sporting events and other programming. Cable television operators are now
offering programming on a pay-per-view basis and are also beginning to offer
non-video services such as data transmission.

Investment in digital cable and high-speed broadband services is estimated
at an average of $1 billion annually. The result is an advanced broadband
infrastructure that can provide 7.8 million households with access to digital
cable and high-speed Internet service. The industry currently provides
approximately one million digital customers and approximately 1.5 million
Internet customers with these services.

Both urban and rural areas are connected to the cable broadband networks,
giving Canada the enviable position of being one of the most connected nations
in the world, surpassing the United States in service availability per capita.
The cable industry investment is growing in other areas with the introduction
of new services such as high definition television, video on demand, and
enhanced television. These offer consumers the opportunity to personalize
their viewing experiences and interact with content rich applications such as
web-TV, E-mail, local portals or multi-player gaming.

5



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##### 



Throughout 2001 and 2002, we have seen growth in customer interest and
uptake in digital set top boxes enabling customers to view the broadcasting
industrys latest offering  the diginet services. More than 300 digital
services have been licensed to date. So far the industry has introduced
between 40 to 60 digital channels to its customers.

Technical developments and strategic decisions by cable system operators
and their competitors will significantly affect the Company. Cable systems are
now being by-passed by direct broadcast satellite services. New digital
technologies enable the compression of many channels into the bandwidth
currently used by one analog channel. There are new wireless technologies,
which could be used to bypass existing distribution systems. The entrance of
telephone companies into the cable industry and the consolidation of cable
companies and telephone companies may affect not only the level of capital
spending in general, but the portion thereof received by the Company.

SALES AND MARKETING

Cabletel markets its products across Canada through 32 full time sales
representatives operating out of five regional offices located in Delta,
British Columbia; Markham, Ontario; St. Hubert, Quebec; Dartmouth, Nova Scotia;
and Calgary, Alberta. The majority of Cabletels sales are made to Canadian
customers. Approximately 79% of Cabletel sales relate primarily to the
Canadian cable television market.

Cabletels customers include almost all of the cable distribution
companies in Canada. Approximately 71% of Cabletels distribution sales for the
year ended December 31, 2002 were made to the five largest cable system
operators: Rogers Cablesystems Inc. (33%), East Link (28%), Persona
Communications Inc. (4%), Shaw Communications (3%), and Cogeco (3%). The five
companies represent approximately 75% of the Canadian cable television market
(based on number of homes passed).

The Backlog of firm orders at December 31, 2002 was $3,681,000 (2001;
$6,100,000) and at March 17, 2003 was approximately $3,727,000. Virtually all
of these orders are intended for shipment during 2003.

The level of Cabletels sales to its customers is largely determined by
the capital expenditures undertaken by the cable television industry in
maintaining and upgrading its distribution system. Capital spending in the
cable industry has been cyclical. The amount of capital spending, and
therefore the Companys sales and profits, are affected by a variety of
factors, including general economic conditions, availability and cost of
capital, other demands and opportunities for capital (such as acquisitions),
regulation, demand for cable services, competition, alternate technology and
real or perceived trends or uncertainties in these factors. Maintenance and
improvement of Cable systems is generally undertaken on a seasonal basis with
the result that the majority of Cabletels sales occur during the period from
April to November of each year. However, the advent of the Internet has
created strong demand at times of the year where traditionally demand had been
low.

6



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##### 



The manufacture of coaxial connectors consists of the production and
assembly of individual components to make connectors. The Company has entered
into subcontract arrangements with suppliers in the Far East. Approximately
85% of its production was supplied from these subcontractors in 2002. Stirling
sales could be impacted by the following: slowdowns in spending by its
customers, inability of the Company to supply products on time or quality
issues relating to its products. While Stirling has made every effort to
assess the credit worthiness of its international customers, it faces a higher
risk of collections on its receivables from foreign customers.

Cabletels Distribution segment purchased approximately 10% of the
products manufactured by Stirling during 2002. Stirling markets the remainder
of its products through direct sales to customers and through three
distributors. Approximately 90% of Stirlings sales are made to the United
States, Israel, and South America.

SEASONALITY

Generally, the Companys business exhibits a moderate level of seasonality
as sales of its products typically increase during the second and third
quarters, due primarily to weather conditions in Canada. This, however, has
been offset in the past year due to increased demands from customers. There
can be no assurances that this trend will continue.

COMPETITION

All aspects of Cabletels business are highly competitive. Cabletel
competes for sales with national, regional and local distributors, wholesalers
and manufacturers of products for the cable television industry. Various
manufacturers that supply Cabletel also sell their products to Canadian cable
television operators directly or through commissioned agents. In addition,
because of the convergence of the cable, telecommunications and computer
industries and rapid technological development, new competitors may seek to
enter the Canadian cable television distribution market. Many of Cabletels
competitors or potential competitors are substantially larger and have greater
resources than the Company. Cabletels commodity products compete on the basis
of price and delivery time. Cabletels higher technology products, such as
transmitters and receivers, compete on the basis of product specifications and
functionality, as well as price.

EMPLOYEES

At December 31, 2002, the Company had 78 employees, of which 64 were
employed in connection with Cabletels Distribution and Technology segment and
14 were employed in connection with Stirlings manufacturing segment. The
Companys employees are not unionized, and the Company believes that its
relationship with its employees is excellent.

7



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|ITEM 2. |  | DESCRIPTION OF PROPERTY
|------- |  | -----------------------

The Company operates out of the following warehouse and office facilities
in five Canadian cities across Canada and one warehouse and office facility in
the United States.

|                    |  |           |        |     |  |                             |  |                                  |  |  |  | 
|------------------- |  | --------- | ------ | --- |  | --------------------------- |  | -------------------------------- |  |  |  | 
|                    |  | Size      |        |     |  |                             |  |                                  |  | 
|Location            |  | (sq. ft.) |        | Use |  | Owned/Leased               
|                    |  |           |        |     |  |                            
|Markham, Ontario    |  |           | 61,585 |     |  | Warehouse and Manufacturing |  | Leased at $705,988 per annum    
|                    |  |           | 15,659 |     |  | Office                      |  | Lease expires January 31, 2010  
|                    |  |           |        |     |  |                             |  |                                  |  |  |  | 
|St. Hubert, Quebec  |  |           | 6,000  |     |  | Warehouse                   |  | Leased at $64,000 per annum     
|                    |  |           | 2,000  |     |  | Office                      |  | Lease expires January 31, 2004  
|                    |  |           |        |     |  |                             |  |                                  |  |  |  | 
|Dartmouth, Nova     |  |           | 9,499  |     |  | Warehouse                   |  | Leased at $107,653 per annum    
|Scotia              |  |           | 1,857  |     |  | Office                      |  | Lease expires May 31, 2005      
|                    |  |           |        |     |  |                             |  |                                  |  |  |  | 
|Valparaiso, Indiana |  |           | 2,800  |     |  | Warehouse                   |  | Leased at U.S. $31,200 per annum
|                    |  |           | 800    |     |  | Office                      |  | Lease expires September 30, 2003
|                    |  |           |        |     |  |                             |  |                                  |  |  |  | 
|Delta, British      |  |           | 10,000 |     |  | Warehouse                   |  | Leased at $111,062 per annum    
|Columbia            |  |           | 1,040  |     |  | Office                      |  | Lease expires March 31, 2007    
|                    |  |           |        |     |  |                             |  |                                  |  |  |  | 
|Calgary, Alberta    |  |           | 2,000  |     |  | Warehouse                   |  | Leased at $23,400 per annum     
|                    |  |           | 400    |     |  | Office                      |  | Lease expires November 30, 2003 

The Company believes its properties are adequate for its current needs.



|ITEM 3. |  | LEGAL PROCEEDINGS
|------- |  | -----------------

There are no material pending legal proceedings to which the Company is a
party or to which any of its properties is subject.



|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- |  | ---------------------------------------------------

None.

8



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PART II



|ITEM 5. |  | MARKET FOR A REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- |  | -----------------------------------------------------------------------

The Common Shares currently trade on the TSX and on the AMEX under the
symbol TTV. The Companys Common Shares are the only class of shares issued
and outstanding. The Common Shares were listed and posted for trading on the
TSX on May 19, 1994 and on the AMEX on September 13, 1994.

The high and low sales prices for the Common Shares on the AMEX during
2002 and 2001 that the Common Shares were traded thereon were as follows:

Fiscal Year Ended December 31,
American Stock Exchange

|               |  |          |      |     |  |  |      | 
|-------------- |  | -------- | ---- | --- |  |  | ---- | 
|               |  | ($ U.S.)
|               |  | High     |      | Low
|               |  |          |      |    
|               |  | 2001    
|               |  |          |      |     |  |  |     
|First Quarter  |  |          | 2.63 |     |  |  | 1.75 | 
|Second Quarter |  |          | 2.05 |     |  |  | 1.40 | 
|Third Quarter  |  |          | 1.71 |     |  |  | 0.55 | 
|Fourth Quarter |  |          | 1.49 |     |  |  | 0.58 | 

|               |  |      |      |  |  |  |      | 
|-------------- |  | ---- | ---- |  |  |  | ---- | 
|               |  | 2002
|               |  |      |      |  |  |  |     
|First Quarter  |  |      | 1.43 |  |  |  | 1.00 | 
|Second Quarter |  |      | 1.44 |  |  |  | 0.93 | 
|Third Quarter  |  |      | 1.15 |  |  |  | 0.98 | 
|Fourth Quarter |  |      | 1.34 |  |  |  | 0.95 | 

On March 17, 2003 the last reported per Common Share sale price on the
AMEX was U.S.$1.20. There were approximately 47 holders of record of the
Common Shares as of March 17, 2003.

The Company has never declared or paid cash dividends on its capital
stock, and the Companys Board of Directors does not intend to declare or pay
any dividends on the Common Stock in the foreseeable future. Earnings of the
Company, if any, are expected to be retained for use in expanding the Companys
business. The declaration and payment in the future of any cash or stock
dividends on the Common Shares will be at the discretion of the Board of
Directors of the Company and will depend upon a variety of factors, including
the ability of the Company to service its outstanding indebtedness and to pay
its dividend obligations on securities ranking senior to the Common Shares, if
any, the Companys future earnings, if any, capital requirements, financial
condition and such other factors as the Companys Board of Directors may
consider to be relevant from time to time. In addition, the Company is
currently restricted from paying dividends under the terms of its credit
facilities.

9



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|ITEM 6. |  | SELECTED FINANCIAL DATA
|------- |  | -----------------------

The following selected financial data is extracted from the Consolidated
Financial Statements of the Company and should be read in conjunction therewith
and the notes related thereto included elsewhere in this Annual Report. The
Consolidated Financial Statements of the Company have been prepared on a
continuity of interest basis.

STATEMENT OF OPERATIONS

|                                     |  |                          |            |      |  |      |            |      |  |      |            |  |  |   |            |  |  |   |            |  
|------------------------------------ |  | ------------------------ | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- |  |  | - | ---------- | -
|                                     |  | Years Ended December 31,
|                                     |  |                         
|                                     |  | 2002                     |            | 2001 |  | 2000 |            | 1999 |  | 1998
|                                     |  |                          |            |      |  |      |            |      |  |     
|Sales                                |  | $                        | 53,629,075 |      |  | $    | 58,120,899 |      |  | $    | 74,492,559 |  |  | $ | 54,445,287 |  |  | $ | 42,629,701 |  
|Expenses                             |  |                          | 10,964,741 |      |  |      | 12,143,628 |      |  |      | 12,710,076 |  |  |   | 8,305,835  |  |  |   | 15,148,053 | *
|Net earnings (loss)**                |  |                          | (1,018,117 | )    |  |      | (2,906,118 | )    |  |      | 932,785    |  |  |   | 567,377    |  |  |   | (7,784,637 | )
|Net earnings (loss)
per common share |  |                          |            |      |  |      |            |      |  |      |            |  |  |   |            |  |  |   |            |  
|Basic                                |  |                          | $(0.14     | )    |  |      | $(0.41     | )    |  | $    | 0.13       |  |  | $ | 0.09       |  |  |   | $(0.19     | )
|Diluted                              |  |                          | $(0.14     | )    |  |      | $(0.41     | )    |  | $    | 0.12       |  |  | $ | 0.08       |  |  |   | $(0.19     | )



---

|*  |  | Included in expenses are restructuring charges of $7,098,077 in 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|** |  | Net earnings in 2002 include charges of $566,145 relating to a write off
of other assets and charges of $164,000 relating to a loss on settlement
of debt. 2001 net earnings include charges of $1,791,836 relating to an
increase in inventory obsolescence amounting to $500,000, increased
provisions for bad debts of $454,000, a write off of $480,000 of legal,
consulting, and financing costs relating to acquisitions and financings
that did not materialize, and $357,836 relating to charges comprised of
employee termination costs.
|  
|** |  | Net earnings in 1999 include a gain of $122,070 on sale of land and
building and a gain of $72,570 on surrender of life insurance.                                                                                                                                                                                                                                                                                                                                                                                                               

BALANCE SHEET

|                                  |  |                    |             |      |  |      |             |      |  |      |            |   |  |   |            |   |  |   |            |  
|--------------------------------- |  | ------------------ | ----------- | ---- |  | ---- | ----------- | ---- |  | ---- | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                  |  | As at December 31,
|                                  |  |                   
|                                  |  | 2002               |             | 2001 |  | 2000 |             | 1999 |  | 1998
|                                  |  |                    |             |      |  |      |             |      |  |     
|Total assets                      |  | $                  | 29,630,024  |      |  | $    | 28,870,195  |      |  | $    | 38,137,912 |   |  | $ | 25,368,199 |   |  | $ | 18,115,853 |  
|Current portion of long-term debt |  |                    | 2,067,558   |      |  |      | 171,385     |      |  |      | 168,616    |   |  |   |           |   |  |   |           |  
|Long-term debt                    |  |                    | 1,154,088   |      |  |      | 713,737     |      |  |      | 849,722    |   |  |   |           |   |  |   |           |  
|Shareholders equity              |  |                    | 5,216,218   |      |  |      | 6,070,335   |      |  |      | 8,825,830  |   |  |   | 6,945,557  |   |  |   | 6,232,775  |  
|Retained earnings (deficit)       |  |                    | (11,084,543 | )    |  |      | (10,066,426 | )    |  |      | (7,160,308 | ) |  |   | (8,093,093 | ) |  |   | (8,660,470 | )

10



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|ITEM 7. |  | MANAGEMENTS DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------

CRITICAL ACCOUNTING POLICIES

Managements Discussion and Analysis of Financial Condition and Results
of Operations includes discussion and analysis of our consolidated financial
statements, which have been prepared in conformity with accounting principles
generally accepted in Canada, which, except as described in Note 15 of the
accompanying financial statements, conform, in all material respects, with the
accounting principles generally accepted in the United States. The preparation
of these financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. These estimates and their underlying assumptions form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other objective sources. Management bases
its estimates, as appropriate, when changes in events or circumstances indicate
that revisions may be necessary. Significant accounting estimates reflected in
our financial statements include the allowance for doubtful accounts, inventory
excess and obsolescence reserves, discounts, allowances and rebates, income tax
valuation allowances and impairment reviews for investments, fixed assets,
goodwill and other intangibles. Although these estimates are based on
managements knowledge of and experience with past and current events and on
managements assumptions about future events, it is at least reasonably
possible that they may ultimately differ materially from actual results.

Management believes that the following critical accounting policies
require more significant judgments and estimates in the preparation of the
Companys consolidated financial statements. We maintain allowances for
doubtful accounts for estimated losses expected to result from the inability of
our customers to make required payments. These estimates are based on
managements evaluation of the ability of our customers to make payments,
focusing on customer financial difficulties and age of receivable balances. An
adverse change in financial condition of a significant customer or group of
customers could materially affect managements estimates related to doubtful
accounts. We record estimated reductions to revenue for customer programs and
incentive offerings, such as discounts, allowances, and rebates. These
estimates are based on contract terms, historical experience, and other
factors. Management believes it has sufficient historical experience to allow
for reasonable and reliable estimation of these reductions to revenue.
However, declining market conditions could result in increased estimates of
sales returns and allowances resulting in incremental reductions to revenue.
We maintain allowances for excess and obsolete inventory. These estimates are
based on managements assumptions about and analysis of relevant factors
including current levels of orders and backlog, shipment experience, forecasted
demand and market conditions. We do not believe our products are subject to a
significant risk of obsolescence in the short term and management believes it
has the ability to adjust inventory levels to declining demand. However, if
actual market conditions become less favorable than anticipated by management,
additional allowances for excess and obsolete inventory could be required.
Management reviews intangible assets, investments and other long-lived assets
for impairment when events or changes in circumstances indicate that their
carrying values may not be fully recoverable. Goodwill is tested for
impairment annually and on

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an interim basis when events or circumstances change. Management assesses
potential impairment of the carrying values of these assets based on market
prices, if available, or assumptions about and estimates of future cash flows
expected to arise from these assets. Future cash flows may be adversely
impacted by operating performance, market conditions, and other factors. If an
impairment is indicated by this analysis, the impairment charge to be
recognized, if any, would be measured as the amount by which the carrying value
exceeds fair value, estimated by management based on market prices, if
available, or forecasted cash flows, discounted using a discount rate
commensurate with the risks involved. Assumptions related to future cash flows
and discount rates involve management judgment and are subject to significant
uncertainty. If actual future cash flows, discount rates and other assumptions
used in the assessment and measurement of impairment differ from managements
estimates and forecasts, additional impairment charges could be required.
Discussion of 2002 impairment charges is located within the Companys
Management Discussion and Analysis of Financial Condition and Results of
Operations for the Year Ended December 31, 2002.

The following discussion should be read in conjunction with the Companys
Consolidated Financial Statements and Notes thereto included elsewhere in this
Annual Report.

RESULTS OF OPERATIONS

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Consolidated net sales for the year ended December 31, 2002 decreased by
$4,491,824 or 7.7% to $53,629,075 compared to consolidated net sales of
$58,120,899 for the year ended December 31, 2001. The decrease is primarily
attributable to the Companys Distribution and Technology segments where
financial and market conditions that impacted growth in the cable, technology
and satellite industry resulted in reduced capital spending within the industry
during the year. However, the Distribution segment has benefited from its
arrangement to supply product for a major project in Eastern Canada. This was
supplemented by increased sales in the Manufacturing segment of 19% for the
year ended December 31, 2002.

The following table shows comparative sales by segment:

|                          |  |                         |            |      |  |   |            |  
|------------------------- |  | ----------------------- | ---------- | ---- |  | - | ---------- | -
|                          |  | Net Sales              
|                          |  | Year Ended December 31,
|                          |  |                        
|                          |  | 2002                    |            | 2001
|                          |  |                         |            |     
|Distribution              |  | $                       | 42,615,216 |      |  | $ | 46,715,597 |  
|Manufacturing             |  |                         | 9,355,703  |      |  |   | 7,859,032  |  
|Technology                |  |                         | 2,730,643  |      |  |   | 4,430,460  |  
|Less: Inter-company sales |  |                         | (1,072,487 | )    |  |   | (884,190   | )
|                          |  |                         |            |      |  |   |            |  
|Net Sales                 |  | $                       | 53,629,075 |      |  | $ | 58,120,899 |  
|                          |  |                         |            |      |  |   |            |  

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Net sales of $42,615,216 in the Distribution segment for the year ended
December 31, 2002 reflects a decrease of $4,100,381 or 8.8% compared to
$46,715,597 for the year ended December 31, 2001. The decrease in the
Distribution segment is attributable to financial and market conditions that
impacted growth in the cable, technology and satellite industry resulting in
reduced capital spending within the industry during the year.

Net sales in the Manufacturing segment of $9,355,703 for the year ended
December 31, 2002, reflects an increase of $1,496,671 or 19.0%, compared to
$7,859,032 for the year ended December 31, 2001. The increase is primarily due
to an increase in sales to foreign countries. For the year ended December 31,
2002, sales to foreign countries, primarily the United States, were $8,405,887
compared to $6,974,839 for the year ended December 31, 2001. The Company had
taken aggressive action in an attempt to increase sales to the U.S., by
establishing offices and warehousing facilities in Indiana to facilitate
distribution of products. In addition, through the May 2002 acquisition of its
distributor in the United States, the Company established a sales force
throughout the U.S. to better service customers.

Net sales of $2,730,643 in the Technology segment for the year ended
December 31, 2002 reflects a decrease of $1,699,817 or $38.4%, compared to
$4,430,460 for the year ended December 31, 2001. The decrease is primarily due
to continued project postponements in the networking industry due to the
financial environment within the Technology sector.

Gross profit for the year ended December 31, 2002 of $10,744,578 increased
by $1,086,221 or 11.2% compared to a gross profit of $9,658,357 for the year
ended December 31, 2001. Gross margin for the year ended December 31, 2002 was
20.0% compared to 16.6% for the year ended December 31, 2001. The primary
reason for the increase in gross margin for the year ended December 31, 2002
was efficiencies achieved in the Companys Manufacturing segment. This segment
is now concentrating on manufacturing one model of connector in house, while
having the balance of the Companys requirements produced at a lower cost in
the Far East. Demand for the Manufacturing segments products has enabled
production to ramp up to a level where higher volumes are produced more
efficiently and yield a higher gross margin. In addition, the manufacturing
segment comprises a higher percentage of overall sales for the year ended
December 31, 2002, which generates a higher gross margin when averaged with the
results of the Companys other segments.

Gross profit of $7,624,991 in the Cabletel Distribution segment for the
year ended December 31, 2002 reflects a decrease of $167,587 or 2.2% compared
to $7,792,578 for the year ended December 31, 2001. Gross margin for the
Distribution segment for the year ended December 31, 2002 was 17.9% an increase
compared to a gross margin of 16.7% for the year ended December 31, 2001. The
increase is primarily due to a change in product mix. The segment experienced
higher sales of hardware products and reduced sales in cable products which are
generally sold at a lower profit margin.

Gross profit of $2,703,205 in the Manufacturing segment for the year ended
December 31, 2002 reflects an increase of $1,531,679 or 130.7% compared to
gross profit of $1,171,526 for the

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year ended December 31, 2001. Gross margin for the Manufacturing segment for
the year ended December 31, 2002 was 28.9% an increase compared to a gross
margin of 14.9% for the year ended December 31, 2001. The increase is
primarily due to manufacturing efficiencies achieved by eliminating unfavorable
production variances through cost cutting measures implemented in the third
quarter of 2001. The Company is currently purchasing Stirling connector
products from its supplier in the Far East and manufacturing selective products
locally.

Gross profit of $416,382 in the Technology segment for the year ended
December 31, 2002 reflects a decrease of $277,871 or 40.0% compared to $694,253
for the year ended December 31, 2001. Gross margin for the Technology segment
for the year ended December 31, 2002 was 15.2%, which is slightly lower
compared to the prior year gross margin of 15.7%. The Technology segment
experienced the effects of a slowdown in the industry resulting in a more
competitive environment.

Selling, general and administrative expenses for the year ended December
31, 2002 decreased $1,015,524 or 9.5% to $9,633,169 compared to $10,648,693 for
the year ended December 31, 2001. As a percentage of sales, selling, general
and administrative expenses for the year ended December 31, 2002 were 18.0%
compared to 18.3% for the year ended December 31, 2001. The Company has made a
conscious effort to reduce costs, including reductions in the Companys labour
force, as well as reduce international marketing costs.

For the year ended December 31, 2002 there were no charges recognized as
special charges. Special charges for the year ended December 31, 2001 were
$357,836, which related to termination expenses of 42 employees, of which 32
were engaged in manufacturing activities of Stirling Connectors and 10 were
related to inside sales and warehouse functions of Cabletel. In light of the
industry and economic environment, and capital market trends impacting both
Cabletel current operations and expected future growth rates, the Company has
implemented steps to optimize results and drive efficiencies in the business by
streamlining operations and activities in order to return the Company to
profitability.

Interest expense increased $185,623 to $1,072,730 for the year ended
December 31, 2002 compared to $887,107 for the year ended December 31, 2001.
Interest expense on bank indebtedness for the year ended December 31, 2002 of
$771,423 decreased by $28,518 down from $799,941 for the year ended December
31, 2001. Interest expense on long-term debt was $301,307 which represents an
increase of $214,141 up from $87,166 for the year ended December 31, 2001. The
decrease in interest expense on bank indebtedness reflects lower interest rates
on lower levels of borrowings of the Companys line of credit for the year.
Interest expense on long-term debt was incurred on a long-term note from the
renegotiation of credit terms with a major supplier during the second quarter
of 2002 and is not comparable to the same period last year.

Loss from operations before write-off of other assets, loss on settlement
of debt and income taxes for the year ended December 31, 2002 was $220,163
compared to a loss of $2,485,271 for the year ended December 31, 2001. This is
reflective of the increase in gross

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profit. Total operating expenses of $10,964,741 for the year ended December
31, 2002 were $1,178,887 lower than $12,143,628 reported for the year ended
December 31, 2001.

Income taxes for the year ended December 31, 2002 were $67,809 compared to
$420,847 for the year ended December 31, 2001. In assessing its future tax
assets, management must consider whether it is more likely than not that some
portion or all of the future tax assets will be recognized. The ultimate
realization of future tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible. The Company has income tax losses in the amount of approximately
$3,489,000 expiring in 2009.

For the year ended December 31, 2002, the Company wrote off other assets
in the amount of $566,145 related to an amount owed to the Company by Allied
Wire and Cable Ltd. The Company took the write-off in connection with the
termination of its previously announced agreement to acquire Allied. For a
number of months, Cabletel and Allied had been in negotiations about
restructuring their previously announced transaction on terms that would have
applied this amount to the net purchase price that would have been paid by
Cabletel for Allieds business. During the second quarter of 2002, the Company
had determined that it was not in its best interest to continue to pursue the
acquisition and as a result wrote off the amounts owed by Allied to the
Company. Subsequently, on November 1, 2002, the Company entered into a
transaction with Allied and certain related companies pursuant to which
Cabletel has been granted an option to acquire all of the capital stock of
Allied for nominal consideration. As part of the proposed transaction Cabletel
has agreed to provide an additional $100,000 in inventory and advance $50,000
in cash to Allied.

For the year ended December 31, 2002, the Company recorded a non-cash item
amounting to $164,000 related to the issuance of warrants in connection with a
settlement of debt with a major supplier. In connection with the debt
settlement the Company issued to the supplier a warrant to acquire up to
200,000 Common Shares at an exercise price of Cdn. $1.64 per share up to and
including May 31, 2007.

Inclusive of the previously mentioned write offs, for the year ended
December 31, 2002, the Company incurred a net loss of $1,018,117 compared to a
net loss of $2,906,118 for the year ended December 31, 2001. Basic and fully
diluted loss per share for the year ended December 31, 2002 was $0.14 compared
to basic and fully diluted loss per share of $0.41 for the year ended December
31, 2001.

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RESULTS OF OPERATIONS

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Consolidated net sales for the year ended December 31, 2001 decreased by
$16,371,660 or 22% to $58,120,899 compared to consolidated net sales of
$74,492,559 for the year ended December 31, 2000. Reduced volumes in all
product categories are reflective of the financial and market conditions that
impacted growth in the cable industry resulting in reduced capital spending by
the Canadian cable operators.

The following table shows comparative sales by segment:

|                          |  |                         |            |      |  |   |            |  
|------------------------- |  | ----------------------- | ---------- | ---- |  | - | ---------- | -
|                          |  | Net Sales              
|                          |  | Year Ended December 31,
|                          |  |                        
|                          |  | 2001                    |            | 2000
|                          |  |                         |            |     
|Distribution              |  | $                       | 46,715,597 |      |  | $ | 59,059,214 |  
|Manufacturing             |  |                         | 7,859,032  |      |  |   | 12,938,721 |  
|Technology                |  |                         | 4,430,460  |      |  |   | 3,473,364  |  
|Less: Inter-company sales |  |                         | (884,190   | )    |  |   | (978,740   | )
|                          |  |                         |            |      |  |   |            |  
|Net Sales                 |  | $                       | 58,120,899 |      |  | $ | 74,492,559 |  
|                          |  |                         |            |      |  |   |            |  

Net sales of $46,715,597 in the Distribution segment for the year ended
December 31, 2001 reflects a decrease of $12,343,617 or 20.9% compared to
$59,059,214 for the year ended December 31, 2000. The decrease is primarily
the result of reduced capital spending by Canadian cable operators.

Net sales in the Manufacturing segment of $7,859,032 for the year ended
December 31, 2001, reflects a decrease of $5,079,689 or 39.3% compared to
$12,938,721 for the year ended December 31, 2000. The decrease is primarily
due to a slow down in the growth in the cable industry. Sales to foreign
countries for the year ended December 31, 2001 were $6,974,839 compared to
$11,929,981 for the year ended December 31, 2000. The decrease is due to a
major contract with an Israeli company terminating in 2001. Sales to Israel
for the year ended December 31, 2001 were $855,266 compared to $7,953,483 for
the year ended December 31, 2000. The Company has taken aggressive action in
an attempt to increase sales to the U.S., by establishing offices and
warehousing facilities in Indiana to facilitate distribution of products. In
addition, the Company established a sales force throughout the U.S. to better
service customers. As a result, sales to the U.S. for the year ended December
31, 2001 were $5,370,113 compared to sales of $3,489,598 for the year ended
December 31, 2000.

Net sales of $4,430,460 in the Technology segment for the year ended
December 31, 2001 reflects an increase of $957,096 or $27.6% compared to
$3,473,364 for the year ended December 31, 2000. The increase is primarily due
to an aggressive focus on sales to the networking industry as well as to a
maturing of the Technology segment, which commenced in January 1999.

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Gross profit for the year ended December 31, 2001 of $9,658,357 decreased
$4,437,318 or 31.5% compared to gross profit of $14,095,675 for the year ended
December 31, 2000. Gross margin for the year ended December 31, 2001 was 16.6%
compared to 18.9% for the year ended December 31, 2000. The primary reason for
the decrease in gross margin for the year ended December 31, 2001 was an
inventory obsolescence charge taken during the year totaling $500,000. The
reduction is also reflective of a change in product mix as well as the effects
of a more competitive environment. In addition, higher manufacturing costs
were incurred during the first half of the year, which due to the competitive
environment, could not be passed on to customers.

Gross profit of $7,792,578 in the Distribution segment for the year ended
December 31, 2001 reflects a decrease of $1,133,165 or 12.7% compared to
$8,925,743 for the year ended December 31, 2000. Gross margin for the
Distribution segment for the year ended December 31, 2001 was 16.7% an increase
compared to a gross margin of 15.1% for the year ended December 31, 2000. The
increase is primarily due to a change in product mix.

Gross profit of $1,171,526 in the Manufacturing segment for the year ended
December 31, 2001 reflects a decrease of $3,458,967 or 74.7% compared to gross
profit of $4,630,493 for the year ended December 31, 2000. The decrease is
primarily due to the charging of manufacturing expenses through cost of sales
of fixed overhead. As production levels declined, the Company experienced
unfavorable manufacturing cost variances since fixed manufacturing costs were
spread over a lower volume of units. Consequently, in July 2001, Management
decided to lay-off all hourly production workers at Stirling Canada. The
Company is currently purchasing Stirling connector products from its supplier
in the Far East and manufacturing selective products locally.

Gross profit of $694,253 in the Technology segment for the year ended
December 31, 2001 reflects an increase of $154,814 or 28.7% compared to
$539,439 for the year ended December 31, 2000. Gross margin for the Technology
segment for the year ended December 31, 2001 was 15.7%, which is comparable to
the prior year gross margin of 15.5%. The Technology segment benefited from a
more favorable product mix during the first part of the year but the effects of
a more competitive environment were evident during the second half of the year.

Selling, general and administrative expenses for the year ended December
31, 2001 decreased $1,041,157 or 8.9% to $10,648,693 compared to $11,689,850
for the year ended December 31, 2000. Included in selling, general and
administrative expenses are charges of $934,000 relating to an increase in
allowance for doubtful accounts amounting to $454,000 and a write off of
$480,000 legal, consulting, and financing costs relating to acquisitions and
financings that did not materialize. The decrease is primarily due to a
reduction in international marketing costs as a result of decreased foreign
sales and the result of a reduction in moving and relocating costs, which were
recorded in the prior period. As a percentage of sales, selling, general and
administrative expenses for the year ended December 31, 2001 were 18.2%
compared to 15.6% for the year ended December 31, 2000.

Special charges for the year ended December 31, 2001 were $357,836,
relating to termination expenses of 42 employees, of which 32 were engaged in
manufacturing activities of

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Stirling Connectors and 10 were related to inside sales and warehouse functions
of Cabletel. No similar charge was taken for the comparable period ending
December 31, 2000. In light of the industry and economic environment, and
capital market trends impacting both Cabletel current operations and expected
future growth rates, the Company has implemented steps to optimize results and
drive efficiencies in its business by streamlining operations and activities in
order to return the Company to profitability.

Interest expense increased $104,054 to $887,107 for the year ended
December 31, 2001 compared to $783,053 for the year ended December 31, 2000.
The increase in interest expense reflects higher borrowings on the Companys
line of credit with HSBC Bank Canada during the year as well as interest
expense on long-term debt acquired to purchase equipment and perform leasehold
improvements.

Loss from operations before taxes for the year ended December 31, 2001 was
$2,485,271 compared to earnings from operations before taxes of $1,385,599 for
the year ended December 31, 2000. This reflects a decrease in gross profit.
Total operating expenses of $12,143,628 for the year ended December 31, 2001
were $566,448 lower than $12,710,076 reported for the year ended December 31,
2000. The 2001 results are impacted by lower international marketing costs as
a result of a reduction in foreign sales.

Income taxes for the year ended December 31, 2001 were $420,847 compared
to $452,814 for the year ended December 31, 2000. In assessing its tax future
assets, management must consider whether it is more likely than not that some
portion or all of the future tax assets will be recognized. The ultimate
realization of future tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible. Management considers the projected future taxable income
projections for future taxable income over the periods, which the future tax
assets are deductible. During the year management re-evaluated the likelihood
of realization of the benefits of the future tax assets and decided to revise
the valuation allowance, as a result the balance of future income taxes as of
December 31, 2001 has been reduced to nil.

Net income for the year ended December 31, 2001 was a loss of $2,906,118
compared to net income of $932,785 for the year ended December 31, 2000. Basic
loss per share was $0.41 for the year ended December 31, 2001 compared to basic
earnings per share of $0.13 for the year ended December 31, 2000. Fully
diluted loss per share was $0.41 for the year ended December 31, 2001 compared
to fully diluted earnings per share of $0.12 for the year ended December 31,
2000.

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FINANCIAL LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has funded its working capital requirements
through cash flow generated by its operations and bank indebtedness. Net cash
of $447,177 was used during the year ended December 31, 2002 for financing
activities. Of such amount, $732,140 was used to repay long-term debt on a term
loan from the landlord of the Companys head office building, long-term debt on
a note payable to a major supplier and long-term debt on an equipment loan.
Offsetting the above amount was $284,963 provided by bank indebtedness.

Net cash provided by operating activities for the year ended December 31,
2002 was $616,255. Cash flow from reductions in inventory was $774,190. Also,
operating cash flow included reductions in accounts receivable amounting to
$104,618 off set by increases in prepaid expenses, deposits and other in the
amount of $1,396,043. Also off setting the cash inflows were outflows of cash
used to reduce accounts payable and accrued liabilities in the amount of
$862,402.

Net cash used in investing activities for the year ended December 31, 2002
was $118,201. Investing activities reflect capital expenditures in replacing
factory equipment and leasehold improvements.

On May 16, 2002, Cabletel entered into a Revolving Credit Facility
Agreement with LaSalle Business Credit, a division of ABN AMRO BANK N.V.,
Canada Branch (LaSalle) for a three year committed fifteen million dollars
($15,000,000), or its United States dollar equivalent. The new facility
replaced the Companys previous $12 million credit facility with HSBC Bank
Canada.

The new facility contains certain customary covenants. As of December 31,
2002, as a result of a variation from the required minimum adjusted net worth,
interest coverage ratio and debt service ratio, the Company had a technical
violation of the applicable covenants. On March 25, 2003, the Company entered
into a waiver and amendment to its credit agreement with its senior bank lender
to remedy the above mentioned technical violations of minimum adjusted net
worth, interest coverage ratio and debt service ratio covenants contained in
its senior credit facility.

Contemporaneously with the Company entering into the new Revolving Credit
Facility, the Company renegotiated credit terms with a major supplier. That
renegotiation included the conversion of US $2.2 million in outstanding
payables owed by the Company into a senior subordinated promissory note, which
resulted in the Company taking a non-cash charge of $164,000 on loss of
settlement of debt. The senior subordinated promissory note bears interest at
the rate of 12% per annum and is payable in agreed upon monthly installments of
between US $60,000 and US $120,000 over the next two years. In connection with
that renegotiation, the Company also issued to the supplier a warrant to
acquire up to 200,000 Common Shares at an exercise price of $1.64 per share up
to and including May 31, 2007.

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As of November 1, 2002, the Company began consolidating the results of
Allied, as a result of the Companys ability to convert its convertible
debenture into 100% ownership of all issued and outstanding common shares of
Allied for nominal consideration. Allied is currently in negotiations with its
senior bank lender with regards to an extension of its senior bank facility
beyond its current maturity date. If Allied is unable to obtain such an
extension, Cabletel does not intend to exercise its option. This event could
adversely affect the consolidated results of the Company.

The Company does not engage in any hedging activities, including, currency
hedging activities, in connection with purchases of merchandise from the United
States, sales to foreign countries and distribution operation in Israel.

OTHER

The Companys Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in Canada. Any
material impact of the recently issued Statements of the United States
Financial Accounting Standards Board (FASB) which have not been adopted and,
for which a Canadian counterpart has not been issued, are described in a
footnote to the Companys Consolidated Financial Statements at the required
time of adoption of the Statement in the United States.

INFLATION

The Company believes that the relatively moderate rates of inflation in
recent years have not had a significant impact on its net revenues or
profitability. Historically, the Company has been able to offset any
inflationary effects by either increasing or improving cost efficiencies.

RECENT UNITED STATES ACCOUNTING PRONOUNCEMENTS



| | (i) |  | Statement of Financial Accounting Standards
(SFAS) No. 141, SFAS 142, SFAS 143 and SFAS 144.                               
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------
|
| |     |  | In July 2001, the FASB issued SFAS No. 141, Business
Combinations, and SFAS No. 142 Goodwill and Other Intangible
Assets.
|
| |     |  | In August 2001, the FASB issued SFAS No. 143, Accounting for
Asset Retirement Obligations.                                 
|
| |     |  | In October 2001, the FASB issued SFAS No. 144, Accounting for

the Impairment or Disposal of Long-Lived Assets.            

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| |       |  | On January 1, 2002, the Company adopted SFAS No. 141, SFAS No.
142, SFAS No. 143 and SFAS No. 144. The adoption of these
statements did not have a material impact on the Companys
results of operations or financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Statement of Financial Accounting Standards No. 146
(SFAS No. 146)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |       |  | In July 2002, the FASB issued SFAS No. 146, which addresses
significant issues regarding the recognition, measurement, and
reporting of costs that are associated with exit and disposal
activities, including restructuring activities that are
currently accounted for pursuant to the guidance that the
Emerging Issues Task Force (EITF) has set forth in EITF issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(Including Certain Costs Incurred in a Restructuring). SFAS
No. 146 revises the accounting for certain lease termination
costs and employee termination benefits, which are generally
recognized in connection with restructuring activities. The
adoption of this statement is not expected to have a material
effect on the Companys results of operations or financial
condition.
|
| | (iii) |  | Statement of Financial Accounting Standards No. 148 (SFAS No. 148)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |       |  | In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure. SFAS
No. 148 amends the transition and disclosure provisions of SFAS
No. 123. The Company is currently evaluating SFAS No. 148 to
determine if it will adopt SFAS No. 123 to account for Employee
stock options using the fair value method and, if so, when to
begin transition to that method.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (iv)  |  | FASB Interpretation No. 45 (FIN 45)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |       |  | In November 2002, the FASB issued FIN 45, which expands
previously issued accounting guidance and disclosure
requirements for certain guarantees. FIN 45 requires the
Company to recognize an initial liability for the fair value of
an obligation assumed by issuing a guarantee. The provision
for initial recognition and measurement of the liability will
be applied on a prospective basis to guarantees issued or
modified after December 31, 2002. The adoption of FIN 45 is
not expected to materially affect the Companys results of
operations or financial condition.                                                                                                                                                                                                                                                                                             
|
| | (v)   |  | FASB Interpretation No. 46 (FIN 46)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |       |  | In January 2003, FASB issued FIN 46, Consolidation of Variable
Interest Entities which requires the consolidation of variable
interest entities, as defined. FIN 46 is applicable to
financial statements to be issued by the Company after 2002;
however, disclosures are required currently if the Company
expects to consolidate any variable interest entities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

21



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##### 



FORWARD LOOKING STATEMENTS

Certain information and statements contained in this Management Discussion
and Analysis of Financial Condition and Results of Operations and other
sections of this report, including statements using terms such as may,
expect, anticipate, intend, estimate, believe, plan, continue,
could be, or similar variations or the negative thereof, constitute forward
looking statements with respect to the financial condition, results of
operations, and business of Cabletel, including statements that are based on
current expectations, estimates, forecasts, and projections about the markets
in which the Company operates, the margins it expects from its products and its
expectations regarding selling, general and administrative expenses, as well as
managements beliefs and assumptions regarding these markets. Any statements
that are not statements about historical facts also are forward looking
statements. The Private Securities Litigation Reform Act of 1995 (the
Litigation Reform Act) provides a safe harbor for forward looking
statements. These Cautionary Statements are being made pursuant to the
provisions of the Litigation Reform Act and with the intention of obtaining the
benefits of the terms of the safe harbor provisions of the Act. In order to
comply with the terms of the safe harbor, the Company cautions investors that
any forward looking statements made by the Company are not guarantees of future
performance and that a variety of factors could cause the Companys actual
results to differ materially from the anticipated results or other expectations
expressed in the Companys forward looking statements. Several factors that
could cause results or events to differ from current expectations are discussed
below. These factors are not intended to be an all-encompassing list of risks
and uncertainties that may affect the operations, performance, development and
results of the Companys business. In providing forward looking statements,
the Company is not undertaking any obligation to update publicly or otherwise
these statements, whether as a result of new information, future events or
otherwise.

RISK FACTORS

Gross Profit for the Manufacturing Segment Disclosures

Gross profit for the product category disclosures within Managements
Discussion and Analysis of Financial Condition and Results of Operations
section of this report was derived from estimates using standard product
margins and an allocation of manufacturing variances.

Rapid Technological change and voice data convergence

Cabletel expects that data communications traffic will grow substantially
in the future compared to the modest growth expected for voice traffic. The
growth of data traffic is expected to have a significant impact on traditional
voice networks and create market discontinuities that should drive the
convergence of data and telephony. Many of the Companys traditional customers
have already been investing in data networking and that trend is expected to
continue. Due to the evolving nature of the communications industry and the
technologies involved, there can be no assurance as to the rate of such
convergence.

22



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Rapidly changing technologies, evolving industry standards, frequent new
product introductions, and relatively short product life cycles characterize
the markets for Cabletels products. The Companys success is expected to
depend, in substantial part, on the timely and successful introduction of new
products and upgrades of current products to comply with emerging industry
standards and to address competing technological and product developments
achieved by its competitors. The success of new or enhanced products is
dependent on a number of factors including the timely introduction of such
products, market acceptance of new technologies and industry standards, and the
pricing and marketing of such products. An unanticipated change in one or more
of the technologies affecting telecommunications and data networking, or in
market demand for products based on specific technology could have a material
adverse effect on the business, results of operations, and financial condition
of the Company if it fails to respond in a timely and effective manner to such
changes.

Competition

All aspects of Cabletels business are highly competitive. Cabletel
competes for sales with national, regional and local distributors, wholesalers
and manufacturers of products for the cable television industry. Various
manufacturers that supply Cabletel also sell their products to Canadian cable
television operators directly or through commissioned agents. In addition,
because of the convergence of the cable telecommunications and computer
industries and rapid technological development, new competitors may seek to
enter the Canadian cable television distribution market. Many of Cabletels
competitors or potential competitors are substantially larger and have greater
resources than the Company. Increased competition could result in price
reductions, reduced profit margins, and loss of market share, each of which
could have a material adverse effect on the business, results of operations,
and financial condition of the Company.

Cabletels commodity products compete on the basis of price and delivery
time. Cabletels higher technology products, such as transmitters and
receivers, compete on the basis of product and specifications and
functionality, as well as price.

Capital Spending of Key Customers

Changes in spending patterns of Cabletels key customers will have a
direct effect on the results of the Companys operations and financial
condition. In particular, sales to Rogers Cable Systems Limited, East Link
Cablesystems, Persona Communications Inc., Shaw Communications Inc., and COGECO
Cable Inc., Cabletels largest customers which have accounted for approximately
33%, 28%, 4%, 3% and 3%, respectively, of the Companys total sales for the 12
month period ending December 31, 2002, of the Companys total sales. Any
future decision by Rogers Cablesystems Limited or East Link Cablesystems to
reduce purchases could have a material adverse effect on the Companys
business, results of operations, and financial condition.

23



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##### 



International Growth, Foreign Exchange, and Interest Rates

Cabletel is exposed to various market risks, including interest rates and
foreign currency rates. Changes in these rates may adversely affect its
results of operations and financial condition. To manage the volatility
relating to these typical business exposures, Cabletel may enter into various
derivative transactions, when appropriate. Cabletel does not hold or issue
derivative instruments for trading or other speculative purposes. As at
December 31, 2002, the Company had no material contracts denominated in foreign
currencies.

The Company is exposed to foreign currency exchange rate risk as a result
of sales of its products in various foreign countries and manufacturing
operations conducted is Israel. In addition, the Companys Distribution
segment imports approximately 80% of its products from the United States for
resale in Canada. In order to minimize the risks associated with foreign
currency fluctuations, most sales contracts are issued in either Canadian or
U.S. dollars. The Company constantly monitors the exchange rate between the
U.S. dollar, the Canadian dollar and the New Israel shekel to determine if any
adverse exposure exists relative to its costs of manufacturing. The Company
does not maintain New Israel shekel denominated currency. Instead, U.S.
dollars are exchanged for shekels at the time of payments.

Cabletel intends to continue to pursue growth opportunities in
international markets. In many international markets, long-standing
relationships, including local content requirements and type approvals, create
barriers to entry. In addition, pursuit of such international growth
opportunities may require significant investments for an extended period before
returns on such investments, if any, are realized. Such projects and
investments could be adversely affected by reversals or delays in opening of
foreign markets to new competitors, exchange controls, currency fluctuations,
investment policies, repatriation of cash, naturalization, social and political
risks, taxation and other factors, depending on the country in which such
opportunities arise. Difficulties in foreign financial markets and economies,
and of foreign financial institutions, could adversely affect demand from
customers in the affected countries.

In order to grow internationally, it is expected that the Company will be
required to provide significant amounts of customer financing in connection
with the sale of products and services.

General Industry and Market Conditions and Growth Rates

Cabletels future operating results may be affected by various trends and
factors that must be managed in order to achieve desired operating results. In
addition, there are trends and factors beyond the Companys control, which
affect its operations. Such trends and factors include general domestic or
global economic conditions as well as competitive, technological, and
regulatory developments and trends specific to the Companys industry,
customers and markets. These conditions and events could be substantially
different than believed or expected and these differences may cause actual
results to vary materially from the forward looking statements made or the
results which could be expected to accompany such statements.

24



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##### 



Cabletel competes in a highly volatile and rapidly growing industry that
is characterized by vigorous competition for market share and rapid
technological development carried out amidst uncertainty over adoption of
industry standards and protection of intellectual property rights. These
factors could result in aggressive pricing practices and growing competition
both from start-up companies and from well-capitalized communication companies.

Consolidations in the Telecommunications Industry

The telecommunications industry has experienced the consolidation of many
industry participants and this trend is expected to continue. Cabletel and one
or more of its competitors may each supply products to the corporations that
have merged or will merge. This consolidation could result in delays in
purchasing decisions by the merged corporations with the Company playing a
greater or lesser role in supplying the communications products to the merged
entity. These purchasing decisions of the merged companies could have a
material adverse effect on the Companys business, results of operations, and
financial condition.

Mergers among the supplier base have recently increased and this trend is
also expected to continue. The larger combined companies with pooled capital
resources may be able to provide solution alternatives with which the Company
would be put at a disadvantage to compete. The larger breadth of product
offerings these consolidated suppliers could provide could result in customers
electing to trim their supplier base for the advantages of one-stop shopping
solutions for all their product needs. These consolidated supplier companies
could have a material adverse effect on the Companys business, results of
operations, and financial conditions. Current and future strategic alliances
and acquisitions will play a strong role in the Companys ability to compete
within this changing landscape.



|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
|-------- |  | -------------------------------------------------------

The following discussion of the Companys risk-management activities
includes forward looking statements that involve risks and uncertainties.
Actual results could differ materially from those projected in the forward
looking statements.

Cabletel is exposed to various market risks, including interest rates and
foreign currency rates. Changes in these rates may adversely affect its
results of operations and financial condition. To manage the volatility
relating to these typical business exposures, Cabletel may enter into various
derivative transactions, when appropriate. Cabletel does not hold or issue
derivative instruments for trading or other speculative purposes. As of
December 31, 2002, the Company had no material contracts denominated in foreign
currencies.

The Company is exposed to foreign currency exchange rate risk as a result
of sales of its products in various foreign countries and manufacturing
operations conducted in Israel. In order

25



---



##### 



to minimize the risks associated with foreign currency fluctuations, most sales
contracts are issued in either Canadian or U.S. dollars. The Company
constantly monitors the exchange rate between the U.S. dollar, the Canadian
dollar and the New Israel shekel to determine if any adverse exposure exists
relative to its costs of manufacturing. The Company does not maintain New
Israel shekel denominated currency. Instead, U.S. dollars are exchanged for
shekels at the time of payments.



|ITEM 8. |  | FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
|------- |  | ------------------------------------------

The Financial Statements of the Company for the three year period ended
December 31, 2002 are hereby incorporated by reference.



|ITEM 9. |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|------- |  | ------------------------------------------------------------------------------------

None.

26



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##### 



PART III



|ITEM 10. |  | DIRECTORS AND OFFICERS OF THE REGISTRANT
|-------- |  | ----------------------------------------

The following table sets forth the name and municipality of residence, the
age, the position held with Cabletel and the principal occupation of each of
the directors and executive officers of Cabletel:

|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|-------------------------------- |  | --- | -- | ---------------------- |  | ------------------------- |  | -------------------------- |  | ---------------------------- |  | 
|Name & Municipality of Residence |  | Age |    | Position with Cabletel |  | Principal Occupation     
|                                 |  |     |    |                        |  |                          
|DAVID R. PETERSON(1)(2)          |  |     | 59 |                        |  | Chairman of the Board     |  | Chairman of Cassels,      
|Toronto, Ontario                 |  |     |    |                        |  | and Director              |  | Brock and Blackwell LLP   
|                                 |  |     |    |                        |  |                           |  | (a legal firm)            
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|GREGORY WALLING                  |  |     | 41 |                        |  | Chief Executive Officer,  |  | Executive Officer of      
|Lindsay, Ontario                 |  |     |    |                        |  | President and Director    |  | Cabletel                  
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|RON EILATH                       |  |     | 47 |                        |  | Chief Financial Officer   |  | Executive Officer of      
|Thornhill, Ontario               |  |     |    |                        |  | and Secretary Treasurer   |  | Cabletel                  
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|WILLIAM
J. BIGGAR(1)             |  |     | 50 |                        |  | Director and Audit        |  | Executive Vice-President, 
|Toronto, Ontario                 |  |     |    |                        |  | Committee Chairman        |  | Magna International Inc.  
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|JAMES L. FAUST(2)                |  |     | 61 |                        |  | Director                  |  | Chief Executive Officer of
|Rolling Meadows, Illinois        |  |     |    |                        |  |                           |  |                            |  | Clearband LLC, and          
|                                 |  |     |    |                        |  |                           |  |                            |  | Director of ARRIS Corp.     
|                                 |  |     |    |                        |  |                           |  |                            |  | (formerly ANTEC Corporation)
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|LAWRENCE A. MARGOLIS(1)          |  |     | 55 |                        |  | Director                  |  | Executive Vice President, 
|Golf, Illinois                   |  |     |    |                        |  |                           |  |                            |  | Chief Financial Officer of  
|                                 |  |     |    |                        |  |                           |  |                            |  | ARRIS Corp. (formerly       
|                                 |  |     |    |                        |  |                           |  |                            |  | ANTEC Corporation)          
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|LEN COCHRANE(2)                  |  |     | 56 |                        |  | Director and Compensation |  | President of Teletoon     
|Mississauga, Ontario             |  |     |    |                        |  | Committee Chairman        |  | Canada Inc.               
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|DAVE NOLAN                       |  |     | 42 |                        |  | Vice President, Sales     |  | Executive Officer of      
|Markham, Ontario                 |  |     |    |                        |  | and Marketing             |  | Cabletel                  
|                                 |  |     |    |                        |  |                           |  |                            |  |                              |  | 
|BRUCE DOWNIE                     |  |     | 47 |                        |  | Vice President,           |  | Executive Officer of      
|Markham, Ontario                 |  |     |    |                        |  | Operations                |  | Cabletel                  



---

|(1) |  | Member of the audit committee.       
|--- |  | -------------------------------------
|   
|(2) |  | Member of the compensation committee.

Each of the foregoing directors and executive officers of Cabletel has
been engaged in the current occupations shown opposite their respective names
for the last five years or as stated below.

27



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##### 



Mr. Peterson was elected as a director of Cabletel on August 11, 2000 and
subsequently appointed Chairman of the Board on December 12, 2000. Mr.
Peterson was formerly Premier of Ontario, and is presently Chairman of Cassels
Brock & Blackwell LLP, one of Canadas leading legal firms, as well as Chairman
of Cassels Pouliot Noriega, an international affiliate of Toronto, Montreal and
Mexico City law firms. Mr. Peterson is also a member of the boards of Rogers
Communications Inc., Rogers AT&T Wireless, National Life Assurance Co.,
Industrial-Alliance Life Assurance Company, BNP Paribas (Canada), SMK Speedy
International Inc., Inscape, Vector Aerospace Corporation, Ivanhoe Cambridge,
and Tesma International Inc. Prior to serving in the legislature, Mr. Peterson
was President and Chief Executive Officer of C.M. Peterson, a national
distributor of electronic products.

Mr. Biggar became a director of Cabletel on June 27, 2001 and is currently
Executive Vice-President with Magna International Inc. From August 1999 to
March 2001 Mr. Biggar was Executive Vice-President and Chief Financial Officer
for Cambridge Shopping Centres Ltd., and from April 1996 to January 1999 was
Senior Vice-President, Investments, of Barrick Gold Corporation. Mr. Biggar
is also a member of the board of Manitou Capital Corporation.

Mr. Margolis became a director in August of 1996 in connection with the
ANTEC Canadian Business Acquisition. From 1986-1992, Mr. Margolis was Vice
President, General Counsel and Secretary of Anixter.

Mr. Faust became a director in August of 1996 in connection with the ANTEC
Canadian Business Acquisition. From 1989-1994, Mr. Faust held various
executive positions with General Instrument Corporation and is also a director
of Arris Corporation, Evolve Communications and Optimal Systems.

Mr. Cochrane became a director in August of 1999 and is currently the
President of Teletoon Inc. He has held this position since October 2001. From
November 1990 to September 2001 he was the President and Chief Operating
Officer of Family Channel Inc.

Mr. Walling was appointed Chief Executive Officer and President of
Cabletel in October 1998. Prior to 1998, Mr. Walling served as President of
Star Choice Television Network Inc. (1995-1998). From 1992 to 1998, he was
President of Walling Corporation. See Item 11. Executive Compensation. 
Compensation of Executives  Employment Contract.

Mr. Eilath who serves as an executive officer of Cabletel has been
employed by the Company as Vice President, Finance from July 1997 to June 2000
and subsequent to June 2000 as Chief Financial Officer and Secretary
Treasurer.
From 1995 to 1997, Mr. Eilath served as Vice President, Finance of the Mariposa
Group. Prior to 1995, he was Executive Vice President, Finance with the
Greenwin Group of Companies. See Item 11. Executive
Compensation  Compensation of Executives  Employment Contract.

28



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##### 



Mr. Nolan was appointed an executive officer of Cabletel on March 7, 2000
and is employed by Cabletel as Vice President, Sales and Marketing. Prior to
joining the Company, Mr. Nolan served as Vice President with ANTEC Corporation,
a developer, manufacturer and supplier of optical and radio frequency
transmission equipment for the construction, rebuilding and maintenance of
broadband communications systems. See Item 11. Executive
Compensation 
Compensation of Executives  Employment Contract.

Mr. Downie was appointed as an executive officer of Cabletel in February
2001 and is employed by Cabletel as Vice President, Operations. Prior to
February 2001, Mr. Downie served as Director of Operations for Cabletel.

Each member of the board of directors of Cabletel will serve until the
next annual meeting of shareholders or until his successor is duly elected.
Officers are appointed to serve, at the discretion of the board of directors of
Cabletel, until their successors are appointed. See Item 11. Executive
Compensation.  Compensation of Executives  Employment Contract.



|ITEM 11. |  | EXECUTIVE COMPENSATION
|-------- |  | ----------------------

COMPENSATION OF EXECUTIVES

The following table sets forth compensation to be paid or awarded to Mr.
Walling, who was appointed Chief Executive Officer in 1998, and Messrs.
Eilath, and Nolan the only executive officers of Cabletel whose total salary
and bonus for the fiscal year ended December 31, 2002 exceeded U.S. $100,000.
The following table is stated in Canadian dollars.

Summary Compensation Table
For Year Ended December 31, 2002

|                      |  |                     |      |                        |  |       |         |                 |  |         |        |              |  |        |         |            |  |       |         |  |  |   |         |    
|--------------------- |  | ------------------- | ---- | ---------------------- |  | ----- | ------- | --------------- |  | ------- | ------ | ------------ |  | ------ | ------- | ---------- |  | ----- | ------- |  |  | - | ------- | ---
|                      |  | Annual Compensation |      | Long-Term Compensation
|                      |  |                     |      |                       
|                      |  |                     |      |                        |  |       |         |                 |  |         |        |              |  | Other  |         | Securities |  | All  
|                      |  |                     |      |                        |  |       |         |                 |  |         |        |              |  | Annual |         | Underlying |  | Other
|                      |  | Year                |      | Salary                 |  | Bonus |         | Compensation(1) |  | Options |        | Compensation
|                      |  |                     |      |                        |  |       |         |                 |  |         |        |             
|GREGORY WALLING(5)(6) |  |                     | 2002 |                        |  | $     | 222,800 | (4)             |  |         |       |              |  | $      | 7,511   | (2)        |  |       | 115,000 |  |  | $ | 460,000 | (5)
|President and Chief   |  |                     | 2001 |                        |  |       | 222,800 |                 |  |         | 45,000 |              |  |        | 15,827  |            |  |       |        |  |  |   |         |    
|Executive Officer     |  |                     | 2000 |                        |  |       | 222,800 |                 |  |         |       |              |  |        | 155,354 | (6)        |  |       | 150,000 |  |  |   |         |    
|                      |  |                     |      |                        |  |       |         |                 |  |         |        |              |  |        |         |            |  |       |         |  |  |   |         |    
|RON EILATH(5)(6)      |  |                     | 2002 |                        |  | $     | 140,000 |                 |  | $       | 40,825 |              |  | $      | 20,657  | (2)        |  |       | 60,000  |  |  | $ | 360,000 | (5)
|Chief Financial       |  |                     | 2001 |                        |  |       | 140,000 |                 |  |         | 20,000 |              |  |        | 25,567  |            |  |       |        |  |  |   |         |    
|Officer, Secretary,   |  |                     | 2000 |                        |  |       | 140,000 |                 |  |         | 50,000 |              |  |        | 114,622 | (6)        |  |       | 75,000  |  |  |   |         |    
|and Treasurer         |  |                     |      |                        |  |       |         |                 |  |         |        |              |  |        |         |            |  |       |         |  |  |   |         |    
|                      |  |                     |      |                        |  |       |         |                 |  |         |        |              |  |        |         |            |  |       |         |  |  |   |         |    
|DAVE NOLAN(3)         |  |                     | 2002 |                        |  | $     | 125,000 |                 |  | $       | 45,625 |              |  | $      | 17,400  | (2)        |  |       | 40,000  |  |  |   |        |    
|Vice-President,       |  |                     | 2001 |                        |  |       | 125,000 |                 |  |         | 45,000 |              |  |        | 17,466  |            |  |       |        |  |  |   |         |    
|Sales and Marketing   |  |                     | 2000 |                        |  |       | 117,308 |                 |  |         | 45,000 |              |  |        | 15,796  |            |  |       |        |  |  |   |         |    



---

|(1) |  | Except as set out in the Summary Compensation Table, the aggregate value
of all other compensation paid to each named executive did not exceed
$50,000 or 10% of the total of the annual salary and bonus of the named
executive for the financial year.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents car allowance and other taxable benefits.                                                                                                                                                                                                    

29



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##### 



|(3) |  | Includes commissions.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | Mr. Wallings compensation included $55,800 in 2002, ($55,800 in 2001;
$55,800 in 2000) paid to the Sullivan Group, an entity controlled by Mr.
Walling.                                                                                                                                                                                                                                                                                                      
|   
|(5) |  | Other compensation is the amount that would be due pursuant to a change
in control in the company. See Item II  Executive
Compensation 
Employee Contracts.                                                                                                                                                                                                                                                                                               
|   
|(6) |  | On December 12, 2000, the Companys Board of Directors approved two
executive loan agreements providing for loans to (i) Gregory Walling,
President and Chief Executive Officer of the Company, in the amount of
$150,000 and (ii) Ron Eilath, Chief Financial Officer and Secretary
Treasurer of the Company, in the amount of $100,000. The loans mature on
December 31, 2003 and are unsecured and interest-free. The loans were
used for personal matters.

Options Granted in 2002 to Executive Officers

|                |  |         |         |              |  |               |    |                 |  |       |      |           |  |                |  |   |         |  |  |   |         |  |  | 
|--------------- |  | ------- | ------- | ------------ |  | ------------- | -- | --------------- |  | ----- | ---- | --------- |  | -------------- |  | - | ------- |  |  | - | ------- |  |  | 
|                |  |         |         |              |  | % of          |    |                 |  |       |      |           |  |                |  |   |         |  |  |   |         | 
|                |  |         |         |              |  | Total Options |    |                 |  |       |      |           |  |                |  |   |         |  |  |   |         | 
|                |  |         |         |              |  | Granted to    |    | Cdn.$           |  |       |      |           |  |                |  |   |         |  |  |  
|                |  | Options |         | Employees in |  | Exercise or   |    |                 |  |       |      |           |  |                |  |   |         | 
|Name            |  | Granted |         | Fiscal Year  |  | Base Price    |    | Expiration Date |  | 5%($) |      | 10%($)(1)
|                |  |         |         |              |  |               |    |                 |  |       |      |          
|Gregory Walling |  |         | 115,000 |              |  |               | 27 | %               |  | $     | 2.10 |           |  | March 21, 2012 |  | $ | 151,800 |  |  | $ | 385,250 | 
|Ron Eilath      |  |         | 60,000  |              |  |               | 14 | %               |  | $     | 2.10 |           |  | March 21, 2012 |  | $ | 79,200  |  |  | $ | 201,000 | 
|Dave Nolan      |  |         | 40,000  |              |  |               | 9  | %               |  | $     | 2.10 |           |  | March 21, 2012 |  | $ | 52,800  |  |  | $ | 134,000 | 
|Bruce Downie    |  |         | 25,000  |              |  |               | 6  | %               |  | $     | 2.10 |           |  | March 21, 2012 |  | $ | 33,000  |  |  | $ | 83,750  | 

There were no option grants to Executive Officers of the Company in 2001.



---

|(1) |  | Amounts shown represent hypothetical future values which may be realized at
the end of the respective option term based upon hypothetical price
appreciation of the Common Shares. Actual values which may be realized, if
any, upon any exercise of such options, will be based on the market price of
the Common Shares at the time of any such exercise and are thus dependent upon
the future performance of the Common Shares of the Company.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Aggregated Option Exercises During the
Year Ended December 31, 2002 and December 31, 2002 Option Values

CABLETEL

|                            |  |             |   |          |  |                   |   |                      |  |              |         |             |  |          |        | 
|--------------------------- |  | ----------- | - | -------- |  | ----------------- | - | -------------------- |  | ------------ | ------- | ----------- |  | -------- | ------ | 
|                            |  |             |   |          |  |                   |   |                      |  |              |         |             |  | Value of
|                            |  |             |   |          |  |                   |   |                      |  | Number of    |         | Unexercised
|                            |  | Shares      |   |          |  |                   |   | Unexercised          |  | In-the-Money
|                            |  | Acquired on |   | Value(2) |  | Options as at     |   | Options as at       
|Name and Principal Position |  | Exercise    |   | Realized |  | December 31, 2002 |   | December 31, 2002(1)
|                            |  |             |   |          |  |                   |   |                     
|Gregory Walling             |  |             |  |          |  |                   |  |                      |  |              | 345,000 |             |  | $        | 16,565 | 
|Ron Eilath                  |  |             |  |          |  |                   |  |                      |  |              | 202,500 |             |  | $        | 12,424 | 
|Bruce Downie                |  |             |  |          |  |                   |  |                      |  |              | 63,000  |             |  | $        | 1,656  | 
|Dave Nolan                  |  |             |  |          |  |                   |  |                      |  |              | 83,000  |             |  |          |       | 

30



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##### 





---

|(1) |  | Represents the difference between the exercise price of the option and the
market price of the Common Shares of Cabletel as of December 31, 2002. Such
amounts may not be realized. Actual values which may be realized, if any, upon
any exercise of such option will be based on the market price of the Common
Shares of Cabletel at the time of any such exercise and are thus dependent upon
the future performance of the Common Shares of Cabletel.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents the difference between the exercise price of the option and the
market price of the Common Shares of Cabletel acquired upon the exercise price
of option as at the date of the exercise.                                                                                                                                                                                                                                                       

EMPLOYMENT CONTRACTS

On December 20, 1999, the Company entered into an employment contract with
Mr. Walling. The agreement provides for total compensation of $215,000 which
includes $167,000 in salary and $48,000 payable to The Sullivan Group, an
entity controlled by Mr. Walling which provides office administrative and other
services to the Company. The agreement with Mr. Walling and The Sullivan Group
contains change in control provisions requiring two year payments in the event
of a change of control or eighteen months payments if the contract is
terminated at anytime without cause.

On December 20, 1999, the Company entered into an employment contract with
Mr. Eilath. The agreement provides for total compensation of $140,000 and a
minimum bonus of $25,000. The agreement with Mr. Eilath contains change in
control provisions requiring two year payments to Mr. Eilath in the event of a
change of control or eighteen months payments if the contract is terminated at
anytime without cause.

EXECUTIVE PROFIT SHARING PLAN

On May 19, 1994, Cabletel adopted an executive profit sharing plan
pursuant to which executive officers who are full-time employees of Cabletel
are entitled to receive bonuses equal to the aggregate of 2.5% of the Companys
pre-tax profits in each fiscal year. The bonus to be paid to each
participating executive officer will be determined by the Compensation
Committee.

STOCK OPTION PLAN

On May 19, 1994, Cabletel adopted a stock option plan (the Option Plan)
pursuant to which it may grant to full-time employees, senior officers and
directors of Cabletel and its subsidiaries non-assignable options (Options)
to purchase Common Shares. The purpose of the Option Plan is to secure for
Cabletel and its shareholders the benefits of incentives inherent in share
ownership by key employees and directors.

The Option Plan is administered by the Compensation Committee which is
authorized to select the optionees to whom Options are granted in its sole
discretion, and to determine the number of Common Shares subject to each
Option, the timing of each grant of an Option, the

31



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##### 



exercise price of such Option, the duration of each Option (which will not
exceed 10 years) and any other matters relating thereto. Any Option granted
under the Option Plan is non-transferable and no person may be issued Options,
which in the aggregate represent 5% or more of the issued and outstanding
Common Shares. The exercise price of an Option granted under the Option Plan
may not be lower than the market price of the Common Shares at the time of
grant. Originally, not more than 950,000 Common Shares were issuable pursuant
to the Option Plan. However, on November 4, 1999, the Board of Directors of
the Company passed a resolution to amend the Stock Option Plan to increase the
number of Common Shares to be available under the plan by 1,000,000 Common
Shares for a total of 1,950,000. This increase was subsequently approved by
Shareholders at the Companys annual general meeting of Shareholders held on
June 28, 2000. If the holder of an Option ceases to be a full-time employee of
Cabletel or any of its subsidiaries, the Option will terminate upon the earlier
of thirty days following the day upon which the holder ceased to be a full-time
employee and the original expiration date of the Option unless the holder
ceased to be a full-time employee by reason of retirement at the normal
retirement age, death or permanent disability. The Option will terminate upon
the earlier of one year following the date of retirement, death or permanent
disability and the original expiration date of the Option.

On August 5, 1999, Cabletel amended its Option Plan to provide that if the
holder of an Option ceases to be a senior officer or director of Cabletel or
any of its subsidiaries, the Option will terminate upon the earlier of one year
following the day upon which the holder ceased to be a senior officer or
director and the original expiration date of the Option.

On March 22, 2002 the Board of Directors approved a reconstitution of the
Option Plan so that an appropriate number of options would be available to be
granted to provide a meaningful incentive to the employees, officers, directors
and consultants to the Company. As a result, an aggregate of 1,950,000 Common
Shares (representing 27% of the number of issued and outstanding Common Shares)
are reversed for issuance under the reconstituted Option Plan. As at December
31, 2002, 1,444,000 Options have been granted pursuant to the reconstituted
Option Plan and 506,000 Options remain available for grant.

Pursuant to the reconstituted Option Plan, 627,500 Common Shares
previously issued in connection with exercised options were reconstituted and
reserved for issuance.

32



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##### 



The following table provides certain information with respect to all of
the Companys equity compensation plans in effect as of December 31, 2002.

|                                                           |  |                      |           |                      |  |                      |      |              |  |                      |         | 
|---------------------------------------------------------- |  | -------------------- | --------- | -------------------- |  | -------------------- | ---- | ------------ |  | -------------------- | ------- | 
|                                                           |  | (A)                  |           | (B)                  |  | (C)                 
|                                                           |  |                      |           |                      |  |                     
|                                                           |  |                      |           |                      |  |                      |      |              |  | Number of           
|                                                           |  |                      |           |                      |  |                      |      |              |  | securities remaining
|                                                           |  |                      |           |                      |  |                      |      |              |  | available for       
|                                                           |  |                      |           |                      |  |                      |      |              |  | future issuance     
|                                                           |  | Number of securities |           |                      |  |                      |      | under equity
|                                                           |  | to be issued upon    |           | Weighted-average     |  | compensation plans  
|                                                           |  | exercise of          |           | exercise price of    |  | (excluding          
|                                                           |  | outstanding options, |           | outstanding options, |  | securities reflected
|Plan Category                                              |  | warrants and rights  |           | warrants and rights  |  | in column (A)       
|                                                           |  |                      |           |                      |  |                     
|Equity compensation
plans approved by
security holders     |  |                      | 1,444,000 |                      |  | $                    | 3.88 |              |  |                      | 506,000 | 
|Equity compensation
plans not approved
by security holders |  |                      |          |                      |  |                      |     |              |  |                      |        | 
|                                                           |  |                      |           |                      |  |                      |      |              |  |                      |         | 
|Total                                                      |  |                      | 1,444,000 |                      |  | $                    | 3.88 |              |  |                      | 506,000 | 
|                                                           |  |                      |           |                      |  |                      |      |              |  |                      |         | 

COMPENSATION OF DIRECTORS

Directors of Cabletel (other than those who are officers of Cabletel)
receive $1,000 for each meeting of the board of directors or any committee
thereof which they attend in person or $500 if they participated by
teleconference. In addition, the Chairman of the Company receives an annual
retainer in the amount of $25,000. Each director receives an annual retainer
of $15,000 and each director who acts as a board committee chairperson receives
an additional $2,500. Each of the directors who are not officers of the
Company receive options to purchase 30,000 Common Shares at an exercise price
equal to the market close on the date granted. In addition, board committee
chairpersons receive additional options to purchased 5,000 Common Shares at an
exercise price equal to the market close on the date granted. These options,
which vest as to 1/3 on each anniversary after their issue date, expire ten
years from the date of issue.

In respect of the fiscal year ended December 31, 2002, directors who are
not also officers of the Company received an aggregate of $132,500.

33



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##### 



THE COMPENSATION COMMITTEE

The Company has a compensation committee which is responsible for annually
reviewing and recommending to the Board of Directors the compensation to be
paid to the executive officers of the Company. These recommendations regarding
base salary, cash bonuses and the granting of options are determined in the
sole discretion of the compensation committee. The factors that the committee
considers may vary from year to year; however, the committee has considered
factors such as the profitability of the Company, the performance of individual
executive officers and the general economic climate in which the Company
operates. The compensation committee is comprised of three members of the
Board of Directors; namely, The Honourable David R. Peterson, James Faust and
Len Cochrane who acts as the Chairman of the Compensation Committee.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Set forth below is information relating to the beneficial ownership within
the meaning of Rule 13(d)(3) under the Act of Common Shares by all persons
known by Cabletel to beneficially own more than 5% of the issued and
outstanding Common Shares of Cabletel as at March 17, 2003.

|               |  |                                          |  |              |           |                  |  |  |       |   |  | 
|-------------- |  | ---------------------------------------- |  | ------------ | --------- | ---------------- |  |  | ----- | - |  | 
|Title of Class |  | Identity of Person or Group              |  | Amount Owned |           | Percent of Class
|               |  |                                          |  |              |           |                 
|Common Shares  |  | GMAC Commercial
Credit LLC(1)            |  |              | 3,340,112 |                  |  |  | 46.60 | %
|Common Shares  |  | ARRIS Corp. (formerly ANTEC Corporation) |  |              | 1,450,000 |                  |  |  | 20.23 | %



---

|(1) |  | In May 2000, ARC International Corporation (ARC), was placed into
the hands of a receiver in Ontario, Canada and ceased operating as a
going-concern. The Company has been advised that all of ARCs assets
would be liquidated and sold. The Company understands and has been
advised that ARCs senior lender in the United States, GMAC Commercial
Credit LLC (GMAC), which had a security interest in the Common Shares
of the Company held by ARC (the ARC Shares), has realized on its
security interest and taken possession of the ARC Shares. To date, GMAC
has not advised the Company regarding its plans, if any, with respect to
the ARC Shares.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Set forth below is information relating to the beneficial ownership of Common
Shares by all executive officers and directors of the Company as at March 17,
2003. The Common Shares shown as beneficially owned include all securities,
which pursuant to Rule 13(d)(3) under the United States Securities and Exchange
Act of 1934, as amended may be deemed to be beneficially owned. The address of
each person is c/o Cabletel Communications Corp., 230 Travail Rd., Markham,
Ontario, Canada, L3S 3J1.

34



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##### 



|                                      |  |                         |         |                  |  |  |       |  
|------------------------------------- |  | ----------------------- | ------- | ---------------- |  |  | ----- | -
|                                      |  | Amount and Nature of    |         |                  |  | 
|Name of Beneficial Owner              |  | Beneficial Ownership(1) |         | Percent of Class
|                                      |  |                         |         |                 
|GREGORY WALLING                       |  |                         | 366,800 | (2)              |  |  | 4.54  | %
|RON EILATH                            |  |                         | 202,500 | (3)              |  |  | 2.51  | %
|LEN COCHRANE                          |  |                         | 76,000  | (4)              |  |  | 0.94  | %
|DAVE NOLAN                            |  |                         | 83,000  | (5)              |  |  | 1.03  | %
|BRUCE DOWNIE                          |  |                         | 63,000  | (6)              |  |  | 0.78  | %
|DAVID R. PETERSON                     |  |                         | 62,000  | (7)              |  |  | 0.77  | %
|WILLIAM J. BIGGAR                     |  |                         | 45,000  | (8)              |  |  | 0.56  | %
|JAMES L. FAUST                        |  |                         | 49,000  | (8)              |  |  | 0.61  | %
|LAWRENCE A. MARGOLIS                  |  |                         | 40,000  | (9)              |  |  | 0.50  | %
|                                      |  |                         |         |                  |  |  |       |  
|All Directors and Officers as a group |  |                         | 987,300 |                  |  |  | 12.24 | %
|                                      |  |                         |         |                  |  |  |       |  



---

|(1) |  | Includes options as listed in Stock Option Plan heading.
|--- |  | --------------------------------------------------------
|   
|(2) |  | Includes options to purchase 345,000 common shares.     
|   
|(3) |  | Includes options to purchase 202,500 common shares.     
|   
|(4) |  | Includes options to purchase 75,000 common shares.      
|   
|(5) |  | Includes options to purchase 83,000 common shares.      
|   
|(6) |  | Includes options to purchase 63,000 common shares.      
|   
|(7) |  | Includes options to purchase 60,000 common shares.      
|   
|(8) |  | Includes options to purchase 45,000 common shares.      
|   
|(9) |  | Includes options to purchase 40,000 common shares.      

As at March 17, 2003, the directors and executive officers of Cabletel as
a group beneficially owned 987,300 Common Shares, representing approximately
12.24% of all Common Shares outstanding.

35



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##### 





|ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- |  | ----------------------------------------------

COUNSEL

In March 2002, the Company appointed Cassels Brock & Blackwell LLP as its
Corporate Counsel, a firm of which Cabletels Chairman is also a Senior Partner
and Chairman. For the year ended December 31, 2002, the Company paid to
Cassels, Brock & Blackwell LLP an amount of $60,172 for services provided to
the Company.

EXECUTIVE LOAN AGREEMENTS

On December 12, 2000, the Companys Board of Directors approved two
executive loan agreements (i) to the President of the Company in the amount of
$150,000 and (ii) to the Chief Financial Officer of the Company in the amount
of $100,000. The loans mature on December 19, 2003 and are unsecured and
interest-free. The loans were used for personal matters.

Since December 19, 2000, the following directors and officers of the
Company have been indebted to the Company in the respective amounts set out
opposite their names below. In each case, the indebtedness was incurred in
connection with the loans made to such directors and officers under the
executive loan agreements.

|                                                                |  |                         |         |                |  |                   |         | 
|--------------------------------------------------------------- |  | ----------------------- | ------- | -------------- |  | ----------------- | ------- | 
|                                                                |  |                         |         |                |  | Amount of Loans  
|                                                                |  |                         |         |                |  | Outstanding as at
|Largest Aggregate Amount of Loans Outstanding Executive Officer |  | Since December 31, 2002 |         | March 17, 2003
|                                                                |  |                         |         |               
|Gregory Walling                                                 |  | $                       | 150,000 |                |  | $                 | 150,000 | 
|Ron Eilath                                                      |  | $                       | 100,000 |                |  | $                 | 100,000 | 

36



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##### 



PART IV



|ITEM 14. |  | CONTROLS AND PROCEDURES
|-------- |  | -----------------------

The
Companys Chief Executive Officer and Chief Financial Officer
(collectively, the Certifying Officers) are responsible for establishing and
maintaining disclosure controls and procedures for establishing and maintaining
disclosure controls and procedures for the Company. Such officers have
concluded (based upon their evaluation of these controls and procedures as of a
date within 90 days of filing of this report) that the Companys disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in this report is accumulated and communicated to the
Companys management, including its Certifying Officers as appropriate, to
allow timely decisions regarding required disclosure. The Certifying Officers
also have indicated that there were no significant changes in the Companys
internal controls or other factors that could significantly affect such
controls subsequent to the date of their evaluation, and there were no
corrective actions with regard to significant deficiencies and material
weakness.



|ITEM 15. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
|-------- |  | ----------------------------------------------------------------

|    |                                   |                                                                                                                                  |  |     
|--- | --------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- |  | ----
|    |                                   |                                                                                                                                  |  | Page
|    |                                   |                                                                                                                                  |  |     
|(a) | FINANCIAL STATEMENTS AND EXHIBITS |                                                                                                                                  | 
|    |                                   |                                                                                                                                  |  |     
|    | (1)                               | Consolidated Financial Statements                                                                                                |  | 43  
|    |                                   |                                                                                                                                  |  |     
|    |                                   | Auditors Report of Kraft, Berger, Grill, Schwartz, Cohen & March LLP                                                            |  | 44  
|    |                                   |                                                                                                                                  |  |     
|    |                                   | Balance Sheets  December 31, 2002 and December 31, 2001                                                                         |  | 45  
|    |                                   |                                                                                                                                  |  |     
|    |                                   | Statements of Operations and Deficit  Years Ended December 31,
2002, December 31, 2001 and December 31, 2000                    |  | 46  
|    |                                   |                                                                                                                                  |  |     
|    |                                   | Statements of Cash Flows  Years Ended December 31, 2002,
December 31, 2001 and December 31, 2000                                |  | 47  
|    |                                   |                                                                                                                                  |  |     
|    |                                   | Notes to Financial Statements                                                                                                    |  | 48  
|    |                                   |                                                                                                                                  |  |     
|    | (2)                               | Financial Statement Schedules                                                                                                    |  | 75  
|    |                                   |                                                                                                                                  |  |     
|    |                                   | Schedule II  Valuation and Qualifying Accounts  For the years ended
December 31, 2002, December 31, 2001 and December 31, 2000 |  | 75  
|    |                                   |                                                                                                                                  |  |     
|    | (3)                               | Exhibits: See exhibit following Reports on Form 8-K.                                                                             |  |     

37



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##### 





|(b) |  | REPORTS ON FORM 8-K
|--- |  | -------------------



|
|
|



| | EXHIBIT INDEX |  | 
| | ------------- |  | 



|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|

38



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| |       |  | whereby Cabletel will acquire the privately-owned Allied Group of
Companies. Included with that 8-K filing was the Share Purchase
Agreement.                                                                                                                                                                                                                                        
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.18 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
August 6, 2001 and incorporated herein by reference. Under ITEM 5 of
that 8-K the Company announced that it had entered into an Amended
Credit Facility Agreement with its main lender. Included with that
8-K filing was the Amended Credit Facility Agreement.                                                     
|
| | 10.19 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
September 10, 2001 and incorporated herein by reference. Under ITEM 5
of that 8-K the Company announced that it will immediately be further
reducing corporate expenses in response to continuing third quarter
softness in Canadian cable sector spending.                                                          
|
| | 10.20 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
October 11, 2001 and incorporated herein by reference. Under ITEM 5
of that 8-K the Company announced that it had entered into a
forbearance agreement with its main bank lender that will permit
Cabletel to actively pursue, in an orderly fashion, various options to
provide the Company with improved liquidity.
|
| | 10.21 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
February 4, 2002 and incorporated herein by reference. Under ITEM 5
of that 8-K the Company announced that its primary bank lender had
agreed to extend the expiration of the term of the Companys existing
bank line from January 31, 2002 to February 28, 2002.                                                   
|
| | 10.22 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
March 1, 2002 and incorporated herein by reference. Under ITEM 5 of
that 8-K the Company                                                                                                                                                                                                                             

39



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##### 





| |       |  | announced that it had received credit approval from a major
asset-based lender for a new credit facility to replace its existing
operating bank line.                                                                                                                                                                                                                                                                                                                                                  
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.23 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
May 2, 2002 and incorporated herein by reference. Under ITEM 5 of
that 8-K the Company announced that it had obtained a facility
extension until May 31, 2002 with its main bank lender that will
permit Cabletel to continue negotiations related to a commitment the
Company received from an asset-based lender.                                                                                                                     
|
| | 10.24 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
May 16, 2002 and incorporated herein by reference. Under ITEM 5 of
that 8-K the Company announced that it had established a new CDN$15
million revolving credit facility with LaSalle Business Credit, the
Canadian arm of LaSalle Business Credit Inc., a subsidiary of
Chicago-based LaSalle Bank.                                                                                                                                    
|
| | 10.25 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
May 29, 2002 and incorporated herein by reference. Under ITEM 5 of
that 8-K the Company announced that, concurrent with its previously
reported establishment of a new $15 million revolving credit facility
with LaSalle Business Credit, Cabletel also renegotiated credit terms
with a major supplier that included conversion of US$2.2 million in
outstanding payables owed by Cabletel into a senior subordinated
promissory note.
|
| | 10.26 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
November 5, 2002 and incorporated herein by reference. Under ITEM 5
of that 8-K the Company announced that it has entered into a
transaction with Allied Wire and Cable Ltd., and certain related
companies pursuant to which Cabletel has been granted an option to
acquire all of the capital stock of Allied.                                                                                                                        

40



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##### 





| | 10.27 |  | Previously filed on Cabletel Current Report on Form 8-K, dated
December 3, 2002 and incorporated herein by reference. Under ITEM 5
of that 8-K the Company announced that it had entered into an
amendment to its credit agreement with its senior bank lender to
remedy certain previously announced technical violations of the debt
service ratio covenant contained in its senior credit facility.
Included with that 8-K filing was the Amendment #1 to Credit Agreement
Dated May 13, 2002.
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 21    |  | List of Subsidiaries (see page 74)                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | 99.1  |  | Certification of Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | 99.2  |  | Certification of Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                         



---

|* |  | Previously filed as an exhibit to Cabletels Registration Statement on Form 20-F
dated June 15, 1994, incorporated herein by reference.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------

41



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 25, 2003



CABLETEL COMMUNICATIONS CORP.

|    |  |                                                        |  |     |  |                                   
|--- |  | ------------------------------------------------------ |  | --- |  | ----------------------------------
|By: |  | /s/ D. Gregory Walling                                 |  | By: |  | /s/ Ron Eilath                    
|    |  |                                                        |  |     |  |                                   
|    |  | D. Gregory Walling
President & Chief Executive Officer |  |     |  | Ron Eilath
Chief Financial Officer
|    |  |                                                        |  |     |  |                                   
|By: |  | /s/ David R. Peterson                                  |  | By: |  | /s/ William J. Biggar             
|    |  |                                                        |  |     |  |                                   
|    |  | David R. Peterson
Chairman of the Board & Director     |  |     |  | William J. Biggar
Director        
|    |  |                                                        |  |     |  |                                   
|By: |  | /s/ Len Cochrane                                       |  | By: |  | /s/ James L. Faust                
|    |  |                                                        |  |     |  |                                   
|    |  | Len Cochrane
Director                                  |  |     |  | James L. Faust
Director           
|    |  |                                                        |  |     |  |                                   
|By: |  | /s/ Lawrence A. Margolis                               |  |     |  |                                   
|    |  |                                                        |  |     |  |                                   
|    |  | Lawrence A. Margolis
Director                          |  |     |  |                                   

42



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##### 



CABLETEL COMMUNICATIONS CORP.

 CONSOLIDATED FINANCIAL STATEMENTS 

AND SCHEDULES

TO

ANNUAL REPORT ON

FORM 10-K FOR FISCAL YEAR

ENDED DECEMBER 31, 2002

43



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##### 



Kraft, Berger, Grill, Schwartz, Cohen & March LLP

Chartered Accountants

Auditors Report

To the Shareholders and the Board of Directors ofCABLETEL COMMUNICATIONS CORP.

We have audited the consolidated balance sheets of CABLETEL COMMUNICATIONS
CORP.as at December 31, 2002 and 2001 and the consolidated statements of
operations and deficit and cash flows for each of the three years ended
December 31, 2002, 2001 and 2000. These consolidated financial statements are
the responsibility of the companys management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audit in accordance with generally accepted auditing standards
in Canada and the United States of America. Those standards require that we
plan and perform an audit to obtain reasonable assurance whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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,
2002 and 2001 and the results of its operations and its cash flows for each of
the three years ended December 31, 2002, 2001 and 2000 in accordance with
accounting principles generally accepted in Canada.

Our audit also included the financial statement schedule as and for each of the
three years ended December 31, 2002, included in the Index at Item 14(a)(2).
This financial statement schedule is the responsibility of the companys
management. In our opinion, the financial statement schedule, when considered
in relation to the consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

KRAFT, BERGER, GRILL, SCHWARTZ, COHEN & MARCH LLP
Chartered Accountants

Toronto, Ontario
February 14, 2003, except for the Note 4,
which is dated March 25, 2003

44



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##### 



CABLETEL COMMUNICATIONS CORP.

CONSOLIDATED BALANCE SHEETS
(Canadian Funds)
December 31,

ASSETS

|                                       |                           |                                                   |                                                 |                                                           |            |            |             |      |            |            |            |  |  |  |  | 
|-------------------------------------- | ------------------------- | ------------------------------------------------- | ----------------------------------------------- | --------------------------------------------------------- | ---------- | ---------- | ----------- | ---- | ---------- | ---------- | ---------- |  |  |  |  | 
|                                       |                           |                                                   |                                                 |                                                           |            | 2002       |             | 2001
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|CURRENT                                |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           | Cash                                              |                                                 | $                                                         | 63,169     |            |             | $    | 12,292     |           
|                                       |                           | Accounts receivable                               |                                                 |                                                           |            |            |             |      |            |           
|                                       |                           |                                                   | (net
of allowance of $109,914; 2001  $847,194) |                                                           |            | 14,291,574 |             |      |            | 14,155,425 |           
|                                       |                           | Inventory (Note 2)                                |                                                 |                                                           | 10,488,445 |            |             |      | 10,629,957 |           
|                                       |                           | Other receivables (Note 9(ii))                    |                                                 |                                                           | 235,000    |            |             |      |           |           
|                                       |                           | Income taxes recoverable                          |                                                 |                                                           | 120,000    |            |             |      | 120,000    |           
|                                       |                           | Prepaid expenses, deposits and other              |                                                 |                                                           | 1,407,169  |            |             |      | 761,843    |           
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           |                                                   | 26,605,357                                      |                                                           |            |            | 25,679,517  |     
|PROPERTY, PLANT AND EQUIPMENT(Note 3)  |                           |                                                   | 2,198,086                                       |                                                           |            |            | 2,297,821   |     
|DEFERRED REFINANCING FEES(Note 1(i))   |                           |                                                   | 633,334                                         |                                                           |            |            |            |     
|OTHER ASSETS                           |                           |                                                   |                                                |                                                           |            |            | 606,720     |     
|OTHER RECEIVABLES(Note 9(ii))          |                           |                                                   |                                                |                                                           |            |            | 220,000     |     
|GOODWILL(Note 11)                      |                           |                                                   | 161,616                                         |                                                           |            |            |            |     
|PRODUCT DEVELOPMENT COSTS(Note 1(h))   |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           | (net
of amortization of $103,517; 2001  $69,011) |                                                 |                                                           | 31,631     |            |             |      | 66,137     |           
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           | $                                                 | 29,630,024                                      |                                                           |            | $          | 28,870,195  |     
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|LIABILITIES                           
|CURRENT                                |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           | Bank indebtedness (Note 4)                        |                                                 | $                                                         | 12,461,424 |            |             | $    | 11,308,972 |           
|                                       |                           | Accounts payable                                  |                                                 |                                                           | 6,736,089  |            |             |      | 8,757,675  |           
|                                       |                           | Accrued liabilities                               |                                                 |                                                           | 1,994,647  |            |             |      | 1,848,091  |           
|                                       |                           | Long-term debt (Note 5)                           |                                                 |                                                           | 2,067,558  |            |             |      | 171,385    |           
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           |                                                   | 23,259,718                                      |                                                           |            |            | 22,086,123  |     
|LONG-TERM DEBT(Note 5)                 |                           |                                                   | 1,154,088                                       |                                                           |            |            | 713,737     |     
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           |                                                   | 24,413,806                                      |                                                           |            |            | 22,799,860  |     
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|COMMITMENTS AND CONTINGENCIES(Note 10) |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                      
|SHAREHOLDERS EQUITY                  
|CAPITAL STOCK(Note 6)                  |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           | AUTHORIZED                                        |                                                 |                                                           |            |            |             |      |            |           
|                                       |                           |                                                   |                                                 | Unlimited      First preferred shares, issuable in series |            |            |             |      |            |            |            | 
|                                       |                           |                                                   |                                                 | Unlimited      Common shares                              |            |            |             |      |            |            |            | 
|                                       |                           | ISSUED                                            |                                                 |                                                           |            |            |             |      |            |           
|                                       |                           |                                                   |                                                 | 7,167,612
Common shares (2001  7,167,612)                |            |            | 16,136,761  |      |            |            | 16,136,761 | 
|                                       | Paid in Capital  Warrant |                                                   |                                                 | 164,000                                                   |            |            |             |     |           
|DEFICIT                                |                           |                                                   | (11,084,543                                     | )                                                         |            |            | (10,066,426 | )   
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           |                                                   | 5,216,218                                       |                                                           |            |            | 6,070,335   |     
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     
|                                       |                           | $                                                 | 29,630,024                                      |                                                           |            | $          | 28,870,195  |     
|                                       |                           |                                                   |                                                 |                                                           |            |            |             |     

See accompanying notes to financial statements.



APPROVED ON BEHALF OF THE BOARD:

|                                                                   |  |                           
|------------------------------------------------------------------ |  | --------------------------
|/s/ D. Gregory Walling                                             |  | /s/ William J. Biggar     
|                                                                   |  |                           
|D. Gregory Walling
President, Chief Executive Officer and Director |  | William J. Biggar
Director

45



---



##### 



CABLETEL COMMUNICATIONS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Canadian Funds)

FOR THE YEARS ENDED DECEMBER 31,

|                                    |                                           |   |             |           |      |   |             |            |   |   |            |            | 
|----------------------------------- | ----------------------------------------- | - | ----------- | --------- | ---- | - | ----------- | ---------- | - | - | ---------- | ---------- | 
|                                    |                                           |   | 2002        |           | 2001 |   | 2000       
|                                    |                                           |   |             |           |      |   |            
|SALES                               |                                           | $ | 53,629,075  |           |      | $ | 58,120,899  |            |   | $ | 74,492,559 |           
|COST OF SALES                       |                                           |   | 42,884,497  |           |      |   | 48,462,542  |            |   |   | 60,396,884 |           
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|GROSS PROFIT                        |                                           |   | 10,744,578  |           |      |   | 9,658,357   |            |   |   | 14,095,675 |           
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|EXPENSES                            |                                           |   |             |           |      |   |             |            |   |   |            |           
|                                    | Selling, general and administrative       |   |             | 9,633,169 |      |   |             | 10,648,693 |   |   |            | 11,689,850 | 
|                                    | Special charge (Note 12)                  |   |             |          |      |   |             | 357,836    |   |   |            |           | 
|                                    | Amortization                              |   |             | 258,842   |      |   |             | 249,992    |   |   |            | 237,173    | 
|                                    | Interest  bank indebtedness              |   |             | 771,423   |      |   |             | 799,941    |   |   |            | 710,058    | 
|                                    | Interest  long-term debt                 |   |             | 301,307   |      |   |             | 87,166     |   |   |            | 72,995     | 
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|                                    |                                           |   | 10,964,741  |           |      |   | 12,143,628  |            |   |   | 12,710,076 |           
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|EARNINGS (LOSS) FROM OPERATIONS     |                                           |   | (220,163    | )         |      |   | (2,485,271  | )          |   |   | 1,385,599  |           
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|                                    | Write off of other assets (Note 11)       |   |             | 566,145   |      |   |             |           |   |   |            |           | 
|                                    | Loss on settlement of debt (Note 5 (iii)) |   |             | 164,000   |      |   |             |           |   |   |            |           | 
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|                                    |                                           |   | 730,145     |           |      |   |            |            |   |   |           |           
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|EARNINGS (LOSS) BEFORE INCOME TAXES |                                           |   | (950,308    | )         |      |   | (2,485,271  | )          |   |   | 1,385,599  |           
|                                    | Income taxes (Note 7)                     |   |             | 67,809    |      |   |             | 420,847    |   |   |            | 452,814    | 
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|NET EARNINGS (LOSS) FOR THE PERIOD  |                                           |   | (1,018,117  | )         |      |   | (2,906,118  | )          |   |   | 932,785    |           
|DEFICIT,beginning of period         |                                           |   | (10,066,426 | )         |      |   | (7,160,308  | )          |   |   | (8,093,093 | )         
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|DEFICIT,end of period               |                                           | $ | (11,084,543 | )         |      | $ | (10,066,426 | )          |   | $ | (7,160,308 | )         
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           
|Earnings (loss) per share(Note 8)   |                                           |   |             |           |      |   |             |            |   |   |            |           
|                                    | Basic and Fully Diluted                   |   |             | $(0.14    | )    |   |             | $(0.41     | ) |   | $          | 0.13       | 
|                                    |                                           |   |             |           |      |   |             |            |   |   |            |           

See accompanying notes to financial statements.

46



---



##### 



CABLETEL COMMUNICATIONS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian Funds)

FOR THE YEARS ENDED DECEMBER 31,

|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |   |            |  
|----------------------------------- |  | -------------------------------------------------- | -------- | ---- | ---------- | ---- | ---------- | ---- | ---------- | - | ---------- | - | ---------- | -
|                                    |  |                                                    |          | 2002 |            | 2001 |            | 2000
|                                    |  |                                                    |          |      |            |      |            |     
|OPERATING ACTIVITIES                |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  | Net income (loss) for the period                   |          | $    | (1,018,117 | )    |            | $    | (2,906,118 | ) |            | $ | 932,785    |  
|                                    |  | Imputed interest                                   |          |      | (15,000    | )    |            |      | (16,000    | ) |            |   | 46,000     |  
|                                    |  | Future income taxes                                |          |      |           |      |            |      | 456,807    |   |            |   | 265,492    |  
|                                    |  | Amortization                                       |          |      | 407,394    |      |            |      | 478,925    |   |            |   | 489,414    |  
|                                    |  | Amortization of prepaid refinancing fees           |          |      | 166,666    |      |            |      |           |   |            |   |           |  
|                                    |  | Other assets                                       |          |      |           |      |            |      | (606,720   | ) |            |   |           |  
|                                    |  | Write off of other assets                          |          |      | 566,145    |      |            |      |           |   |            |   |           |  
|                                    |  | Loss on settlement of debt                         |          |      | 164,000    |      |            |      |           |   |            |   |           |  
|                                    |  | Change in accounts receivable                      |          |      | 104,618    |      |            |      | 6,462,928  |   |            |   | (8,264,323 | )
|                                    |  | Change in inventory                                |          |      | 774,190    |      |            |      | 2,273,184  |   |            |   | (2,852,897 | )
|                                    |  | Change in prepaid expenses, deposits and other     |          |      | (1,396,043 | )    |            |      | 552,817    |   |            |   | (799,758   | )
|                                    |  | Change in accounts payable and accrued liabilities |          |      | 862,402    |      |            |      | (4,838,519 | ) |            |   | 4,979,390  |  
|                                    |  | Change in other receivables                        |          |      |           |      |            |      |           |   |            |   | (250,000   | )
|                                    |  | Change in income taxes recoverable                 |          |      |           |      |            |      | (83,544    | ) |            |   | 552,304    |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  |                                                    | 616,255  |      |            |      | 1,773,760  |      |            |   | (4,901,593 | )
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|FINANCING ACTIVITIES                |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  | Bank indebtedness                                  |          |      | 284,963    |      |            |      | (1,540,487 | ) |            |   | 4,891,712  |  
|                                    |  | Issuance of common shares                          |          |      |           |      |            |      | 150,623    |   |            |   | 947,488    |  
|                                    |  | Proceeds of long-term debt                         |          |      |           |      |            |      |           |   |            |   | 1,101,721  |  
|                                    |  | Repayment of long-term debt                        |          |      | (732,140   | )    |            |      | (133,216   | ) |            |   | (83,383    | )
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  |                                                    | (447,177 | )    |            |      | (1,523,080 | )    |            |   | 6,857,538  |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|INVESTING ACTIVITIES                |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  | Purchase of equipment                              |          |      | (55,577    | )    |            |      | (276,607   | ) |            |   | (1,945,313 | )
|                                    |  | Goodwill acquired                                  |          |      | (161,616   | )    |            |      |           |   |            |   |           |  
|                                    |  | Net assets acquired                                |          |      | 98,992     |      |            |      |           |   |            |   |           |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  |                                                    | (118,201 | )    |            |      | (276,607   | )    |            |   | (1,945,313 | )
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|CHANGE IN CASH                      |  |                                                    | (50,877  | )    |            |      | (25,927    | )    |            |   | 10,632     |  
|CASH, beginning of period           |  |                                                    | 12,292   |      |            |      | 38,219     |      |            |   | 27,587     |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|CASH, end of period                 |  | $                                                  | 63,169   |      |            | $    | 12,292     |      |            | $ | 38,219     |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|SUPPLEMENTARY CASH FLOW INFORMATION |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  | Interest paid                                      |          | $    | 1,072,730  |      |            | $    | 887,107    |   |            | $ | 737,053    |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  
|                                    |  | Income taxes paid                                  |          | $    | 67,809     |      |            | $    | 47,584     |   |            | $ |           |  
|                                    |  |                                                    |          |      |            |      |            |      |            |   |            |  

Non-cash activities included the conversion of $U.S. 2.2 million of accounts
payable to long-term debt (See Note 5).

See accompanying notes to financial statements

47



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                         
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada, which, except as
described in Note 15, conform, in all material respects, with the
accounting principles generally accepted in the United States.



| | (a) |  | Organization and Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Cabletel Communications Corp., (together with its consolidated
subsidiaries, except as the context otherwise indicates, Cabletel
or the Company) is primarily a Canadian distribution and
manufacturing company headquartered in Markham, Ontario with major
offices and distribution warehouses located in Montreal, Quebec;
Vancouver, British Columbia; Dartmouth, Nova Scotia; and Calgary,
Alberta.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | The Company operates in three business segments, Distribution,
Manufacturing and Technology. The Distribution Segment is carried
out through Cabletel Communications Corp., a full-service
distributor of broadband equipment to the Canadian television and
telecommunications industries, offering a wide variety of products
required to construct, build, maintain and upgrade broadcasting and
telecommunications systems. The Manufacturing Segment is carried
out through Stirling Connectors, which manufactures and sells brass
and aluminum coaxial connectors for use in cable distribution
systems. The majority of Stirlings sales are to foreign markets.
The Technology Segment provides products to broadcasters, network
providers and a wide-variety of companies building the
infrastructure to support the Internet economy.
|
| |     |  | As at December 31, 2002, ARRIS (formerly ANTEC Corporation), whose
common shares are publicly traded on the NASDAQ Stock Exchange,
effectively controlled approximately 20.23% of the outstanding
Cabletel common stock. At December 31, 2002, GMAC Commercial Credit
LLC, effectively controlled approximately 46.60% of the outstanding
Cabletel common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (b) |  | Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | The consolidated financial statements include the accounts of the
wholly-owned subsidiaries, Stirling (Israel) Ltd., Stirling
Connectors, U.S.A., Inc., and as of November 1, 2002, Allied Wire
and Cable Ltd., as a result of the Companys ability to convert its
convertible debenture into 100% ownership of all Allied issued and
outstanding common shares for a nominal consideration.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | The consolidated financial statements include the accounts of the
Company after eliminations of inter-company transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

48



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|1. |  | SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES(Continued)
|-- |  | -----------------------------------------------------



| | (c) |  | Revenue Recognition                                                                                                                                                                                                                                         
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Sales are recognized when legal title to the goods has been passed
to the customer, which generally occurs when products are shipped
from the Companys plant or warehouses, and collection is reasonably
assured.                                          
|
| | (d) |  | Inventory                                                                                                                                                                                                                                                   
|
| |     |  | Inventory is valued at the lower of cost (first-in, first-out) and
net realizable value. Cost includes appropriate elements of duty,
freight, material, labour and overhead.                                                                                
|
| | (e) |  | Property, Plant and Equipment                                                                                                                                                                                                                               
|
| |     |  | Property, Plant and Equipment are recorded at cost. Amortization is
being provided for over the estimated useful life of the asset on
the straight-line basis at the following annual rates. The Company
does not amortize temporarily unutilized equipment.

|                                 |  |                                                    
|-------------------------------- |  | ---------------------------------------------------
|Equipment
Leasehold improvements |  |  20 to 50%
 Over the life of the applicable lease



| | (f) |  | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Monetary assets and liabilities are translated into Canadian dollars
at the year-end exchange rate, while foreign currency revenues and
expenses are translated at the exchange rate in effect on the date
of the transaction.                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | Non-monetary items are translated at historical exchange rates. The
Companys foreign wholly-owned subsidiaries are considered to be
fully integrated operations and therefore any resulting exchange
gain or loss is recorded in income. Resulting exchange loss of
$260,094 (2001  loss of $296,739; 2000  gain of $19,272) are
included in income.                                                                                                                                                                                                                                                         
|
| | (g) |  | Future Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The company provides for income taxes using the asset and liability
method as required by the Canadian Institute of Chartered
Accountants (CICA) Handbook section 3465. The asset and liability
method requires that income taxes reflect the expected future tax
consequences of temporary differences between the carrying amounts
of assets or liabilities and their tax bases. Future income tax
assets and liabilities are determined for each temporary difference
based on the tax rates, which are expected to be in effect when the
underlying items of income and expense are expected to be realized.

49



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- |  | -----------------------------------------------------



| | (h) |  | Product Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Product development costs are stated at cost, net of amortization.
These expenses, related to the development of new product lines, are
recoverable through future sales. Amortization is provided over a
period of 5 years based on the life expectancy of the product.                                                                                                                                                                                                                                                                                                                                                        
|
| | (i) |  | Deferred Refinancing Fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Deferred refinancing fees relate to costs incurred in connection
with the Companys refinancing of its long-term debt with ABN AMRO.
(See Note 4) Deferred refinancing fees are amortized over three
years being the life of the loan.                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (j) |  | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | The Company grants stock options for a fixed number of shares to
employees with an exercise price equal to the fair value of the
shares at the date of grant. The Company does not recognize
compensation expense for the stock based compensation plan when
stock or stock options are issued to employees. Any consideration
paid by employees on exercise of stock options or purchase of stock
is credited to share capital. If stock or stock options are
repurchased from employees, the excess of the consideration paid
over the carrying amount of the stock or stock option cancelled is
charged to retained earnings.
|
| | (k) |  | Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | The preparation of financial statements in accordance with Canadian
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of
revenues and expenses during the reported period. These estimates
are reviewed periodically, and, as adjustments become necessary,
they are reported in earnings in the period in which they become
known.                                                                  
|
| | (l) |  | Reclassification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | Certain amounts in prior years consolidated financial statements
have been reclassified to conform to current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

50



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|2. |  | INVENTORY
|-- |  | ---------

|                |  |      |            |      |  |   |            | 
|--------------- |  | ---- | ---------- | ---- |  | - | ---------- | 
|                |  | 2002 |            | 2001
|                |  |      |            |     
|Raw Material    |  | $    | 293,783    |      |  | $ | 284,258    | 
|Work in process |  |      | 483,497    |      |  |   | 655,933    | 
|Finished goods  |  |      | 9,711,165  |      |  |   | 9,689,766  | 
|                |  |      |            |      |  |   |            | 
|                |  | $    | 10,488,445 |      |  | $ | 10,629,957 | 
|                |  |      |            |      |  |   |            | 



|3. |  | PROPERTY, PLANT AND EQUIPMENT
|-- |  | -----------------------------

|                       |  |      |           |              |  |             |           |      |  |              |           |     |  |  |           |             |  |  |           |  |  |  |           | 
|---------------------- |  | ---- | --------- | ------------ |  | ----------- | --------- | ---- |  | ------------ | --------- | --- |  |  | --------- | ----------- |  |  | --------- |  |  |  | --------- | 
|                       |  |      |           |              |  | 2002        |           |      |  |              |           |     |  |  |           | 2001        |  |  |           | 
|                       |  |      |           |              |  | Accumulated |           |      |  |              |           |     |  |  |           | Accumulated |  |  |           | 
|                       |  |      |           |             
|                       |  | Cost |           | Amortization |  | Net         |           | Cost |  | Amortization |           | Net
|                       |  |      |           |              |  |             |           |      |  |              |           |    
|                       |  | $    |           | $            |  | $           |           | $    |  | $            |           | $  
|Leasehold improvements |  |      | 711,090   |              |  |             | 296,093   |      |  |              | 414,997   |     |  |  | 688,024   |             |  |  | 235,296   |  |  |  | 452,728   | 
|Equipment              |  |      | 4,136,094 |              |  |             | 2,353,005 |      |  |              | 1,783,089 |     |  |  | 3,886,007 |             |  |  | 2,040,914 |  |  |  | 1,845,093 | 
|                       |  |      |           |              |  |             |           |      |  |              |           |     |  |  |           |             |  |  |           |  |  |  |           | 
|                       |  |      | 4,847,184 |              |  |             | 2,649,098 |      |  |              | 2,198,086 |     |  |  | 4,574,031 |             |  |  | 2,276,210 |  |  |  | 2,297,821 | 
|                       |  |      |           |              |  |             |           |      |  |              |           |     |  |  |           |             |  |  |           |  |  |  |           | 



|   |  | For the years ending December 31, 2002 and December 31, 2001, the Company
did not amortize equipment with a carrying amount of $837,142 relating to
certain manufacturing equipment during a period the equipment was not in
use. The Company assessed future cash flow based on the Companys
expected plan of operations and it was determined there was no impairment
in value. The Company had re-utilized all these assets in its
manufacturing operations during the year ended December 31, 2002.                                                                                                                                                                                                       
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | BANK INDEBTEDNESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | On May 16, 2002, Cabletel entered into a Revolving Credit Facility
Agreement with LaSalle Business Credit, a division of ABN AMRO BANK N.V.,
Canada Branch (LaSalle) for a three year committed fifteen million
Canadian dollars (CDN$15,000,000) facility, or its United States dollar
equivalent. Canadian Dollar borrowings under the Revolving Credit
Facility bears interest at the LaSalle Prime Reference Rate plus one and a
half percent (2.0%). United States dollar borrowings under the Revolving
Credit Facility bears interest at the LaSalle U.S. Base Reference Rate
plus one and a half percent (2.0%). (December 31, 2002  CDN$ borrowings
6%, per annum, US$ borrowings 6.25% per annum).

51



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|4. |  | BANK INDEBTEDNESS(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The facilities are secured by a first priority security position on all
personal property (including without limitation accounts, contract rights,
inventory, machinery and equipment, and general intangibles, existing and
future, second position in the case of certain machinery and equipment
securing prior loan by the Business Development Bank of Canada, and
general intangibles), existing and future. The weighted average interest
rate was 5.91% on the $CDN borrowings and 6.64% on the $US borrowings.                                                               
|  
|   |  | The new facility contains certain customary covenants. As of December 31,
2002, as a result of a variation from the required minimum adjusted net
worth, interest coverage ratio and debt service ratio, the Company had a
technical violation of the applicable covenants. On March 25, 2003, the
Company entered into a waiver and amendment to its credit agreement with
its senior bank lender to remedy the above mentioned technical violations
of minimum adjusted net worth, interest coverage ratio and debt service
ratio covenants contained in its senior credit facility.
|  
|5. |  | LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  

|                         |                       |   |              |           |              |   |         |         | 
|------------------------ | --------------------- | - | ------------ | --------- | ------------ | - | ------- | ------- | 
|                         |                       |   | December 31, |           | December 31,
|                         |                       |   | 2002         |           | 2001         |  
|                         |                       |   |              |           |             
|(i) Term loan-Leaseholds |                       | $ | 324,337      |           |              | $ | 354,122 |        
|(ii) Term loan-Equipment |                       |   | 401,200      |           |              |   | 531,000 |        
|(iii) Term loan-Note     |                       |   | 2,496,109    |           |              |   |        |        
|                         |                       |   |              |           |              |   |         |        
|                         |                       |   | 3,221,646    |           |              |   | 885,122 |        
|                         | Less: Current portion |   |              | 2,067,558 |              |   |         | 171,385 | 
|                         |                       |   |              |           |              |   |         |        
|                         |                       | $ | 1,154,088    |           |              | $ | 713,737 |        
|                         |                       |   |              |           |              |   |         |        



| | (i)  |  | Long-term debt bears interest at 10% per annum, payable in
equal monthly installments of $5,264 (principal and interest) for
ten years until February 14, 2010. This debt was obtained for the
improvements of the building covered by a lease agreement and is
payable to the landlord, together with the monthly lease payments.                                                                                                                                                                                                                                            
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | Long-term debt bears interest at Business Development Bank of
Canada (BDC) prime plus 0.75% per annum.
(December 31, 2002 
7.25% per annum; December 31, 2001  6.75% per annum) payable monthly
over a period of 5 years. This debt was provided by the BDC to
purchase production machinery used in the manufacturing of
connectors. BDC has provided a total facility of $700,000 which is
available to the company for capital purchases and is collateralized
by the assets acquired under this facility. The weighted average
interest rate was 6.94% (2001  8.81%).

52



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|5. |  | LONG-TERM DEBT(continued)
|-- |  | -------------------------



| | (iii) |  | Contemporaneously with the Company entering into the new
Revolving Credit Facility, the Company renegotiated credit terms
with a major supplier. That renegotiation included the conversion
of US $2.2 million in outstanding payables owed by the Company into
a senior subordinated promissory note, which resulted in the Company
taking a charge of $164,000 on loss on settlement of debt. The
senior subordinated promissory note is in the principal amount of US
$2.2 million, and bears interest at the rate of 12% per annum and is
repayable in agreed upon monthly installments of between US $60,000
and US $120,000 over the next two years. In connection with that
renegotiation, the Company also issued to the supplier a Warrant to
acquire up to 200,000 shares of the Companys common stock at an
exercise price of CDN $1.64 per share up to and including May 31,
2007. The fair value of the Warrant was estimated on the date of
the grant using the fair value recognition method, with the
following assumptions: risk free interest rate of 5%, dividend yield
of 0%, theoretical volatility of .90 and the expected life of 2
years.
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |       |  | Principal payments required in each of the next five years on
long-term debt are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|            |  |               |         |                |  |                 |         |       |  |   |           |  |  |   |           | 
|----------- |  | ------------- | ------- | -------------- |  | --------------- | ------- | ----- |  | - | --------- |  |  | - | --------- | 
|            |  | Term loan (i) |         | Term loan (ii) |  | Term loan (iii) |         | Total
|            |  |               |         |                |  |                 |         |      
|2003        |  | $             | 32,838  |                |  | $               | 141,600 |       |  | $ | 1,893,120 |  |  | $ | 2,067,558 | 
|2004        |  |               | 36,204  |                |  |                 | 141,600 |       |  |   | 602,989   |  |  |   | 780,793   | 
|2005        |  |               | 39,914  |                |  |                 | 118,000 |       |  |   |          |  |  |   | 157,914   | 
|2006        |  |               | 44,006  |                |  |                 |        |       |  |   |          |  |  |   | 44,006    | 
|2007        |  |               | 48,516  |                |  |                 |        |       |  |   |          |  |  |   | 48,516    | 
|Beyond 2007 |  |               | 122,859 |                |  |                 |        |       |  |   |          |  |  |   | 122,859   | 



|6. |  | CAPITAL STOCK
|-- |  | -------------

|                           |                         |  |           |        |        |   |            |         | 
|-------------------------- | ----------------------- |  | --------- | ------ | ------ | - | ---------- | ------- | 
|                           |                         |  | Number    |        | Amount
|                           |                         |  |           |        |       
|Balance, December 31, 2000 |                         |  | 7,068,912 |        |        | $ | 15,986,138 |        
|                           | Exercise of options     |  |           | 98,700 |        |   |            | 150,623 | 
|                           |                         |  |           |        |        |   |            |        
|Balance, December 31, 2001 |                         |  | 7,167,612 |        |        |   | 16,136,761 |        
|                           | Change to Capital Stock |  |           |       |        |   |            |        | 
|                           |                         |  |           |        |        |   |            |        
|Balance, December 31, 2002 |                         |  | 7,167,612 |        |        | $ | 16,136,761 |        
|                           |                         |  |           |        |        |   |            |        

53



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|6. |  | CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | Under the terms of a stock option plan approved by the shareholders in
May, 1994 and amended in November of 1999, and March of 2002, the Company
is authorized to grant directors, officers, employees and others options
to purchase common shares at prices based on the market price of shares as
determined on the date of grant. At December 31, 2002, 506,000 options
remain available to be granted. Stock options become exercisable at
dates determined by the Compensation Committee.
|  
|   |  | Common shares have been reserved for stock options on the following basis:                                                                                                                                                                                                                                                                                                                                                                                                                     

|                             |  |        |           |       |  |         |             |          |  |  |      | 
|---------------------------- |  | ------ | --------- | ----- |  | ------- | ----------- | -------- |  |  | ---- | 
|                             |  |        |           |       |  | Option  |             | Weighted
|                             |  | Shares |           | Price |  | Average
|                             |  |        |           |       |  |        
|                             |  |        |           |       |  | $       |             | $       
|Outstanding and Exercisable  |  |        |           |       |  |         |             |          |  |  |      | 
|Balance at December 31, 1999 |  |        | 1,447,500 |       |  |         | 1.53  8.55 |          |  |  | 3.73 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 
|Exercised                    |  |        | (424,800  | )     |  |         | 1.53  5.90 |          |  |  | 2.26 | 
|Granted                      |  |        | 407,000   |       |  |         | 1.49  9.28 |          |  |  | 6.62 | 
|Expired                      |  |        | (100,000  | )     |  |         | 4.11        |          |  |  | 4.11 | 
|Cancelled                    |  |        | (60,500   | )     |  |         | 1.53  5.92 |          |  |  | 5.49 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 
|Balance at December 31, 2000 |  |        | 1,269,200 |       |  |         | 1.53  9.28 |          |  |  | 4.32 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 
|Exercised                    |  |        | (98,700   | )     |  |         | 1.53        |          |  |  | 1.53 | 
|Granted                      |  |        | 169,000   |       |  |         | 2.31  3.40 |          |  |  | 2.68 | 
|Expired                      |  |        | (163,000  | )     |  |         | 4.44  8.60 |          |  |  | 5.22 | 
|Cancelled                    |  |        | (111,000  | )     |  |         | 1.53  9.28 |          |  |  | 4.04 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 
|Balance at December 31, 2001 |  |        | 1,065,500 |       |  |         | 1.53  9.28 |          |  |  | 4.62 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 
|Granted                      |  |        | 424,500   |       |  |         | 2.10        |          |  |  | 2.10 | 
|Expired                      |  |        | (35,000   | )     |  |         | 4.44  5.92 |          |  |  | 4.65 | 
|Cancelled                    |  |        | (11,000   | )     |  |         | 1.53  9.28 |          |  |  | 4.68 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 
|Balance at December 31, 2002 |  |        | 1,444,000 |       |  |         | 1.53  9.28 |          |  |  | 3.88 | 
|                             |  |        |           |       |  |         |             |          |  |  |      | 

54



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|6. |  | CAPITAL STOCK(continued)                                                                                                              
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | During the year ended December 31, 2002, no options were exercised. The
weighted average price at exercise date during 2001 was $1.53.
|  
|   |  | At December 31, 2002, a total of 1,444,000 options were exercisable.                                                                  
|  
|   |  | The weighted average price of options granted during the year ended
December 31, 2002 was $2.10.                                      

|                                    |                 |                     |  |            |  |                |                  |                |                  |           |   |      |  |                |                  |           |  |  |   |      | 
|----------------------------------- | --------------- | ------------------- |  | ---------- |  | -------------- | ---------------- | -------------- | ---------------- | --------- | - | ---- |  | -------------- | ---------------- | --------- |  |  | - | ---- | 
|OPTIONS OUTSTANDING AND EXERCISABLE |                 | OPTIONS EXERCISABLE
|                                    |                 |                    
|                                    |                 |                     |  |            |  |                | Weighted average |                | Weighted average |           |   |      |  |                | Weighted average |           |  | 
|                                    |                 |                     |  |            |  | remaining life |                  | exercise price |                  |           |   |      |  | exercise price
|Range of Exercise Prices            |                 | Shares              |  | (In years) |  | Per share      |                  | Shares         |                  | Per share
|                                    |                 |                     |  |            |  |                |                  |                |                  |          
|                                    | $1.00 to $2.00  |                     |  | 159,500    |  |                |                  | 4.1            |                  |           | $ | 1.53 |  |                |                  | 159,500   |  |  | $ | 1.53 | 
|                                    | $2.00 to $3.00  |                     |  | 548,000    |  |                |                  | 7.4            |                  |           | $ | 2.16 |  |                |                  | 230,667   |  |  | $ | 2.21 | 
|                                    | $3.00 to $4.00  |                     |  | 43,500     |  |                |                  | 5.7            |                  |           | $ | 3.36 |  |                |                  | 31,500    |  |  | $ | 3.39 | 
|                                    | $4.00 to $5.00  |                     |  | 279,000    |  |                |                  | 6.3            |                  |           | $ | 4.41 |  |                |                  | 279,000   |  |  | $ | 4.41 | 
|                                    | $5.00 to $6.00  |                     |  | 154,000    |  |                |                  | 2.3            |                  |           | $ | 5.23 |  |                |                  | 154,000   |  |  | $ | 5.23 | 
|                                    | $7.00 to $10.00 |                     |  | 260,000    |  |                |                  | 6.9            |                  |           | $ | 7.64 |  |                |                  | 260,000   |  |  | $ | 7.64 | 
|                                    |                 |                     |  |            |  |                |                  |                |                  |           |   |      |  |                |                  |           |  |  |   |      | 
|                                    | $1.00 to $10.00 |                     |  | 1,444,000  |  |                |                  | 6.3            |                  |           | $ | 3.88 |  |                |                  | 1,114,667 |  |  | $ | 4.38 | 
|                                    |                 |                     |  |            |  |                |                  |                |                  |           |   |      |  |                |                  |           |  |  |   |      | 



| |  | In connection with the settlement of outstanding accounts payable (Note
5iii), common shares have been reserved for warrants on the following
basis:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|                             |  |        |         |            |  |                  |     |          |  |          |      |   |  |  |      | 
|---------------------------- |  | ------ | ------- | ---------- |  | ---------------- | --- | -------- |  | -------- | ---- | - |  |  | ---- | 
|                             |  |        |         |            |  | Weighted Average |     |          |  |          |      |   |  | 
|                             |  |        |         |            |  | Remaining Life   |     | Exercise |  | Weighted
|                             |  | Shares |         | (In Years) |  | Price            |     | Average 
|                             |  |        |         |            |  |                  |     |         
|                             |  |        |         |            |  |                  |     |          |  | $        |      | $
|Outstanding and Exercisable  |  |        |         |            |  |                  |     |          |  |          |      |   |  |  |      | 
|Balance at December 31, 2001 |  |        |        |            |  |                  |    |          |  |          |     |   |  |  |     | 
|                             |  |        |         |            |  |                  |     |          |  |          |      |   |  |  |      | 
|Granted                      |  |        | 200,000 |            |  |                  |     |          |  |          | 1.64 |   |  |  | 1.64 | 
|                             |  |        |         |            |  |                  |     |          |  |          |      |   |  |  |      | 
|Balance at December 31, 2002 |  |        | 200,000 |            |  |                  | 4.4 |          |  |          | 1.64 |   |  |  | 1.64 | 
|                             |  |        |         |            |  |                  |     |          |  |          |      |   |  |  |      | 

55



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|7. |  | CAPITAL STOCK(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In December 2001, the CICA issued Handbook Section 3870 Stock-Based
Compensation and Other Stock-Based Payments. Effective for the
Companys fiscal year beginning January 1, 2002, the new section
requires the use of a fair-value based approach of accounting for
certain specified stock-based awards. For all other employee
stock-based awards, the section encourages but does not require that
a fair-value based approach be used. Had compensation expense for
the Companys stock-based compensation plan been determined based on
the fair value at the grant dates for awards under the Plan
consistent with the method under CICA Handbook Section 3870, the
Companys net income and earnings per share would have been reported
as the pro-forma amounts indicated in the table below.
|  
|   |  | The fair value of each option grant was estimated on the date of the
grant using the fair value recognition method, with the following
assumptions: risk free interest rate of 5%; dividend yield of 0%;
theoretical volatility assumption of .90; three years vesting
provision on certain options granted in 2002 and the expected lives
of options of 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                        

As Reported

|                   |                         |   |             |        |  
|------------------ | ----------------------- | - | ----------- | ------ | -
|                   |                         |   | 2002       
|                   |                         |   | As Reported
|                   |                         |   |            
|Net loss           |                         | $ | (1,018,117  | )     
|Net loss per share |                         |   |             |       
|                   | Basic and Fully Diluted |   |             | ($0.14 | )

Pro-Forma

|                                                                  |                         |   |            |        |  
|----------------------------------------------------------------- | ----------------------- | - | ---------- | ------ | -
|                                                                  |                         |   | 2002      
|                                                                  |                         |   | Pro-Forma 
|                                                                  |                         |   |           
|Net loss                                                          |                         | $ | (1,455,734 | )     
|Net earnings (loss) per share                                     |                         |   |            |       
|                                                                  | Basic and Fully Diluted |   |            | ($0.20 | )
|Weighted average fair value of
options granted during this period |                         | $ | 1.25       |       

56



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|7. |  | INCOME TAXES                                         
|-- |  | -----------------------------------------------------
|  
|   |  | The provision (benefit) for income taxes consists of:

|                     |                          |   |        |          |      |   |         |         |   |   |         |         | 
|-------------------- | ------------------------ | - | ------ | -------- | ---- | - | ------- | ------- | - | - | ------- | ------- | 
|                     |                          |   | 2002   |          | 2001 |   | 2000   
|                     |                          |   |        |          |      |   |        
|Current income taxes | - Federal                |   | $      | (323,811 | )    |   | $       | 36,000  |   |   | $       | 145,985 | 
|                     | - Provincial (recovered) |   |        | (177,274 | )    |   |         | (71,960 | ) |   |         | 41,337  | 
|Future income taxes  | - Federal                |   |        | 381,120  |      |   |         | 301,420 |   |   |         | 175,907 | 
|                     | - Provincial             |   |        | 187,774  |      |   |         | 155,387 |   |   |         | 89,585  | 
|                     |                          |   |        |          |      |   |         |         |   |   |         |        
|                     |                          | $ | 67,809 |          |      | $ | 420,847 |         |   | $ | 452,814 |        
|                     |                          |   |        |          |      |   |         |         |   |   |         |        
|Statutory rate       |                          |   | 38.99  | %        |      |   | 41.75   | %       |   |   | 43.95   | %      
|                     |                          |   |        |          |      |   |         |         |   |   |         |        

|                                                                   |  |      |          |      |  |      |            |   |  |   |          |  
|------------------------------------------------------------------ |  | ---- | -------- | ---- |  | ---- | ---------- | - |  | - | -------- | -
|                                                                   |  | 2002 |          | 2001 |  | 2000
|                                                                   |  |      |          |      |  |     
|Income taxes at statutory rate                                     |  | $    | (370,516 | )    |  | $    | (1,037,600 | ) |  | $ | 608,971  |  
|Items non-deductible for income tax purposes
and other             |  |      | (166,568 | )    |  |      | 211,090    |   |  |   | 108,629  |  
|Future benefits of eligible capital
expenditures realized          |  |      |         |      |  |      |           |   |  |   | (279,820 | )
|Large Corporation Tax                                              |  |      | 36,000   |      |  |      | 36,000     |   |  |   | 33,744   |  
|Benefits realized from manufacturing and
processing deduction      |  |      |         |      |  |      |           |   |  |   | (18,710  | )
|Write down of future income tax assets
previously recognized       |  |      |         |      |  |      | 456,807    |   |  |   |         |  
|Future income tax expense resulting from
the reduction in tax rate |  |      |         |      |  |      | 24,994     |   |  |   |         |  
|Unrealized benefit of losses carried forward                       |  |      | 568,893  |      |  |      | 729,556    |   |  |   |         |  
|                                                                   |  |      |          |      |  |      |            |   |  |   |          |  
|Income tax expense                                                 |  | $    | 67,809   |      |  | $    | 420,847    |   |  | $ | 452,814  |  
|                                                                   |  |      |          |      |  |      |            |   |  |   |          |  

Sources of Future Income Tax Balances

|                                     |  |                                   |           |      |            |      |           |   |            |  
|------------------------------------ |  | --------------------------------- | --------- | ---- | ---------- | ---- | --------- | - | ---------- | -
|                                     |  |                                   |           | 2002 |            | 2001
|                                     |  |                                   |           |      |            |     
|Future income tax assets:            |  |                                   |           |      |            |      |           |  
|                                     |  | Net operating loss carry-forwards |           | $    | 1,277,820  |      |           | $ | 1,279,452  |  
|                                     |  | Prepaid financing fees and other  |           |      | 26,650     |      |           |   |           |  
|                                     |  | Property, plant and equipment     |           |      |           |      |           |   |           |  
|                                     |  | Eligible capital expenditure      |           |      | 1,450,450  |      |           |   | 1,703,578  |  
|                                     |  | Inter-company gains               |           |      | 21,090     |      |           |   | 45,160     |  
|                                     |  |                                   |           |      |            |      |           |  
|Total gross future income tax assets |  |                                   | 2,776,010 |      |            |      | 3,028,190 |  
|                                     |  | Less: Valuation allowance         |           |      | (2,669,588 | )    |           |   | (2,979,250 | )
|                                     |  |                                   |           |      |            |      |           |  
|Future income tax assets             |  | $                                 | 106,422   |      |            | $    | 48,940    |  
|                                     |  |                                   |           |      |            |      |           |  
|Future income tax liabilities:       |  |                                   |           |      |            |      |           |  
|                                     |  | Other asset                       |           | $    | (11,600    | )    |           | $ | (24,000    | )
|                                     |  | Property, plant and equipment     |           |      | (94,822    | )    |           |   | (24,940    | )
|                                     |  |                                   |           |      |            |      |           |  
|Future income tax liabilities        |  |                                   | (106,422  | )    |            |      | (48,940   | )
|                                     |  |                                   |           |      |            |      |           |  
|Net future tax assets                |  | $                                 |          |      |            | $    |          |  
|                                     |  |                                   |           |      |            |      |           |  

57



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|7. |  | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                       
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In assessing its future tax assets, management considers whether it is
more likely than not that some portion or all of the future tax assets
will be realized. The ultimate realization of future tax assets is
dependent upon the generation of future taxable income during periods in
which those temporary differences become deductible.
|  
|   |  | The Company has income tax losses in the amount of approximately
$3,489,000 expiring in 2009. The benefit of the losses has not been
recognized in these financial statements.                                                                                                                                                                
|  
|8. |  | EARNINGS PER SHARE                                                                                                                                                                                                                                                                                                                            



| | (a) |  | Basic Earnings per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The weighted average number of shares outstanding amounted to
7,167,612 for the year ended December 31, 2002 and 7,123,202 and
7,004,139 for the years ended December 31, 2001 and 2000,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (b) |  | Fully Diluted Earnings per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |     |  | For the year ended December 31, 2002 the exercise of outstanding
stock options do not have a dilutive effect on earnings (loss) per
share. All the options as indicated in Note 6, outstanding during
the year ended December 31, 2002 and 2001 being 1,444,000 and
1,065,500 respectively, were not included in the calculation of
diluted earnings per share as to do so would have been
anti-dilutive. Also not included in the calculation of diluted
earnings per share for the year ended December 31, 2002 were 200,000
warrants as to do so would have been anti-dilutive. The weighted
average number of shares for diluted earnings per share amounted to
7,393,268 for the year ended December 31, 2000. For the year ended
December 31, 2000, options not included in the calculation of
diluted earnings per share amounted to 880,071 as to do so would
have been anti-dilutive.

58



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|8. |  | EARNINGS PER SHARE(continued)                                                          
|-- |  | ---------------------------------------------------------------------------------------
|  
|   |  | The following table sets forth the computation of basic and diluted
earnings per share:

|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | --------- | 
|                                                                                                      |  | 2002 |            | 2001 |  | 2000
|                                                                                                      |  |      |            |      |  |     
|Numerator:                                                                                            |  |      |            |      |  |      |            |   |  |   |           | 
|Net earnings (loss) and numerator for
basic earnings (loss) and for diluted
earnings (loss) per share |  | $    | (1,018,117 | )    |  | $    | (2,906,118 | ) |  | $ | 932,785   | 
|Denominator:                                                                                          |  |      |            |      |  |      |            |   |  |   |           | 
|Weighted-average shares for basic
earnings per share                                                  |  |      | 7,167,612  |      |  |      | 7,123,202  |   |  |   | 7,004,139 | 
|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 
|Effect of dilutive securities:                                                                        |  |      |            |      |  |      |            |   |  |   |           | 
|Employee stock options                                                                                |  |      |           |      |  |      |           |   |  |   | 389,129   | 
|Warrants                                                                                              |  |      |           |      |  |      |           |   |  |   |          | 
|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 
|Dilutive potential of common shares                                                                   |  |      |           |      |  |      |           |   |  |   | 389,129   | 
|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 
|Adjusted weighted-average
shares and assumed conversions
for diluted earnings per share               |  |      | 7,167,612  |      |  |      | 7,123,202  |   |  |   | 7,393,268 | 
|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 
|Basic earnings (loss) per share                                                                       |  |      | ($0.14     | )    |  |      | ($0.41     | ) |  | $ | 0.13      | 
|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 
|Diluted earnings (loss) per share                                                                     |  |      | ($0.14     | )    |  |      | ($0.41     | ) |  | $ | 0.13      | 
|                                                                                                      |  |      |            |      |  |      |            |   |  |   |           | 



|9. |  | RELATED PARTY TRANSACTIONS
|-- |  | --------------------------



| | (i) |  | The Company was party to certain agreements and transactions in
the normal course of business with a company which was Cabletels
largest shareholder. The agreement with this company was terminated
on May 31, 2000. Significant related party transactions not disclosed
elsewhere include:
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   |  |      |  |      |  |      |         |  |  |  |  | 
|-------------------------------------------------- |  | ---- |  | ---- |  | ---- | ------- |  |  |  |  | 
|                                                   |  | 2002 |  | 2001 |  | 2000
|                                                   |  |      |  |      |  |     
|Management fees paid to the aforementioned
Company |  | nil  |  | nil  |  | $    | 142,923 | 



| | (ii) |  | On December 12, 2000, the Companys Board of Directors approved
two executive loan agreements (i) to the President of the Company in
the amount of $150,000 and (ii) to the Chief Financial Officer of the
Company in the amount of $100,000. The loans mature on December 19,
2003, and are unsecured and interest-free. The Company carries these
loans at estimated fair value using a discount rate of 7% per annum.
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

59



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|9. |  | RELATED PARTY TRANSACTIONS(continued)
|-- |  | -------------------------------------



| | (iii) |  | For the year ended December 31, 2002, the Company paid to the
Sullivan Group, an entity controlled by the President of the Company
$55,800, (2001  $55,800; 2000  $55,800) for charges related to Mr.
Wallings compensation.              
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (iv)  |  | For the year ended December 31, 2002, the Company paid Cassels,
Brock & Blackwell LLP, a legal firm of which Mr. Peterson, the
Chairman of the Company is a Senior Partner an amount of $60,172,
(2001  $34,014) for services they provided.



|10. |  | COMMITMENTS AND CONTINGENCIES
|--- |  | -----------------------------



| | (a) |  | Commitments for leased premises and certain contracts have been
made as follows:
| | --- |  | --------------------------------------------------------------------------------

|            |  |   |           | 
|----------- |  | - | --------- | 
|2003        |  | $ | 1,033,379 | 
|2004        |  |   | 996,108   | 
|2005        |  |   | 933,312   | 
|2006        |  |   | 888,457   | 
|2007        |  |   | 805,161   | 
|Beyond 2007 |  |   | 1,470,808 | 



| | (b) |  | The Company is party to legal actions arising in the ordinary
course of its business. In managements opinion, the Company has
adequate insurance coverage and/or legal defenses with respect to any
of these actions and does not believe that they will materially
affect the Companys consolidated financial position or results of
operations.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|11. |  | ACQUISITION OF ALLIED WIRE AND CABLE LTD.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On November 1, 2002, the Company entered into a transaction with
Allied and certain related companies pursuant to which Cabletel has
been granted an option to acquire all of the capital stock of Allied
for a nominal consideration. As part of the proposed transaction,
Cabletel has agreed to provide an additional $100,000 in inventory
and advance $50,000 in cash to Allied. As previously reported, the
Companys second quarter results included a write-off related to
Allied. The Company took that write-off in connection with the
termination of its previously announced agreement to acquire Allied.
|   
|    |  | As set out in note 1(b), Allied has been accounted for by the
purchase method and as such results of operations for this business
have been included for the period beginning November 1, 2002.
Approximately $161,616 of goodwill was recorded in connection with
the transaction. The acquisition was accounted for as follows:                                                                                                                                                                                                                                                                                     

60



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|11. |  | ACQUISITION OF ALLIED WIRE AND CABLE LTD.(continued)
|--- |  | ----------------------------------------------------

|                     |  |   |            |  
|-------------------- |  | - | ---------- | -
|Net assets acquired  |  |   |            |  
|Total current assets |  | $ | 986,504    |  
|Total liabilities    |  |   | (1,303,071 | )
|Other                |  |   | 217,575    |  
|Acquisition costs    |  |   | (62,624    | )
|                     |  |   |            |  
|                     |  |   | (161,616   | )
|Goodwill             |  |   | 161,616    |  
|                     |  |   |            |  
|                     |  |   | 0          |  
|                     |  |   |            |  
|Consideration given  |  |   | 0          |  
|                     |  |   |            |  



|12. |  | SPECIAL CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | For the year ended December 31, 2002, Cabletel did not incur any special
charges. For the year ended December 31, 2001, Cabletel recorded special
charges of $357,836 related to termination expenses of 42 employees, of
which 32 were engaged in manufacturing activities of Stirling Connectors
and 10 were related to inside sales and warehouse functions of Cabletel.
As of December 31, 2002, the unpaid balance of these charges included in
accrued liabilities was $nil. For the year ended December 31, 2002 the
Company paid $203,985 relating to the previously recorded special charges.
|   
|13. |  | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



| | (a) |  | Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Companys Distribution and Technologies divisions are engaged in
the sale of telecommunication products principally in Canada to a
diversified group of customers within the telecommunications
industry. In the Manufacturing division, approximately 90% of total
revenue is derived from sales to international customers. At
December 31, 2002, accounts receivable from international customers
represented approximately 16% of

61



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|13. |  | FINANCIAL INSTRUMENTS(continued)
|--- |  | --------------------------------



| |     |  | total outstanding accounts receivable. The sales are to a
diversified group of customers in the telecommunications industry.
The company performs ongoing credit evaluation of its customers
financial condition and, generally, requires no collateral from its
customers although foreign sales are insured through the Export
Development Corporation to the maximum allowable.                                                                                                                                                                                           
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Currency risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | The Company is subject to currency risk through its activities in
the United States and Israel. Unfavorable changes in the exchange
rate may affect the operating results of the Company. The Company
does not actively use derivative instruments to reduce its exposure
to foreign currency risk. However, dependent on the nature, amount
and timing of foreign currency receipts and payments, the Company
may enter into forward exchange contracts to mitigate the associated
risks. There were no forward exchange contracts outstanding at
December 31, 2002 and 2001.
|
| | (c) |  | Fair value of financial assets and liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | The carrying amounts of the Companys financial assets and
liabilities including cash, accounts receivable, accounts payable,
and accrued liabilities, approximate fair value due to the
short-term maturity of these items.                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | The fair value of short-term loans and long-term debt approximates
the carrying amounts due to recent negotiations or variable rates
based on prime.                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | The carrying value of other receivables approximates fair value due
to the use of the market interest rates used in calculating net
present value.                                                                                                                                                                                                                                                                                                                                                                                                                            



|14. |  | SEGMENTED INFORMATION                                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company operates in three separate segments  distribution of
broadband communications equipment, distribution of technology equipment
and manufacturing of coaxial cable connectors.
|   
|    |  | It should be noted that industry segment information may be of limited
usefulness in comparing an industry segment of the Company with a similar
industry segment of another enterprise. 
|   
|    |  | Selected information by operating segment is summarized below for the
years ended December 31, 2002, 2001 and 2000.                                                                      

62



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|14. |  | SEGMENTED INFORMATION(continued)
|--- |  | --------------------------------
|   
|    |  | Summary of Business Segment     
|   
|    |  | Net Revenue                     

|                                 |  |      |            |      |  |      |            |   |  |   |            |  
|-------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                 |  | 2002 |            | 2001 |  | 2000
|                                 |  |      |            |      |  |     
|Distribution                     |  | $    | 42,615,216 |      |  | $    | 46,715,597 |   |  | $ | 59,059,214 |  
|Manufacturing                    |  |      | 9,355,703  |      |  |      | 7,859,032  |   |  |   | 12,938,721 |  
|Technology                       |  |      | 2,730,643  |      |  |      | 4,430,460  |   |  |   | 3,473,364  |  
|Less: Inter-company eliminations |  |      | (1,072,487 | )    |  |      | (884,190   | ) |  |   | (978,740   | )
|                                 |  |      |            |      |  |      |            |   |  |   |            |  
|Total Net Revenue                |  | $    | 53,629,075 |      |  | $    | 58,120,899 |   |  | $ | 74,492,559 |  
|                                 |  |      |            |      |  |      |            |   |  |   |            |  



| |  | Gross Profit
| |  | ------------

|                                                      |                  |   |             |          |      |   |             |         |   |   |             |         |  
|----------------------------------------------------- | ---------------- | - | ----------- | -------- | ---- | - | ----------- | ------- | - | - | ----------- | ------- | -
|                                                      |                  |   | 2002        |          | 2001 |   | 2000       
|                                                      |                  |   |             |          |      |   |            
|Distribution                                          |                  | $ | 7,624,991   |          |      | $ | 7,792,578   |         |   | $ | 8,925,743   |        
|Manufacturing                                         |                  |   | 2,703,205   |          |      |   | 1,171,526   |         |   |   | 4,630,493   |        
|Technology                                            |                  |   | 416,382     |          |      |   | 694,253     |         |   |   | 539,439     |        
|                                                      |                  |   |             |          |      |   |             |         |   |   |             |        
|Total Gross Profit                                    |                  | $ | 10,744,578  |          |      | $ | 9,658,357   |         |   | $ | 14,095,675  |        
|                                                      |                  |   |             |          |      |   |             |         |   |   |             |        
|Reconciliation to earnings (loss) before income taxes |                  |   |             |          |      |   |             |         |   |   |             |        
|Selling, general and administrative expenses          |                  |   | (9,633,169  | )        |      |   | (10,648,693 | )       |   |   | (11,689,850 | )      
|Special charge                                        |                  |   |            |          |      |   | (357,836    | )       |   |   |            |        
|Amortization                                          |                  |   | (258,842    | )        |      |   | (249,992    | )       |   |   | (237,173    | )      
|Interest expense  bank debt                          |                  |   | (771,423    | )        |      |   | (799,941    | )       |   |   | (710,058    | )      
|                                                      |  long-term debt |   |             | (301,307 | )    |   |             | (87,166 | ) |   |             | (72,995 | )
|Write off of other assets                             |                  |   | (566,145    | )        |      |   |            |         |   |   |            |        
|Loss on settlement of debt                            |                  |   | (164,000    | )        |      |   |            |         |   |   |            |        
|                                                      |                  |   |             |          |      |   |             |         |   |   |             |        
|                                                      |                  |   | (11,694,886 | )        |      |   | (12,143,628 | )       |   |   | (12,710,076 | )      
|                                                      |                  |   |             |          |      |   |             |         |   |   |             |        
|Consolidated earnings (loss) before income taxes      |                  |   | (950,308    | )        |      |   | (2,485,271  | )       |   |   | 1,385,599   |        
|                                                      |                  |   |             |          |      |   |             |         |   |   |             |        



| |  | Identifiable Assets:
| |  | --------------------

|                            |  |      |            |      |  |      |            |  |  |   |            | 
|--------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                            |  | 2002 |            | 2001 |  | 2000
|                            |  |      |            |      |  |     
|Distribution and Technology |  | $    | 20,213,322 |      |  | $    | 20,106,150 |  |  | $ | 26,877,416 | 
|Manufacturing               |  |      | 9,296,702  |      |  |      | 8,644,045  |  |  |   | 10,563,233 | 
|Other unallocated assets    |  |      | 120,000    |      |  |      | 120,000    |  |  |   | 697,263    | 
|                            |  |      |            |      |  |      |            |  |  |   |            | 
|Total Identifiable Assets   |  | $    | 29,630,024 |      |  | $    | 28,870,195 |  |  | $ | 38,137,912 | 
|                            |  |      |            |      |  |      |            |  |  |   |            | 

63



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|14. |  | SEGMENTED INFORMATION(continued)             
|--- |  | ---------------------------------------------
|   
|    |  | Expenditures on Property, Plant and Equipment

|                            |  |      |        |      |  |      |         |  |  |   |           | 
|--------------------------- |  | ---- | ------ | ---- |  | ---- | ------- |  |  | - | --------- | 
|                            |  | 2002 |        | 2001 |  | 2000
|                            |  |      |        |      |  |     
|Distribution and Technology |  | $    | 46,829 |      |  | $    | 120,811 |  |  | $ | 850,602   | 
|Manufacturing               |  |      | 8,748  |      |  |      | 155,796 |  |  |   | 1,094,712 | 
|                            |  |      |        |      |  |      |         |  |  |   |           | 
|Total Expenditures          |  | $    | 55,577 |      |  | $    | 276,607 |  |  | $ | 1,945,314 | 
|                            |  |      |        |      |  |      |         |  |  |   |           | 



| |  | Amortization                                                                         
| |  | -------------------------------------------------------------------------------------
|
| |  | (Includes amortization in cost of sales and amortization of prepaid financing costs.)

|                            |  |      |         |      |  |      |         |  |  |   |         | 
|--------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                            |  | 2002 |         | 2001 |  | 2000
|                            |  |      |         |      |  |     
|Distribution and Technology |  | $    | 378,510 |      |  | $    | 228,647 |  |  | $ | 236,109 | 
|Manufacturing               |  |      | 195,550 |      |  |      | 250,278 |  |  |   | 253,305 | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 
|Total Amortization          |  | $    | 574,060 |      |  | $    | 478,925 |  |  | $ | 489,414 | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 



| |  | Summary by Geographical Area                                    
| |  | ----------------------------------------------------------------
|
| |  | Net Revenue                                                     
|
| |  | (Revenues are attributed based on the location of the customer.)

|                  |  |      |            |      |  |      |            |  |  |   |            | 
|----------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                  |  | 2002 |            | 2001 |  | 2000
|                  |  |      |            |      |  |     
|Canada            |  | $    | 45,223,188 |      |  | $    | 51,146,057 |  |  | $ | 62,562,578 | 
|United States     |  |      | 7,247,937  |      |  |      | 5,370,113  |  |  |   | 3,489,598  | 
|Israel            |  |      | 595,418    |      |  |      | 855,266    |  |  |   | 7,953,483  | 
|Other             |  |      | 562,532    |      |  |      | 749,460    |  |  |   | 486,900    | 
|                  |  |      |            |      |  |      |            |  |  |   |            | 
|Total Net Revenue |  | $    | 53,629,075 |      |  | $    | 58,120,899 |  |  | $ | 74,492,559 | 
|                  |  |      |            |      |  |      |            |  |  |   |            | 



| |  | Property, Plant and Equipment                                                         
| |  | --------------------------------------------------------------------------------------
|
| |  | (Property, Plant, Equipment by geographical area are based on location of facilities.)

|                                    |  |      |           |      |  |      |           |  |  |   |           | 
|----------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                    |  | 2002 |           | 2001 |  | 2000
|                                    |  |      |           |      |  |     
|Canada                              |  | $    | 2,188,196 |      |  | $    | 2,280,388 |  |  | $ | 2,442,209 | 
|United States                       |  |      | 9,890     |      |  |      | 17,433    |  |  |   | 23,424    | 
|                                    |  |      |           |      |  |      |           |  |  |   |           | 
|Total Property, Plant and Equipment |  | $    | 2,198,086 |      |  | $    | 2,297,821 |  |  | $ | 2,465,633 | 
|                                    |  |      |           |      |  |      |           |  |  |   |           | 

64



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2001, 2000 AND 1999



|14. |  | SEGMENTED INFORMATION(continued)                                                        
|--- |  | ----------------------------------------------------------------------------------------
|   
|    |  | Sales that exceed 10% of total revenue within the Distribution
segment are listed below.

|                             |  |      |            |      |  |      |            |  |  |   |            | 
|---------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                             |  | 2002 |            | 2001 |  | 2000
|                             |  |      |            |      |  |     
|Rogers Cable Systems Limited |  | $    | 13,960,000 |      |  | $    | 12,399,000 |  |  | $ | 14,311,000 | 
|East Link Cablesystems       |  | $    | 11,903,000 |      |  |      |           |  |  |   |           | 



| |  | Sales to East Link during the years ended December 31, 2001 and 2000
represented less than 10% of the Companys total sales.                                                                                                                                                                                                                                                                                                                                                 
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Distribution                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Sales to a customer within the Distribution segment for the year ended
December 31, 2002 amounted to approximately $11,903,000 or 22% of total
revenue. At December 31, 2002 this customer accounted for approximately
34% of total Cabletel accounts receivable. The customers account was
current as per the terms and conditions of sale. The conditions of sale
to this particular customer include payment terms of 180 days.                                          
|
| |  | Sales to another customer within the Distribution segment for the year
ended December 31, 2002 amounted to approximately $13,960,000 or 26% of
total revenue. At December 31, 2002 this customer accounted for
approximately 19% of total Cabletel accounts receivable. The customers
account was current as per the terms and conditions of sale.                                                                                                                          
|
| |  | Manufacturing                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Sales to a customer within the Manufacturing segment for the year ended
December 31, 2002 amounted to approximately $6,043,000 or 65% of the
Manufacturing segments total sales or approximately 11% of the Companys
total consolidated sales. At December 31, 2002 this customer accounted
for approximately 23% of the Companys total consolidated accounts
receivable. At December 31, 2002, the customers account was current as
per the terms and conditions of sale.

65



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The following table reconciles the net earnings (loss) as reported on the
statements of operations and deficit prepared in accordance with Canadian
GAAP to the net income that would have been reported had the financial
statements been prepared in accordance with U.S. GAAP.



| | (i)  |  | Under Canadian GAAP costs classified as development
costs are charged in the income statement unless they meet
certain criteria; in which case, the costs must be deferred and
amortized. Under U.S. GAAP all costs classified as either
research or development costs are charged in the income
statement as incurred.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | Due to the fact that the Company does not have
legal ownership of the common shares of Allied, U.S. GAAP does
not allow consolidation of Allied results of operations.                                                                                                                                                 



| |  | Reconciliation of Net Earnings From Canadian GAAP to United States GAAP
| |  | -----------------------------------------------------------------------

|                                                                     |  |      |            |      |  |      |            |   |  |   |         | 
|-------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ------- | 
|                                                                     |  | 2002 |            | 2001 |  | 2000
|                                                                     |  |      |            |      |  |     
|Net earnings (loss) in accordance with
Canadian GAAP                 |  | $    | (1,018,117 | )    |  | $    | (2,906,118 | ) |  | $ | 932,785 | 
|Reduction of Allied net income                                       |  |      | (4,223     | )    |  |      |           |   |  |   |        | 
|Reduction in amortization of
development costs (net of income taxes) |  |      | 18,739     |      |  |      | 18,739     |   |  |   | 18,739  | 
|                                                                     |  |      |            |      |  |      |            |   |  |   |         | 
|Net earnings (loss) in accordance with
U.S. GAAP                     |  | $    | (1,003,601 | )    |  | $    | (2,887,379 | ) |  | $ | 951,524 | 
|                                                                     |  |      |            |      |  |      |            |   |  |   |         | 

66



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------

Balance Sheet Presentation
Comparing Canadian GAAP to United States GAAP

ASSETS

|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |            | 
|----------------------------- | ------------------------------------ | - | ----------- | ---------- | ------- | - | ----------- | ---------- | ------- | - | ----------- | ---------- |  | - | ----------- | ---------- | 
|                              |                                      |   | 2002        |            | 2001   
|                              |                                      |   |             |            |        
|                              |                                      |   | CDN GAAP    |            | US GAAP |   | CDN GAAP    |            | US GAAP
|                              |                                      |   |             |            |         |   |             |            |        
|CURRENT                       |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              | Cash                                 |   | $           | 63,169     |         |   | $           | 63,169     |         |   | $           | 12,292     |  |   | $           | 12,292     | 
|                              | Accounts receivable                  |   |             | 14,291,574 |         |   |             | 14,098,457 |         |   |             | 14,155,425 |  |   |             | 14,155,425 | 
|                              | Inventory                            |   |             | 10,488,445 |         |   |             | 9,874,445  |         |   |             | 10,629,957 |  |   |             | 10,629,957 | 
|                              | Income taxes recoverable             |   |             | 120,000    |         |   |             | 120,000    |         |   |             | 120,000    |  |   |             | 120,000    | 
|                              | Prepaid expenses, deposits and other |   |             | 1,407,169  |         |   |             | 1,398,460  |         |   |             | 761,843    |  |   |             | 761,843    | 
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              |                                      |   | 26,370,357  |            |         |   | 25,554,531  |            |         |   | 25,679,517  |            |  |   | 25,679,517  |           
|PROPERTY, PLANT AND EQUIPMENT |                                      |   | 2,198,086   |            |         |   | 1,980,511   |            |         |   | 2,297,821   |            |  |   | 2,297,821   |           
|DEFERRED REFINANCING FEES     |                                      |   | 633,334     |            |         |   | 633,334     |            |         |   | 606,720     |            |  |   | 606,720     |           
|OTHER RECEIVABLES             |                                      |   | 235,000     |            |         |   | 235,000     |            |         |   | 220,000     |            |  |   | 220,000     |           
|GOODWILL                      |                                      |   | 161,616     |            |         |   |            |            |         |   |            |            |  |   |            |           
|INVESTMENT IN ALLIED          |                                      |   |            |            |         |   | 112,624     |            |         |   |            |            |  |   |            |           
|PRODUCT DEVELOPMENT COSTS     |                                      |   | 31,631      |            |         |   |            |            |         |   | 66,137      |            |  |   |            |           
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              |                                      | $ | 29,630,024  |            |         | $ | 28,516,000  |            |         | $ | 28,870,195  |            |  | $ | 28,804,058  |           
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|LIABILITIES                   |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|CURRENT                       |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              | Bank indebtedness                    |   | $           | 12,461,424 |         |   | $           | 11,741,424 |         |   | $           | 11,308,972 |  |   | $           | 11,308,972 | 
|                              | Accounts payable                     |   |             | 6,736,089  |         |   |             | 6,377,919  |         |   |             | 8,757,675  |  |   |             | 8,757,675  | 
|                              | Accrued liabilities                  |   |             | 1,994,647  |         |   |             | 1,982,022  |         |   |             | 1,848,091  |  |   |             | 1,819,699  | 
|                              | Long-term debt                       |   |             | 2,067,558  |         |   |             | 2,067,558  |         |   |             | 171,385    |  |   |             | 171,385    | 
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              |                                      |   | 23,259,718  |            |         |   | 22,168,923  |            |         |   | 22,086,123  |            |  |   | 22,057,731  |           
|LONG-TERM DEBT                |                                      |   | 1,154,088   |            |         |   | 1,154,088   |            |         |   | 713,737     |            |  |   | 713,737     |           
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              |                                      |   | 24,413,806  |            |         |   | 23,323,011  |            |         |   | 22,799,860  |            |  |   | 22,771,468  |           
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|SHAREHOLDERS EQUITY          |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|CAPITAL STOCK                 |                                      |   | 16,300,761  |            |         |   | 16,300,761  |            |         |   | 16,136,761  |            |  |   | 16,136,761  |           
|DEFICIT                       |                                      |   | (11,084,543 | )          |         |   | (11,107,772 | )          |         |   | (10,066,426 | )          |  |   | (10,104,171 | )         
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              |                                      |   | 5,216,218   |            |         |   | 5,192,989   |            |         |   | 6,070,335   |            |  |   | 6,032,590   |           
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           
|                              |                                      | $ | 29,630,024  |            |         | $ | 28,516,000  |            |         | $ | 28,870,195  |            |  | $ | 28,804,058  |           
|                              |                                      |   |             |            |         |   |             |            |         |   |             |            |  |   |             |           

67



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------

Statement of Cash Flow
Presentation Comparing Canadian GAAP to United States GAAP

|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |            |  
|------------------------ | -------------------------------------------------- | - | -------- | ---------- | ---- | - | -------- | ---------- | ---- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                         |                                                    |   | 2002     |            | 2001 |   | 2000    
|                         |                                                    |   |          |            |      |   |         
|                         |                                                    |   | CDN      |            | US   |   | CDN      |            | US   |   | CDN        |            | US  
|                         |                                                    |   | GAAP     |            | GAAP |   | GAAP     |            | GAAP |   | GAAP       |            | GAAP
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |     
|OPERATING ACTIVITIES     |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|                         | Net income (loss) for the period                   |   | $        | (1,018,117 | )    |   | $        | (1,003,601 | )    |   | $          | (2,906,118 | )    |   | $          | (2,887,379 | ) |   | $          | 932,785    |   |   | $          | 951,524    |  
|                         | Imputed interest                                   |   |          | (15,000    | )    |   |          | (15,000    | )    |   |            | (16,000    | )    |   |            | (16,000    | ) |   |            | 46,000     |   |   |            | 46,000     |  
|                         | Future income taxes                                |   |          |           |      |   |          |           |      |   |            | 456,807    |      |   |            | 456,807    |   |   |            | 265,492    |   |   |            | 265,492    |  
|                         | Amortization                                       |   |          | 407,394    |      |   |          | 372,888    |      |   |            | 478,925    |      |   |            | 444,419    |   |   |            | 489,414    |   |   |            | 454,908    |  
|                         | Amortization of prepaid
refinancing fees           |   |          | 166,666    |      |   |          | 166,666    |      |   |            |           |      |   |            |           |   |   |            |           |   |   |            |           |  
|                         | Other assets                                       |   |          |           |      |   |          |           |      |   |            | (606,720   | )    |   |            | (606,720   | ) |   |            |           |   |   |            |           |  
|                         | Write off of other assets                          |   |          | 566,145    |      |   |          | 566,145    |      |   |            |           |      |   |            |           |   |   |            |           |   |   |            |           |  
|                         | Loss on settlement of debt                         |   |          | 164,000    |      |   |          | 164,000    |      |   |            |           |      |   |            |           |   |   |            |           |   |   |            |           |  
|                         | Change in accounts receivable                      |   |          | 104,618    |      |   |          | 56,968     |      |   |            | 6,462,928  |      |   |            | 6,462,928  |   |   |            | (8,264,323 | ) |   |            | (8,264,323 | )
|                         | Change in inventory                                |   |          | 774,190    |      |   |          | 755,512    |      |   |            | 2,273,184  |      |   |            | 2,273,184  |   |   |            | (2,852,897 | ) |   |            | (2,852,897 | )
|                         | Change in prepaid expenses,
deposits and other     |   |          | (1,396,043 | )    |   |          | (1,396,043 | )    |   |            | 552,817    |      |   |            | 552,817    |   |   |            | (799,758   | ) |   |            | (799,758   | )
|                         | Change in accounts payable and
accrued liabilities |   |          | 862,402    |      |   |          | 851,231    |      |   |            | (4,838,519 | )    |   |            | (4,822,752 | ) |   |            | 4,979,390  |   |   |            | 4,995,157  |  
|                         | Change in other receivables                        |   |          |           |      |   |          |           |      |   |            |           |      |   |            |           |   |   |            | (250,000   | ) |   |            | (250,000   | )
|                         | Change in income taxes
recoverable                 |   |          |           |      |   |          |           |      |   |            | (83,544    | )    |   |            | (83,544    | ) |   |            | 552,304    |   |   |            | 552,304    |  
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|                         |                                                    |   | 616,255  |            |      |   | 518,766  |            |      |   | 1,773,760  |            |      |   | 1,773,760  |            |   |   | (4,901,593 | )          |   |   | (4,901,593 | )         
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|FINANCING ACTIVITIES     |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|                         | Bank indebtedness                                  |   |          | 284,963    |      |   |          | 432,452    |      |   |            | (1,540,487 | )    |   |            | (1,540,487 | ) |   |            | 4,891,712  |   |   |            | 4,891,712  |  
|                         | Issuance of common shares                          |   |          |           |      |   |          |           |      |   |            | 150,625    |      |   |            | 150,625    |   |   |            | 947,488    |   |   |            | 947,488    |  
|                         | Proceeds of long-term debt                         |   |          |           |      |   |          |           |      |   |            |           |      |   |            |           |   |   |            | 1,101,721  |   |   |            | 1,101,721  |  
|                         | Repayment of long-term debt                        |   |          | (732,140   | )    |   |          | (732,140   | )    |   |            | (133,216   | )    |   |            | (133,216   | ) |   |            | (83,383    | ) |   |            | (83,383    | )
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|                         |                                                    |   | (447,177 | )          |      |   | (299,688 | )          |      |   | (1,523,078 | )          |      |   | (1,523,078 | )          |   |   | 6,857,538  |            |   |   | 6,857,538  |           
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|INVESTING ACTIVITIES     |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|                         | Purchase of equipment                              |   |          | (55,577    | )    |   |          | (55,577    | )    |   |            | (276,607   | )    |   |            | (276,607   | ) |   |            | (1,945,313 | ) |   |            | (1,945,313 | )
|                         | Investment in Allied                               |   |          |           |      |   |          | (112,624   | )    |   |            |           |      |   |            |           |   |   |            |           |   |   |            |           |  
|                         | Net assets acquired                                |   |          | 98,992     |      |   |          |           |      |   |            |           |      |   |            |           |   |   |            |           |   |   |            |           |  
|                         | Goodwill acquired                                  |   |          | (161,616   | )    |   |          |           |      |   |            |           |      |   |            |           |   |   |            |           |   |   |            |           |  
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|                         |                                                    |   | (118,201 | )          |      |   | (168,201 | )          |      |   | (276,607   | )          |      |   | (276,607   | )          |   |   | (1,945,313 | )          |   |   | (1,945,313 | )         
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|CHANGE IN CASH           |                                                    |   | 50,877   |            |      |   | 50,877   |            |      |   | (25,925    | )          |      |   | (25,925    | )          |   |   | 10,632     |            |   |   | 10,632     |           
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|CASH,beginning of period |                                                    |   | 12,292   |            |      |   | 12,292   |            |      |   | 38,219     |            |      |   | 38,219     |            |   |   | 27,587     |            |   |   | 27,587     |           
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           
|CASH,end of period       |                                                    | $ | 63,169   |            |      | $ | 63,169   |            |      | $ | 12,294     |            |      | $ | 12,294     |            |   | $ | 38,219     |            |   | $ | 38,219     |           
|                         |                                                    |   |          |            |      |   |          |            |      |   |            |            |      |   |            |            |   |   |            |            |   |   |            |           

68



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------



| | (a) |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                       
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Earnings per share calculations under U.S. GAAP reflecting the
Statement of Financial Accounting Standards No. 128 (SFAS 128), for
the years ended December 31, 2002, 2001, and 2000 would not differ
materially from the calculations required by the pronouncements of
CICA handbook Section 3500 which was adopted at the commencement of
Fiscal 2001.
|
| |     |  | Net income (loss) per share under U.S. GAAP would not differ
materially from that of Cdn. GAAP and accordingly earnings (loss)
per share would be disclosed as follows:                                                                                                                                                                                  

|                                     |                            |  |      |           |      |  |      |           |   |  |  |           | 
|------------------------------------ | -------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | - |  |  | --------- | 
|                                     |                            |  | 2002 |           | 2001 |  | 2000
|                                     |                            |  |      |           |      |  |     
|Net income (loss) per share:         |                            |  |      |           |      |  |      |           |   |  |  |          
|                                     | Basic                      |  |      | ($0.14    | )    |  |      | ($0.41    | ) |  |  | $0.13     | 
|                                     |                            |  |      |           |      |  |      |           |   |  |  |          
|                                     | Diluted earnings per share |  |      | ($0.14    | )    |  |      | ($0.41    | ) |  |  | $0.13     | 
|                                     |                            |  |      |           |      |  |      |           |   |  |  |          
|Weighted average shares outstanding: |                            |  |      |           |      |  |      |           |   |  |  |          
|                                     | Basic                      |  |      | 7,167,612 |      |  |      | 7,123,202 |   |  |  | 7,004,139 | 
|                                     |                            |  |      |           |      |  |      |           |   |  |  |          
|                                     | Diluted                    |  |      | 7,167,612 |      |  |      | 7,123,202 |   |  |  | 7,393,268 | 
|                                     |                            |  |      |           |      |  |      |           |   |  |  |          



| | (b) |  | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                             
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Statement of Financial Accounting Standards No. 130 (SFAS 130),
Reporting Comprehensive Income, establishes standards for the
reporting and display of comprehensive income and its components and
requires restatement of all previously reported information for
comparative purposes. For the years ended December 31, 2002, 2001,
and 2000 the Companys comprehensive income was the same as net
earnings.

69



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------



| | (c) |  | Accounting for stock options and pro-forma disclosures required
under SFAS 123                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Issued by the Financial Accounting Standards Board in October, 1996,
Statement of Financial Accounting Standards No. 123, (SFAS 123),
Accounting for Stock-Based Compensation, establishes financial
accounting and reporting standards for stock-based employee
compensation plans as well as transactions in which an entity issues
its equity instruments to acquire goods or services from
non-employees. This statement defines a fair value based method of
accounting for employee stock option or similar equity instruments,
and encourages all entities to adopt that method of accounting for
all their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation cost for those
plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, (APB 25),
Accounting for Stock Issued to Employees.
|
| |     |  | Entities electing to remain with the accounting in APB 25 must make
pro-forma disclosures of net income and, if presented, earnings per
share, as if the fair value based methods of accounting defined by
SFAS 123 had been applied. SFAS 123 is applicable to fiscal years
beginning after December 15, 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | The Company accounts for its stock options under Canadian GAAP,
which, in the Companys circumstances are not materially different
from the amounts that would be determined under the provisions of
the APB 25 and related interpretations in accounting for its stock
option plan. No compensation expense has been charged to the
statement of operations for the plan for the twelve months ended
December 31, 2002, 2001 and 2000. Had compensation expense for the
Companys stock-based compensation plan been determined based on the
fair value at the grant dates for awards under the Plan consistent
with the method under SFAS 123, the Companys net income and
earnings per share would have been reported as the pro-forma amounts
indicated in the table below.                                                                                                                                       
|
| |     |  | The fair value of each option grant was estimated on the date of the
grant using the fair value recognition method, with the following
assumptions: risk free interest rate of 5% (2001  5% and 2000  5%)
dividend yield of 0%, theoretical volatility assumption of .90 (2001
 .90 and 2000  .89), three years vesting provision on certain
options granted in 2002, 2001 and 2000, and the expected lives of
options of 7 years (2001  3 to 7 years, 2000 
3 - 7 years). The
weighted average fair value of options granted for the year ended
December 31, 2002 was $1.25 per option (2001  $1.66; 2000  $4.27).                                                                                                                                                                                                                                                                                            

70



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------

As
Reported  U.S. GAAP

|                              |         |   |             |        |             |   |             |        |   |   |         |      | 
|----------------------------- | ------- | - | ----------- | ------ | ----------- | - | ----------- | ------ | - | - | ------- | ---- | 
|                              |         |   | 2002        |        | 2001        |   | 2000       
|                              |         |   | As Reported |        | As Reported |   | As Reported
|                              |         |   |             |        |             |   |            
|Net income (loss)             |         | $ | (1,003,601  | )      |             | $ | (2,887,379  | )      |   | $ | 951,524 |     
|Net earnings (loss) per share |         |   |             |        |             |   |             |        |   |   |         |     
|                              | Basic   |   |             | ($0.14 | )           |   |             | ($0.41 | ) |   | $       | 0.14 | 
|                              |         |   |             |        |             |   |             |        |   |   |         |     
|                              | Diluted |   |             | ($0.14 | )           |   |             | ($0.41 | ) |   | $       | 0.13 | 
|                              |         |   |             |        |             |   |             |        |   |   |         |     

Pro-Forma
 U.S. GAAP

|                                                                  |         |   |            |        |           |   |            |        |   |   |          |        |  
|----------------------------------------------------------------- | ------- | - | ---------- | ------ | --------- | - | ---------- | ------ | - | - | -------- | ------ | -
|                                                                  |         |   | 2002       |        | 2001      |   | 2000      
|                                                                  |         |   | Pro-Forma  |        | Pro-Forma |   | Pro-Forma 
|                                                                  |         |   |            |        |           |   |           
|Net loss                                                          |         | $ | (1,684,384 | )      |           | $ | (3,925,338 | )      |   | $ | (817,930 | )     
|Net loss per share                                                |         |   |            |        |           |   |            |        |   |   |          |       
|                                                                  | Basic   |   |            | ($0.23 | )         |   |            | ($0.55 | ) |   |          | ($0.12 | )
|                                                                  |         |   |            |        |           |   |            |        |   |   |          |       
|                                                                  | Diluted |   |            | ($0.23 | )         |   |            | ($0.55 | ) |   |          | ($0.12 | )
|                                                                  |         |   |            |        |           |   |            |        |   |   |          |       
|Weighted average fair value of
options granted during this period |         | $ | 1.25       |        |           | $ | 1.66       |        |   | $ | 4.27     |       
|                                                                  |         |   |            |        |           |   |            |        |   |   |          |       

71



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##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------



| | (d)  |  | Recent United States Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |      |  | Under Staff Accounting Bulletin 74, the Company is required to
disclose certain information related to new accounting
standards which had not yet been adopted due to delayed
effective dates.                                                                                                                                                                                                                                                                                                                                                   
|
| | (i)  |  | Statement of Financial Accounting Standards
(SFAS) No. 141, SFAS 142, SFAS 143 and SFAS 144.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |      |  | In July 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141, Business Combinations, and SFAS No. 142
Goodwill and Other Intangible Assets.                                                                                                                                                                                                                                                                                                                                                                             
|
| |      |  | In August 2001, the FASB issued SFAS No. 143, Accounting for
Asset Retirement Obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |      |  | In October 2001, the FASB issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |      |  | On January 1, 2002, the Company adopted SFAS No. 141, SFAS No.
142, SFAS No. 143 and SFAS No. 144. The adoption of these
statements did not have a material impact on the Companys
results of operations or financial condition.                                                                                                                                                                                                                                                                                                                
|
| | (ii) |  | Statement of Financial Accounting Standards No. 146
(SFAS No. 146)                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |      |  | In July 2002, the FASB issued SFAS No. 146, which addresses
significant issues regarding the recognition, measurement, and
reporting of costs that are associated with exit and disposal
activities, including restructuring activities that are
currently accounted for pursuant to the guidance that the
Emerging Issues Task Force (EITF) has set forth in EITF issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(Including Certain Costs Incurred in a Restructuring).

72



---



##### 



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)

DECEMBER 31, 2002, 2001 AND 2000



|15. |  | UNITED STATES ACCOUNTING
PRINCIPLES(continued)
|--- |  | ----------------------------------------------



| |       |  | SFAS No. 146 revises the accounting for certain lease
termination costs and employee termination benefits, which are
generally recognized in connection with restructuring
activities. The adoption of this Statement is not expected to
have a material effect on the Companys results of operations
or financial condition.                                                                                                                                                                                                                                                     
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (iii) |  | Statement of Financial Accounting Standards No. 148 (SFAS No. 148)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |       |  | In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure. SFAS
No. 148 amends the transition and disclosure provisions of SFAS
No. 123. The Company is currently evaluating SFAS No. 148 to
determine if it will adopt SFAS No. 123 to account for Employee
stock options using the fair value method.                                                                                                                                                                                                                
|
| | (iv)  |  | FASB Interpretation No. 45 (FIN 45)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |       |  | In November 2002, the FASB issued FIN 45, which expands
previously issued accounting guidance and disclosure
requirements for certain guarantees. FIN 45 requires the
Company to recognize an initial liability for the fair value of
an obligation assumed by issuing a guarantee. The provision
for initial recognition and measurement of the liability will
be applied on a prospective basis to guarantees issued or
modified after December 31, 2002. The adoption of FIN 45 is
not expected to materially affect the Companys results of
operations or financial condition.
|
| | (v)   |  | FASB Interpretation No. 46 (FIN 46)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |       |  | In January 2003, FASB issued FIN 46, Consolidation of Variable
Interest Entities which requires the consolidation of variable
interest entities, as defined. FIN 46 is applicable to
financial statements to be issued by the Company after 2002;
however, disclosures are required currently if the Company
expects to consolidate any variable interest entities.                                                                                                                                                                                                              

73



---



##### 



Exhibit 21

Subsidiaries at December 31,
2002

|                                 |  |             
|-------------------------------- |  | ------------
|Direct Wholly-Owned Subsidiaries |  | Jurisdiction
|                                 |  |             
|Stirling (Israel) Ltd.           |  | Israel      
|Stirling Connectors U.S.A., Inc. |  | Delaware    

74



---



##### 



CABLETEL COMMUNICATIONS CORP.

SCHEDULE II
(Canadian Funds)

VALUATION AND QUALIFYING ACCOUNTS

|                                     |                                      |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |           | 
|------------------------------------ | ------------------------------------ |  | ---------- | --------- | ---------- |  | -------- | ------- | ---------- |  | ------ | - | ------- |  |  | -------- | - |  |  | --------- | 
|                                     |                                      |  |            |           |            |  | Charged  |         | Charged    |  |        |   |         |  |  |          |  
|                                     |                                      |  | Balance at |           | to Costs & |  | to Other |         |            |  |        |   | Balance
|                                     |                                      |  | Beginning  |           | Expenses   |  | Accounts |         | Deductions |  | at End
|                                     |                                      |  |            |           |            |  |          |         |            |  |       
|                                     |                                      |  | $          |           | $          |  | $        |         | $          |  | $     
|For the year ended December 31, 2002 |                                      |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |          
|                                     | Allowance for uncollectible trade    |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |           | 
|                                     | Receivables                          |  |            | 847,194   |            |  |          | 42,000  |            |  |        |  |         |  |  | (779,280 | ) |  |  | 109,914   | 
|                                     | Allowance for inventory obsolescence |  |            | 1,333,278 |            |  |          |        |            |  |        |  |         |  |  | (265,407 | ) |  |  | 1,067,871 | 
|For the year ended December 31, 2001 |                                      |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |          
|                                     | Allowance for uncollectible trade    |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |           | 
|                                     | Receivables                          |  |            | 276,005   |            |  |          | 596,400 |            |  |        |  |         |  |  | (25,211  | ) |  |  | 847,194   | 
|                                     | Allowance for inventory obsolescence |  |            | 863,241   |            |  |          | 500,000 |            |  |        |  |         |  |  | (29,963  | ) |  |  | 1,333,278 | 
|For the year ended December 31, 2000 |                                      |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |          
|                                     | Allowance for uncollectible trade    |  |            |           |            |  |          |         |            |  |        |   |         |  |  |          |   |  |  |           | 
|                                     | receivables                          |  |            | 242,489   |            |  |          | 42,000  |            |  |        |  |         |  |  | (8,484   | ) |  |  | 276,005   | 
|                                     | Allowance for inventory obsolescence |  |            | 798,564   |            |  |          | 64,677  |            |  |        |  |         |  |  |         |   |  |  | 863,241   | 

75



---



##### 



CERTIFICATIONS

I, Greg Walling, certify that:

1.     I have reviewed this annual report on Form 10-K of Cabletel
Communications Corp.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a)     designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
| | b)     evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c)     presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                     

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a)     all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and



| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b)     any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and

6.     The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                                                      |  | 
|----------------------------------------------------- |  | 
|Date: March 25, 2003                                  |  | 
|                                                     
|/s/Gregory Walling

Gregory Walling
President and CEO |  | 

76



---



##### 



CERTIFICATION

I, Ron Eilath, certify that:

1.     I have reviewed this annual report on Form 10-K of Cabletel
Communications Corp.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a)    designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
| | b)    evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c)    presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a)    all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
|
| | b)    any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                                                  |  | 
|------------------------------------------------- |  | 
|Date: March 25, 2003                              |  | 
|                                                 
|/s/Ron Eilath

Ron Eilath
Chief Financial Officer |  | 

77