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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

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

|                                         |  |                               
|---------------------------------------- |  | ------------------------------
|For the Quarter Ended
September 30, 2002 |  | Commission File Number
1-13332

CABLETEL COMMUNICATIONS CORP.(Exact name of registrant as specified in its charter)

|                                                                               |  |                                             
|------------------------------------------------------------------------------ |  | --------------------------------------------
|Ontario, Canada
(State or other jurisdiction of
incorporation or organization) |  | 8647 8526
(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

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 the number of shares outstanding of each of the Registrants classes
of common stock as of the latest practicable date:

|                                |  |                                             
|------------------------------- |  | --------------------------------------------
|ClassCommon Stock, no par value |  | Outstanding as at November 11, 20027,167,612

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TABLE OF CONTENTS



|                                                                                              |                                                   |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                                                
|ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                                                              | CONSOLIDATED BALANCE SHEETS                      
|                                                                                              | CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
|                                                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS            
|                                                                                              | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS       
|ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK                              
|ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                                                                   
|ITEM 1. LEGAL PROCEEDINGS                                                                    
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|Certification of Chief Executive Officer                                                     
|Certification of Chief Financial Officer                                                     



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP.
FORM 10-Q
FOR THE QUARTER ENDED
SEPTEMBER 30, 2002

INDEX

|         |  |                                                                                       |  |  |                                                                                                     |  |          |      | 
|-------- |  | ------------------------------------------------------------------------------------- |  |  | --------------------------------------------------------------------------------------------------- |  | -------- | ---- | 
|         |  |                                                                                       |  |  |                                                                                                     |  | Page No.
|         |  |                                                                                       |  |  |                                                                                                     |  |         
|Part I.  |  | Financial Information                                                                 |  |  |                                                                                                     | 
|Item 1.  |  | Financial Statements                                                                  |  |  |                                                                                                     | 
|         |  |                                                                                       |  |  | Balance Sheet as at
September 30, 2002 and December 31, 2001                                        |  |          | 3    | 
|         |  |                                                                                       |  |  | Statement of Operations and Deficit
for the 3 and 9 month periods ended September 30, 2002 and 2001 |  |          | 4    | 
|         |  |                                                                                       |  |  | Statement of Cash Flows
for the 3 and 9 month periods ended September 30, 2002 and 2001             |  |          | 5    | 
|         |  |                                                                                       |  |  | Notes to Financial Statements                                                                       |  |          | 6-21 | 
|Item 2.  |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  |  | 22-28                                                                                               | 
|Item 3.  |  | Quantitative and Qualitative Disclosures of Market Risk                               |  |  | 29                                                                                                  | 
|Item 4.  |  | Controls and Procedures                                                               |  |  | 32                                                                                                  | 
|Part II. |  | Other Information                                                                     |  |  | 33                                                                                                  | 
|Item 1.  |  | Legal Proceedings                                                                     |  |  | 33                                                                                                  | 
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                      |  |  | 33                                                                                                  | 

The Company is a Foreign Private Issuer as defined in Rule 3b-4 under
the Securities Exchange Act of 1994, as amended. Although as a Foreign
Private Issuer the Company is eligible to file reports on Form 6-K, the
Company has voluntarily elected to file quarterly reports on Form 10-Q.

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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

CABLETEL COMMUNICATIONS CORP.




CONSOLIDATED BALANCE
SHEETS
(Canadian Funds)
Unaudited

ASSETS

|                                                                           |                                                                    |                                                      |             |                      |            |               |             |              |            |         |  | 
|-------------------------------------------------------------------------- | ------------------------------------------------------------------ | ---------------------------------------------------- | ----------- | -------------------- | ---------- | ------------- | ----------- | ------------ | ---------- | ------- |  | 
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |              |            | Audited
|                                                                           |                                                                    |                                                      |             |                      |            | September 30, |             | December 31,
|                                                                           |                                                                    |                                                      |             |                      |            | 2002          |             | 2001        
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    |                                                      |             |                      |            | (Unaudited)   |             |              |            |        
|CURRENT                                                                    |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           | Cash                                                               |                                                      | $           | 10,850               |            |               | $           | 12,292       |           
|                                                                           | Accounts receivable
(net of allowance of $285,508;2001 - $847,194) |                                                      | 18,824,630  |                      |            |               | 14,155,425  |             
|                                                                           | Inventory (Note 2)                                                 |                                                      |             | 9,942,000            |            |               |             | 10,629,957   |           
|                                                                           | Income taxes recoverable                                           |                                                      |             | 200,192              |            |               |             | 120,000      |           
|                                                                           | Prepaid expenses and deposits                                      |                                                      |             | 1,062,788            |            |               |             | 761,843      |           
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    |                                                      | 30,040,460  |                      |            |               | 25,679,517  |             
|PROPERTY, PLANT AND EQUIPMENT(Note 3)                                      |                                                                    |                                                      | 2,106,322   |                      |            |               | 2,297,821   |             
|DEFERRED REFINANCING FEES(Note 8)                                          |                                                                    |                                                      | 700,000     |                      |            |               |            |             
|OTHER ASSETS(Note 9i)                                                      |                                                                    |                                                      | 231,999     |                      |            |               | 826,720     |             
|PRODUCT DEVELOPMENT COSTS
(net of amortization of $94,891; 2001 - $69,011) |                                                                    |                                                      | 40,257      |                      |            |               | 66,137      |             
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    | $                                                    | 33,119,038  |                      |            | $             | 28,870,195  |             
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    |                                                      |             | LIABILITIES          |            |               |             |              |            |         |  | 
|CURRENT                                                                    |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           | Bank indebtedness (Note 4)                                         |                                                      | $           | 14,845,506           |            |               | $           | 11,308,972   |           
|                                                                           | Accounts payable                                                   |                                                      |             | 6,669,125            |            |               |             | 8,757,675    |           
|                                                                           | Accrued liabilities                                                |                                                      |             | 2,531,035            |            |               |             | 1,848,091    |           
|                                                                           | Current portion of long-term debt (Note 5)                         |                                                      |             | 1,763,622            |            |               |             | 171,385      |           
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    |                                                      | 25,809,288  |                      |            |               | 22,086,123  |             
|LONG-TERM DEBT(Note 5)                                                     |                                                                    |                                                      | 1,802,030   |                      |            |               | 713,737     |             
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    |                                                      | 27,611,318  |                      |            |               | 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                                                                    |                                                                    |                                                      | (10,793,041 | )                    |            |               | (10,066,426 | )           
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    |                                                      | 5,507,720   |                      |            |               | 6,070,335   |             
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             
|                                                                           |                                                                    | $                                                    | 33,119,038  |                      |            | $             | 28,870,195  |             
|                                                                           |                                                                    |                                                      |             |                      |            |               |             |             

See accompanying notes to financial statements.

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CABLETEL COMMUNICATIONS CORP.




CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Canadian Funds)
(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,

|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |           |  
|---------------------------------- | -------------------------------------- | - | -------------------------- | --------- | -------------------------- | - | ----------- | --------- | ---- | - | ----------- | --------- | - | - | ----------- | --------- | -
|                                   |                                        |   | For the Three Month        |           | For the Nine Month        
|                                   |                                        |   | Period Ended September 30, |           | Period Ended September 30,
|                                   |                                        |   |                            |           |                           
|                                   |                                        |   | 2002                       |           | 2001                       |   | 2002        |           | 2001
|                                   |                                        |   |                            |           |                            |   |             |           |     
|SALES                              |                                        | $ | 13,650,216                 |           |                            | $ | 15,041,835  |           |      | $ | 41,794,281  |           |   | $ | 43,344,711  |          
|COST OF SALES                      |                                        |   | 10,463,565                 |           |                            |   | 13,276,649  |           |      |   | 33,496,624  |           |   |   | 36,506,769  |          
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|GROSS PROFIT                       |                                        |   | 3,186,651                  |           |                            |   | 1,765,186   |           |      |   | 8,297,657   |           |   |   | 6,837,942   |          
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|EXPENSES                           |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|                                   | Selling, general and administrative    |   |                            | 2,878,464 |                            |   |             | 3,021,723 |      |   |             | 7,274,515 |   |   |             | 8,052,779 |  
|                                   | Special charge (Note 11)               |   |                            |          |                            |   |             | 607,446   |      |   |             |          |   |   |             | 607,446   |  
|                                   | Amortization                           |   |                            | 72,311    |                            |   |             | 57,598    |      |   |             | 192,616   |   |   |             | 178,647   |  
|                                   | Interest  bank indebtedness           |   |                            | 227,877   |                            |   |             | 186,097   |      |   |             | 554,662   |   |   |             | 635,059   |  
|                                   | Interest  long-term debt              |   |                            | 101,370   |                            |   |             | 21,398    |      |   |             | 195,629   |   |   |             | 68,966    |  
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|                                   |                                        |   | 3,280,022                  |           |                            |   | 3,894,262   |           |      |   | 8,217,422   |           |   |   | 9,542,897   |          
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|INCOME (LOSS) BEFORE THE FOLLOWING |                                        |   | (93,371                    | )         |                            |   | (2,129,076  | )         |      |   | 80,235      |           |   |   | (2,704,955  | )        
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|                                   | Write off of other assets (Note 10 b)  |   |                            | 11,041    |                            |   |             |          |      |   |             | 615,850   |   |   |             |          |  
|                                   | Loss on settlement of debt (Note 5iii) |   |                            |          |                            |   |             |          |      |   |             | 164,000   |   |   |             |          |  
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|                                   |                                        |   | 11,041                     |           |                            |   |            |           |      |   | 779,850     |           |   |   |            |          
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|LOSS BEFORE INCOME TAXES           |                                        |   | (104,412                   | )         |                            |   | (2,129,076  | )         |      |   | (699,615    | )         |   |   | (2,704,955  | )        
|                                   | Income taxes                           |   |                            | 9,000     |                            |   |             | 687,866   |      |   |             | 27,000    |   |   |             | 418,807   |  
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|NET LOSS FOR THE PERIOD            |                                        | $ | (113,412                   | )         |                            | $ | (2,816,942  | )         |      | $ | (726,615    | )         |   | $ | (3,123,762  | )        
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|DEFICIT,beginning of period        |                                        | $ | (10,679,629                | )         |                            | $ | (7,467,128  | )         |      | $ | (10,066,426 | )         |   | $ | (7,160,308  | )        
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|DEFICIT,end of period              |                                        | $ | (10,793,041                | )         |                            | $ | (10,284,070 | )         |      | $ | (10,793,041 | )         |   | $ | (10,284,070 | )        
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|Earnings (loss) per share(Note 7)  |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|                                   | Basic                                  |   |                            | ($0.02    | )                          |   |             | ($0.39    | )    |   |             | ($0.10    | ) |   |             | ($0.44    | )
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          
|                                   | Fully diluted                          |   |                            | ($0.02    | )                          |   |             | ($0.39    | )    |   |             | ($0.10    | ) |   |             | ($0.44    | )
|                                   |                                        |   |                            |           |                            |   |             |           |      |   |             |           |   |   |             |          

See accompanying notes to financial statements.

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CABLETEL COMMUNICATIONS CORP.




CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian Funds)
(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,

|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |            |  
|----------------------------------- | -------------------------------------------------- | - | -------------------------- | ---------- | -------------------------- | - | -------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                    |                                                    |   | For the Three Month        |            | For the Nine Month        
|                                    |                                                    |   | Period Ended September 30, |            | Period Ended September 30,
|                                    |                                                    |   |                            |            |                           
|                                    |                                                    |   | 2002                       |            | 2001                       |   | 2002     |            | 2001
|                                    |                                                    |   |                            |            |                            |   |          |            |     
|OPERATING ACTIVITIES                |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    | Loss for the period                                |   | $                          | (113,412   | )                          |   | $        | (2,816,942 | )    |   | $          | (726,615   | ) |   | $          | (3,123,762 | )
|                                    | Imputed interest                                   |   |                            | (3,999     | )                          |   |          | (4,000     | )    |   |            | (11,999    | ) |   |            | (12,000    | )
|                                    | Write off of other assets                          |   |                            | 11,041     |                            |   |          |           |      |   |            | 615,850    |   |   |            |           |  
|                                    | Loss on settlement of debt                         |   |                            |           |                            |   |          |           |      |   |            | 164,000    |   |   |            |           |  
|                                    | Future income taxes                                |   |                            |           |                            |   |          | 678,866    |      |   |            |           |   |   |            | 391,807    |  
|                                    | Amortization                                       |   |                            | 89,660     |                            |   |          | 95,786     |      |   |            | 240,519    |   |   |            | 410,754    |  
|                                    | Amortization of prepaid
refinancing fees           |   |                            | 100,000    |                            |   |          |           |      |   |            | 100,000    |   |   |            |           |  
|                                    | Change in accounts receivable                      |   |                            | (1,300,360 | )                          |   |          | (3,102,727 | )    |   |            | (4,669,205 | ) |   |            | 3,493,143  |  
|                                    | Change in inventory                                |   |                            | 141,930    |                            |   |          | 2,150,940  |      |   |            | 687,957    |   |   |            | 341,284    |  
|                                    | Change in prepaid expenses,
deposits and other     |   |                            | (114,885   | )                          |   |          | 890,470    |      |   |            | (1,110,076 | ) |   |            | 340,287    |  
|                                    | Change in accounts payable
and accrued liabilities |   |                            | (309,915   | )                          |   |          | 1,769,834  |      |   |            | 1,663,059  |   |   |            | (927,314   | )
|                                    | Change in income taxes recoverable                 |   |                            |           |                            |   |          |           |      |   |            | (80,192    | ) |   |            |           |  
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    |                                                    |   | (1,499,940                 | )          |                            |   | (337,773 | )          |      |   | (3,100,822 | )          |   |   | 1,770,488  |           
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|FINANCING ACTIVITIES                |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    | Bank indebtedness incurred (repayment)             |   |                            | 1,621,983  |                            |   |          | 262,622    |      |   |            | 3,536,534  |   |   |            | (1,552,841 | )
|                                    | Issuance of common shares                          |   |                            |           |                            |   |          | 74,186     |      |   |            |           |   |   |            | 150,623    |  
|                                    | Repayment of long-term debt                        |   |                            | (128,814   | )                          |   |          | (42,234    | )    |   |            | (388,134   | ) |   |            | (126,196   | )
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    |                                                    |   | 1,493,169                  |            |                            |   | 294,574  |            |      |   | 3,148,400  |            |   |   | (1,528,414 | )         
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|INVESTING ACTIVITIES                |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    | Purchase of equipment                              |   |                            | (23,460    | )                          |   |          | (18,416    | )    |   |            | (49,020    | ) |   |            | (262,239   | )
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    |                                                    |   | (23,460                    | )          |                            |   | (18,416  | )          |      |   | (49,020    | )          |   |   | (262,239   | )         
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|CHANGE IN CASH                      |                                                    |   | (30,231                    | )          |                            |   | (61,615  | )          |      |   | (1,442     | )          |   |   | (20,165    | )         
|CASH, beginning of period           |                                                    |   | 41,081                     |            |                            |   | 79,669   |            |      |   | 12,292     |            |   |   | 38,219     |           
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|CASH, end of period                 |                                                    | $ | 10,850                     |            |                            | $ | 18,054   |            |      | $ | 10,850     |            |   | $ | 18,054     |           
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|SUPPLEMENTARY CASH FLOW INFORMATION |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    | Interest paid                                      |   | $                          | 333,246    |                            |   | $        | 211,495    |      |   | $          | 762,290    |   |   | $          | 704,025    |  
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           
|                                    | Income taxes paid                                  |   | $                          |           |                            |   | $        |           |      |   | $          |           |   |   | $          |           |  
|                                    |                                                    |   |                            |            |                            |   |          |            |      |   |            |            |   |   |            |           

See accompanying notes to financial statements.

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CABLETEL COMMUNICATIONS CORP.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|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 13, conform, in all material respects, with the
accounting principles generally accepted in the United States.



| | (a) |  | General                                                                                                                                                                                                                                                                                                                                                                                               
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal
recurring adjustments) which are necessary to present fairly the
consolidated financial position as at September 30, 2002 and the
consolidated results of operations and the consolidated cash flows
for the three and nine months ended September 30, 2002 and 2001.
|
| |     |  | While management believes that the disclosures presented are
adequate to make the information not misleading, it is suggested
that these consolidated financial statements be read in conjunction
with the consolidated financial statements and the notes included in
the Companys latest annual report on Form 10-K.                                                                               
|
| |     |  | The interim financial statements follow the same accounting policies
and methods of their application as the most recent annual financial
statements. However, the interim financial statements do not
include all disclosures necessary to conform in all respects to the
requirements of Canadian generally accepted accounting principles
for annual financial statements.                         
|
| | (b) |  | Consolidation                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | The consolidated financial statements include the accounts of the wholly-owned
subsidiaries, Stirling (Israel) Ltd., and Stirling Connectors, U.S.A., Inc.                                                                                                                                                                                                                                            
|
| |     |  | The consolidated financial statements include the accounts of the
Company after eliminations of inter-company transactions.                                                                                                                                                                                                                                                                           
|
| | (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) |  | Deferred Refinancing Fees                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | Deferred refinancing fees are amortized over three years being the life of the loan.                                                                                                                                                                                                                                                                                                                  

6



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|2. |  | 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.

|                |  |               |           |              |  |   |            | 
|--------------- |  | ------------- | --------- | ------------ |  | - | ---------- | 
|                |  | September 30, |           | December 31,
|                |  | 2002          |           | 2001        
|                |  |               |           |             
|Raw Material    |  | $             | 392,616   |              |  | $ | 284,258    | 
|Work in process |  |               | 530,581   |              |  |   | 655,933    | 
|Finished goods  |  |               | 9,018,803 |              |  |   | 9,689,766  | 
|                |  |               |           |              |  |   |            | 
|                |  | $             | 9,942,000 |              |  | $ | 10,629,957 | 
|                |  |               |           |              |  |   |            | 



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

|                       |  |                    |           |                   |  |             |           |      |  |              |           |     |  |  |           |             |  |  |           |  |  |  |           | 
|---------------------- |  | ------------------ | --------- | ----------------- |  | ----------- | --------- | ---- |  | ------------ | --------- | --- |  |  | --------- | ----------- |  |  | --------- |  |  |  | --------- | 
|                       |  | September 30, 2002 |           | December 31, 2001
|                       |  |                    |           |                  
|                       |  |                    |           |                   |  | Accumulated |           |      |  |              |           |     |  |  |           | Accumulated |  |  |           | 
|                       |  | Cost               |           | Amortization      |  | Net         |           | Cost |  | Amortization |           | Net
|                       |  |                    |           |                   |  |             |           |      |  |              |           |    
|                       |  | $                  |           | $                 |  | $           |           | $    |  | $            |           | $  
|Leasehold improvements |  |                    | 711,090   |                   |  |             | 280,787   |      |  |              | 430,303   |     |  |  | 688,024   |             |  |  | 235,296   |  |  |  | 452,728   | 
|Equipment              |  |                    | 3,911,962 |                   |  |             | 2,235,943 |      |  |              | 1,676,019 |     |  |  | 3,886,007 |             |  |  | 2,040,914 |  |  |  | 1,845,093 | 
|                       |  |                    |           |                   |  |             |           |      |  |              |           |     |  |  |           |             |  |  |           |  |  |  |           | 
|                       |  |                    | 4,623,052 |                   |  |             | 2,516,730 |      |  |              | 2,106,322 |     |  |  | 4,574,031 |             |  |  | 2,276,210 |  |  |  | 2,297,821 | 
|                       |  |                    |           |                   |  |             |           |      |  |              |           |     |  |  |           |             |  |  |           |  |  |  |           | 



|   |  | The Company did not amortize equipment with a carrying amount of $694,362
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 is now utilizing these assets in its
manufacturing operations and therefore commenced recording amortization on
this equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|4. |  | BANK INDEBTEDNESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | On May 16, 2002, Cabletel entered into a Revolving Credit Facility
Agreement with LaSalle Business Credit, a division of ABN AMBRO 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 (1.5%). 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 (1.5%). 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 a prior loan by the Business
Development Bank of Canada, and general intangibles), existing and future.

7



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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|4. |  | BANK INDEBTEDNESS(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The new facility contains certain customary covenants, including, among
others, certain debt servicing ratios. The Company estimates that as of
September 30, 2002, as a result of a minor variation from the required
debt service ratio, the Company had a technical violation of the
applicable covenant. The Company is working with its lender to resolve
the matter and expects to receive either a waiver or amendment to the
agreement shortly. There can be no assurance that the Company will be
successful in obtaining either a waiver or amendment. In the event that
the Company is unable to obtain such waiver or amendment it could
adversely affect the Company.
|  
|5. |  | LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|      |    |                     |  |                       |           |               |           |              |         |   |         | 
|----- | -- | ------------------- |  | --------------------- | --------- | ------------- | --------- | ------------ | ------- | - | ------- | 
|      |    |                     |  |                       |           | September 30, |           | December 31,
|      |    |                     |  |                       |           | 2002          |           | 2001        
|      |    |                     |  |                       |           |               |           |             
|      | (i | )                   |  | Term loan-Leaseholds  |           | $             | 332,057   |              |         | $ | 354,122 | 
|(ii)  |    | Term loan-Equipment |  |                       | 436,600   |               |           |              | 531,000 |  
|(iii) |    | Term loan-Note      |  |                       | 2,796,995 |               |           |              |        |  
|      |    |                     |  |                       |           |               |           |              |         |   |         | 
|      |    |                     |  |                       |           |               | 3,565,652 |              |         |   | 885,122 | 
|      |    |                     |  | Less: Current portion |           |               | 1,763,622 |              |         |   | 171,385 | 
|      |    |                     |  |                       |           |               |           |              |         |   |         | 
|      |    |                     |  |                       |           | $             | 1,802,030 |              |         | $ | 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 (September 30, 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 of which is available to
the Company for capital purchases and is collateralized by the assets
acquired under this facility.                                                                                                                                                                                                                                                                                                        
|
| | (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 of settlement of debt. The
senior subordinated promissory note is in the principal amount of US
$2.2 million, 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

8



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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|5. |  | LONG-TERM DEBT(continued)                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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.                                                                                    
|  
|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 June 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. 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, 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 September 30, 2002 |  |        | 1,444,000 |       |  |         | 1.53  9.28 |          |  |  | 3.88 | 
|                              |  |        |           |       |  |         |             |          |  |  |      | 

The contractual terms of options at various prices are as follows:

|              |  |                            
|------------- |  | ---------------------------
|$1.53  $4.31 |  | less than 1 year  10 years
|$4.44  $7.46 |  | less than 1 year  5 years 
|$8.60  $9.28 |  | less than 1 year  8 years 

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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|6. |  | CAPITAL STOCK(continued)                                                                                                                            
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In connection with the settlement of outstanding accounts payable (Note
5iii), common shares have been reserved for warrants on the following basis:

|                              |  |        |         |       |  |          |      |          |  |  |      | 
|----------------------------- |  | ------ | ------- | ----- |  | -------- | ---- | -------- |  |  | ---- | 
|                              |  |        |         |       |  | Exercise |      | Weighted
|                              |  | Shares |         | Price |  | Average 
|                              |  |        |         |       |  |         
|                              |  |        |         |       |  | $        |      | $       
|Outstanding and Exercisable   |  |        |         |       |  |          |      |          |  |  |      | 
|Balance at December 31, 2001  |  |        |        |       |  |          |     |          |  |  |     | 
|                              |  |        |         |       |  |          |      |          |  |  |      | 
|Granted                       |  |        | 200,000 |       |  |          | 1.64 |          |  |  | 1.64 | 
|Balance at September 30, 2002 |  |        | 200,000 |       |  |          | 1.64 |          |  |  | 1.64 | 
|                              |  |        |         |       |  |          |      |          |  |  |      | 

The contractual term of the warrant is as follows:



| |  |  | $1.64 less than 1 year  5 year
| |  |  | -------------------------------



|7. |  | EARNINGS PER SHARE
|-- |  | ------------------



| | (a) |  | Basic Earnings per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The weighted average number of shares outstanding for the three
months ended September 30, 2002 and 2001 amounted to 7,167,612 and
7,167,612 respectively and for the nine months ended September 30,
2002 and 2001 weighted average number of shares outstanding amounted
to 7,167,612 and 7,108,237 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (b) |  | Fully Diluted Earnings per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | For the three and nine months ended September 30, 2002 and 2001 the
exercise of outstanding stock options do not have a dilutive effect
on earnings (loss) per share. The weighted average number of shares
for diluted earnings per share amounted to 7,184,937 and 7,196,701
for the three months ended September 30, 2002 and 2001 respectively.
The weighted average number of shares for diluted earning per share
amounted to 7,247,182 and 7,182,097 for the nine months ended
September 30, 2002 and 2001 respectively. All the options as
indicated in Note 6, outstanding during the three and nine month
periods ended September 30, 2002 and 2001 respectively, were not
included in the calculation of diluted earnings per share as to do
so would have been anti-dilutive.

10



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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|7. |  | EARNINGS PER SHARE(continued)                                                          
|-- |  | ---------------------------------------------------------------------------------------
|  
|   |  | The following table sets forth the computation of basic and diluted
earnings per share:

|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|--------------------------------------------------------------------------------------- |  | -------------------- | --------- | ------------------- |  | ---- | ---------- | ---- |  | - | --------- | - |  | - | ---------- | -
|                                                                                        |  | For the Three Months |           | For the Nine Months
|                                                                                        |  | Ended September 30,  |           | Ended September 30,
|                                                                                        |  |                      |           |                    
|                                                                                        |  | 2002                 |           | 2001                |  | 2002 |            | 2001
|                                                                                        |  |                      |           |                     |  |      |            |     
|Numerator:                                                                              |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Net loss and numerator for
basic loss and for diluted
loss per share                    |  | $                    | (113,412  | )                   |  | $    | (2,816,946 | )    |  | $ | (726,615  | ) |  | $ | (3,123,762 | )
|Denominator:                                                                            |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Weighted-average shares for basic
loss per share                                        |  |                      | 7,167,612 |                     |  |      | 7,167,612  |      |  |   | 7,167,612 |   |  |   | 7,108,237  |  
|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Effect of dilutive securities:                                                          |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Employee stock options                                                                  |  |                      | 8,973     |                     |  |      | 29,089     |      |  |   | 24,674    |   |  |   | 73,860     |  
|Warrants                                                                                |  |                      | 8,352     |                     |  |      |           |      |  |   | 54,896    |   |  |   |           |  
|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Dilutive potential of common shares                                                     |  |                      | 17,325    |                     |  |      | 29,089     |      |  |   | 79,570    |   |  |   | 73,860     |  
|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Adjusted weighted-average
shares and assumed conversions
for diluted earnings per share |  |                      | 7,184,937 |                     |  |      | 7,196,701  |      |  |   | 7,247,182 |   |  |   | 7,182,097  |  
|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Basic loss per share                                                                    |  |                      | ($0.02    | )                   |  |      | ($0.39     | )    |  |   | ($0.10    | ) |  |   | ($0.44     | )
|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  
|Diluted loss per share                                                                  |  |                      | ($0.02    | )                   |  |      | ($0.39     | )    |  |   | ($0.10    | ) |  |   | ($0.44     | )
|                                                                                        |  |                      |           |                     |  |      |            |      |  |   |           |   |  |   |            |  



|8. |  | DEFERRED REFINANCING FEES                                                                                                                                                                                                                  
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Deferred refinancing fees relate to costs incurred in connection with the
Companys refinancing of its long-term bank debt with ABN AMRO. (See note
4) Deferred refinancing fees are amortized over three years being the life
of the loan.

11



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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



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



| | (i)   |  | 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.
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | For the three months ended September 30, 2002 and 2001 the
Company paid to the Sullivan Group, an entity controlled by the
President of the Company, $13,950 and $13,950 respectively and for the
nine months ended September 30, 2002 and 2001 $41,850 and $41,850
respectively relating to charges in connection with Mr. Wallings
compensation.                                                                     
|
| | (iii) |  | For the three months ended September 30, 2002 and 2001 the
Company incurred charges from Cassels, Brock & Blackwell LLP, a legal
firm of which Mr. Peterson, the Chairman of the Company is a Senior
Partner, amounting to $28,866 and $8,816 respectively for services
provided. For the nine months ended September 30, 2002 and 2001 the
Company incurred charges amounting to $43,742 and $29,362
respectively.     



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



| | (a) |  | 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.                                                                                                       
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | On March 12, 2001, the Company announced that it had entered
into an agreement with Allied Wire and Cable Ltd., (Allied) a
supplier of products to the cable and telecom sectors in Western
Canada, whereby Cabletel would acquire the privately-owned Allied
Group of Companies. The transaction was subject to the Company
obtaining necessary financing which had not materialized as of
December 31, 2001.                                          
|
| |     |  | 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. As part of the proposed transaction, Allied
and the Company have agreed upon repayment terms for the approximately
$675,000 owed by Allied to the Company for inventory previously
provided by the Company. In addition, Cabletel

12



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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|10. |  | COMMITMENTS AND CONTINGENCIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | has agreed to provide an additional $100,000 in inventory and advance
$50,000 in cash to Allied. At any time prior to full repayment by
Allied of such amounts owed, Cabletel has the option to acquire all of
the capital stock of Allied for a price equal to the amount of the
indebtedness owed by Allied to the Company on the exercise date of
that option.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | As previously reported, the Companys second quarter results included
a write-off related to Allied. That amount is included in the
indebtedness now being restructured by the Company and Allied. The
Company took that write-off in connection with the termination of its
previously announced agreement to acquire Allied. The new transaction
allows the Company to restructure the payment terms of the Allied
obligations while at the same time providing the Company with the
right to acquire ownership of the Allied business at a later date if
Cabletels management determines that it is in the Companys best
interest to do so. All of Allieds indebtedness to the Company is
secured by a security interest in Allieds assets second to the rights
of Allieds senior bank lender.
|   
|11. |  | 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
September 30, 2002, the unpaid balance of these charges included in
accrued liabilities was nil. For the three months ended September 30,
2002 the Company paid nil relating to the previously recorded special
charges and $203,985 for the nine months ended September 30, 2002.                                                                                                                                                                                                                    
|   
|12. |  | 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
three and nine months ended September 30, 2002 and 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

13



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CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|12. |  | SEGMENTED INFORMATION(continued)
|--- |  | --------------------------------
|   
|    |  | Summary of Business Segment     

|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |         |  
|------------------------------------------------- | ---------------- | ---- | -------------------------- | -------- | ------------------- | ---- | ---------- | ------- | - | - | ---------- | -------- | - | - | ---------- | ------- | -
|                                                  |                  |      | For the Three Months Ended |          | For the Nine Months
|                                                  |                  |      | September 30,              |          | Ended September 30,
|                                                  |                  |      |                            |          |                    
|Net Revenue                                       |                  | 2002 |                            | 2001     |                     | 2002 |            | 2001   
|                                                  |                  |      |                            |          |                     |      |            |        
|Distribution                                      |                  | $    | 10,454,523                 |          |                     | $    | 12,951,257 |         |   | $ | 34,298,626 |          |   | $ | 34,256,536 |        
|Manufacturing                                     |                  |      | 2,820,681                  |          |                     |      | 1,215,552  |         |   |   | 6,223,171  |          |   |   | 6,139,125  |        
|Technology                                        |                  |      | 608,458                    |          |                     |      | 1,240,952  |         |   |   | 1,858,317  |          |   |   | 3,497,271  |        
|Less: Inter-company eliminations                  |                  |      | (233,446                   | )        |                     |      | (365,926   | )       |   |   | (585,833   | )        |   |   | (548,221   | )      
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Total Net Revenue                                 |                  | $    | 13,650,216                 |          |                     | $    | 15,041,835 |         |   | $ | 41,794,281 |          |   | $ | 43,344,711 |        
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Gross Profit                                      |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Distribution                                      |                  | $    | 2,045,862                  |          |                     | $    | 1,871,703  |         |   | $ | 5,968,899  |          |   | $ | 5,706,594  |        
|Manufacturing                                     |                  |      | 1,018,376                  |          |                     |      | (272,429   | )       |   |   | 2,045,090  |          |   |   | 597,461    |        
|Technology                                        |                  |      | 122,413                    |          |                     |      | 165,912    |         |   |   | 283,668    |          |   |   | 533,887    |        
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Total Gross Profit                                |                  | $    | 3,186,651                  |          |                     | $    | 1,765,186  |         |   | $ | 8,297,657  |          |   | $ | 6,837,942  |        
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Selling, general and administrative expenses      |                  |      | (2,878,464                 | )        |                     |      | (3,021,723 | )       |   |   | (7,274,515 | )        |   |   | (8,052,779 | )      
|Special charge                                    |                  |      |                           |          |                     |      | (607,446   | )       |   |   |           |          |   |   | (607,446   | )      
|Amortization                                      |                  |      | (72,311                    | )        |                     |      | (57,598    | )       |   |   | (192,616   | )        |   |   | (178,647   | )      
|Interest expense  other                          |                  |      | (227,877                   | )        |                     |      | (186,097   | )       |   |   | (554,662   | )        |   |   | (635,059   | )      
|                                                  |  long-term debt |      |                            | (101,370 | )                   |      |            | (21,398 | ) |   |            | (195,629 | ) |   |            | (68,966 | )
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|                                                  |                  |      | (3,280,022                 | )        |                     |      | (3,894,262 | )       |   |   | (8,217,422 | )        |   |   | (9,542,897 | )      
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Consolidated Earnings (Loss) Before
the Following |                  |      | (93,371                    | )        |                     |      | (2,129,076 | )       |   |   | 80,235     |          |   |   | (2,704,955 | )      
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Write-off of other assets                         |                  |      | (11,041                    | )        |                     |      |           |         |   |   | (615,850   | )        |   |   |           |        
|Loss on settlement of debt                        |                  |      |                           |          |                     |      |           |         |   |   | (164,000   | )        |   |   |           |        
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|                                                  |                  |      | (104,412                   | )        |                     |      |           |         |   |   | (779,850   | )        |   |   |           |        
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        
|Loss Before Income Taxes                          |                  | $    | (104,412                   | )        |                     | $    | (2,129,076 | )       |   | $ | (699,615   | )        |   | $ | (2,704,955 | )      
|                                                  |                  |      |                            |          |                     |      |            |         |   |   |            |          |   |   |            |        

Identifiable Assets:

|                            |  |               |            |              |  |   |            | 
|--------------------------- |  | ------------- | ---------- | ------------ |  | - | ---------- | 
|                            |  | September 30, |            | December 31,
|                            |  | 2002          |            | 2001        
|                            |  |               |            |             
|Distribution and Technology |  | $             | 24,760,371 |              |  | $ | 20,375,245 | 
|Manufacturing               |  |               | 8,158,475  |              |  |   | 8,374,950  | 
|Other unallocated assets    |  |               | 200,192    |              |  |   | 120,000    | 
|                            |  |               |            |              |  |   |            | 
|Total Identifiable Assets   |  | $             | 33,119,038 |              |  | $ | 28,870,195 | 
|                            |  |               |            |              |  |   |            | 

14



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|12. |  | SEGMENTED INFORMATION(continued)
|--- |  | --------------------------------

Expenditures on Property, Plant and
Equipment

|                            |  |                      |        |                           |  |      |        |      |  |   |        |   |  |   |         | 
|--------------------------- |  | -------------------- | ------ | ------------------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------- | 
|                            |  | For the Three Months |        | For the Nine Months Ended
|                            |  | Ended September 30,  |        | September 30,            
|                            |  |                      |        |                          
|                            |  | 2002                 |        | 2001                      |  | 2002 |        | 2001
|                            |  |                      |        |                           |  |      |        |     
|                            |  |                      |        |                           |  |      |        |      |  |   |        |   |  |   |         | 
|Distribution and Technology |  | $                    | 22,302 |                           |  | $    | 9,364  |      |  | $ | 57,111 |   |  | $ | 114,676 | 
|Manufacturing               |  |                      | 1,158  |                           |  |      | 9,052  |      |  |   | (8,091 | ) |  |   | 147,563 | 
|                            |  |                      |        |                           |  |      |        |      |  |   |        |   |  |   |         | 
|Total Expenditures          |  | $                    | 23,460 |                           |  | $    | 18,416 |      |  | $ | 49,020 |   |  | $ | 262,239 | 
|                            |  |                      |        |                           |  |      |        |      |  |   |        |   |  |   |         | 



| |  | Amortization                             
| |  | -----------------------------------------
| |  | (Includes amortization in cost of sales.)

|                            |  |                      |         |                           |  |      |        |      |  |   |         |  |  |   |         | 
|--------------------------- |  | -------------------- | ------- | ------------------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                            |  | For the Three Months |         | For the Nine Months Ended
|                            |  | Ended September 30,  |         | September 30,            
|                            |  |                      |         |                          
|                            |  | 2002                 |         | 2001                      |  | 2002 |        | 2001
|                            |  |                      |         |                           |  |      |        |     
|Distribution and Technology |  | $                    | 16,966  |                           |  | $    | 55,205 |      |  | $ | 131,485 |  |  | $ | 172,690 | 
|Manufacturing               |  |                      | 72,694  |                           |  |      | 40,581 |      |  |   | 109,034 |  |  |   | 238,064 | 
|Other                       |  |                      | 100,000 |                           |  |      |       |      |  |   | 100,000 |  |  |   |        | 
|                            |  |                      |         |                           |  |      |        |      |  |   |         |  |  |   |         | 
|Total Amortization          |  | $                    | 189,660 |                           |  | $    | 95,786 |      |  | $ | 340,519 |  |  | $ | 410,754 | 
|                            |  |                      |         |                           |  |      |        |      |  |   |         |  |  |   |         | 



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

|                  |  |                            |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|----------------- |  | -------------------------- | ---------- | ------------------------- |  | ---- | ---------- | ---- |  | - | ---------- |  |  | - | ---------- | 
|                  |  | For the Three Months Ended |            | For the Nine Months Ended
|                  |  | September 30,              |            | September 30,            
|                  |  |                            |            |                          
|                  |  | 2002                       |            | 2001                      |  | 2002 |            | 2001
|                  |  |                            |            |                           |  |      |            |     
|Canada            |  | $                          | 11,062,981 |                           |  | $    | 14,192,209 |      |  | $ | 36,156,943 |  |  | $ | 37,753,807 | 
|United States     |  |                            | 2,061,997  |                           |  |      | 666,389    |      |  |   | 4,823,420  |  |  |   | 4,743,162  | 
|Other             |  |                            | 525,238    |                           |  |      | 183,237    |      |  |   | 813,918    |  |  |   | 847,742    | 
|                  |  |                            |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|Total Net Revenue |  | $                          | 13,650,216 |                           |  | $    | 15,041,835 |      |  | $ | 41,794,281 |  |  | $ | 43,344,711 | 
|                  |  |                            |            |                           |  |      |            |      |  |   |            |  |  |   |            | 



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

|                                    |  |               |           |              |  |   |           | 
|----------------------------------- |  | ------------- | --------- | ------------ |  | - | --------- | 
|                                    |  | September 30, |           | December 31,
|                                    |  | 2002          |           | 2001        
|                                    |  |               |           |             
|Canada                              |  | $             | 2,094,516 |              |  | $ | 2,280,388 | 
|United States                       |  |               | 11,806    |              |  |   | 17,433    | 
|                                    |  |               |           |              |  |   |           | 
|Total Property, Plant and Equipment |  | $             | 2,106,322 |              |  | $ | 2,297,821 | 
|                                    |  |               |           |              |  |   |           | 

15



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

September 30, 2002



|12. |  | SEGMENTED INFORMATION(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Sales Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Distribution                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Sales to a customer within the Distribution segment for the three months
ended September 30, 2002 amounted to approximately $2,737,223 or 20% of
total revenue. Sales to this customer for the nine months ended September
30, 2002 amounted to approximately $10,629,823 or 25% of total revenue.
At September 30, 2002 this customer accounted for approximately 50% 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 three
months ended September 30, 2002 amounted to approximately $3,372,483 or
25% of total revenue. Sales to this customer for the nine months ended
September 30, 2002 amounted to approximately $10,875,283 or 26% of total
revenue. At September 30, 2002 this customer accounted for approximately
14% 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 three months
ended September 30, 2002 amounted to approximately $1,568,120 or 56% of
the Manufacturing segments total sales or approximately 11% of the
Companys total consolidated sales. For the nine months ended September
30, 2002, sales to this customer within the Manufacturing segment amounted
to approximately $4,011,620 or 64% of the Manufacturing segments total
sales or approximately 10% of the Companys total consolidated sales. At
September 30, 2002 this customer accounted for approximately 9% of the
Companys total consolidated accounts receivable. The customers account
was current as per the terms and conditions of sale.

16



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|13. |  | 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.

|                                                                     |  |                            |             |                           |  |      |             |      |  |   |             |   |  |   |             |  
|-------------------------------------------------------------------- |  | -------------------------- | ----------- | ------------------------- |  | ---- | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                                     |  | For the Three Months Ended |             | For the Nine Months Ended
|                                                                     |  | September 30,              |             | September 30,            
|                                                                     |  |                            |             |                          
|                                                                     |  | 2002                       |             | 2001                      |  | 2002 |             | 2001
|                                                                     |  |                            |             |                           |  |      |             |     
|Net loss in accordance with
Canadian GAAP                            |  | $                          | (113,412    | )                         |  | $    | (2,816,942  | )    |  | $ | (726,615    | ) |  | $ | (3,123,762  | )
|Reduction in amortization
of development costs (net
of income taxes) |  |                            | 8,627       |                           |  |      | 4,658       |      |  |   | 25,880      |   |  |   | 13,974      |  
|                                                                     |  |                            |             |                           |  |      |             |      |  |   |             |   |  |   |             |  
|Net earnings (loss) in
accordance with U.S. GAAP                     |  | $                          | (104,785    | )                         |  | $    | (2,812,284  | )    |  | $ | (700,735    | ) |  | $ | (3,109,788  | )
|                                                                     |  |                            |             |                           |  |      |             |      |  |   |             |   |  |   |             |  
|Total assets                                                         |  | $                          | 33,078,781  |                           |  | $    | 32,483,659  |      |  | $ | 33,078,781  |   |  | $ | 32,483,659  |  
|                                                                     |  |                            |             |                           |  |      |             |      |  |   |             |   |  |   |             |  
|Deficit                                                              |  | $                          | (10,816,491 | )                         |  | $    | (10,325,975 | )    |  | $ | (10,816,491 | ) |  | $ | (10,325,975 | )
|                                                                     |  |                            |             |                           |  |      |             |      |  |   |             |   |  |   |             |  



| |  | Loss on settlement of debt would be reported as an extraordinary item for U.S. GAAP.
| |  | ------------------------------------------------------------------------------------

17



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CABLETEL COMMUNICATIONS CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|13. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------



| | (a) |  | Earnings Per Share                                                                                                                                                                                
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Net loss per share calculations under U.S. GAAP would require loss on
settlement of debt to be reported as an extraordinary item and accordingly
earnings per share would be disclosed as follows:

|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |           |  
|------------------------------------ | --------------------------------------- |  | -------------------- | --------- | ------------------------- |  | ---- | --------- | ---- |  |  | --------- | - |  |  | --------- | -
|                                     |                                         |  | For the Three Months |           | For the Nine Months Ended
|                                     |                                         |  | Ended September 30,  |           | September 30,            
|                                     |                                         |  |                      |           |                          
|                                     |                                         |  | 2002                 |           | 2001                      |  | 2002 |           | 2001
|                                     |                                         |  |                      |           |                           |  |      |           |     
|Net loss per share:                  |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|                                     | Basic from continuing operations        |  |                      | ($0.02    | )                         |  |      | ($0.39    | )    |  |  | ($0.08    | ) |  |  | ($0.44    | )
|                                     | Basic from loss on extraordinary item   |  |                      | ($0.00    | )                         |  |      |          |      |  |  | ($0.02    | ) |  |  |          |  
|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|                                     | Basic loss per share                    |  |                      | ($0.02    | )                         |  |      | ($0.39    | )    |  |  | ($0.10    | ) |  |  | ($0.44    | )
|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|                                     | Diluted from continuing operations      |  |                      | ($0.02    | )                         |  |      | ($0.39    | )    |  |  | ($0.08    | ) |  |  | ($0.44    | )
|                                     | Diluted from loss on extraordinary item |  |                      | ($0.00    | )                         |  |      |          |      |  |  | ($0.02    | ) |  |  |          |  
|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|                                     | Diluted earnings per share              |  |                      | ($0.02    | )                         |  |      | ($0.39    | )    |  |  | ($0.10    | ) |  |  | ($0.44    | )
|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|Weighted average shares outstanding: |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|                                     | Basic                                   |  |                      | 7,167,612 |                           |  |      | 7,167,612 |      |  |  | 7,167,612 |   |  |  | 7,108,237 |  
|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          
|                                     | Diluted                                 |  |                      | 7,184,937 |                           |  |      | 7,196,701 |      |  |  | 7,247,182 |   |  |  | 7,182,097 |  
|                                     |                                         |  |                      |           |                           |  |      |           |      |  |  |           |   |  |  |          



| | (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 three and nine months ended September
30, 2002, and 2001 the Companys comprehensive income was the same
as net earnings.

18



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|13. |  | 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 three and nine months
ended September 30, 2002 or September 30, 2001. 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%) dividend
yield of 0%, theoretical volatility assumption of .90 (2001  .90),
three years vesting provision on all options granted in 2002 and
2001, and the expected lives of options of 3 to 7 years (2001  3 to
7 years).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

19



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##### Table of Contents



CABLETEL COMMUNICATIONS CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|13. |  | UNITED STATES ACCOUNTING PRINCIPLES(continued)
|--- |  | ----------------------------------------------

|                   |             |             |                      |             |                     |             |      |             |      |  |   |          |   |  |   |            |  
|------------------ | ----------- | ----------- | -------------------- | ----------- | ------------------- | ----------- | ---- | ----------- | ---- |  | - | -------- | - |  | - | ---------- | -
|                   |             |             | For the Three Months |             | For the Nine Months
|                   |             |             | Ended September 30,  |             | Ended September 30,
|                   |             |             |                      |             |                    
|                   |             |             | 2002                 |             | 2001                |             | 2002 |             | 2001
|As Reported        |             | As Reported |                      | As Reported |                     | As Reported |      | As Reported
|                   |             |             |                      |             |                     |             |      |            
|Net loss           |             |             |                      |             |                     |             |      |             |      |  |   |          |   |  |   |           
|                   |  U.S. GAAP |             | $                    | (113,412    | )                   |             | $    | (2,821,600  | )    |  | $ | (726,615 | ) |  | $ | (3,137,736 | )
|Net loss per share |             |             |                      |             |                     |             |      |             |      |  |   |          |   |  |   |           
|                   | Basic       |             |                      | ($0.02      | )                   |             |      | ($0.39      | )    |  |   | ($0.10   | ) |  |   | ($0.44     | )
|                   | Diluted     |             |                      | ($0.02      | )                   |             |      | ($0.39      | )    |  |   | ($0.10   | ) |  |   | ($0.44     | )

|                                                                  |             |           |                      |           |                     |           |      |            |      |   |      |            |   |   |      |            |  
|----------------------------------------------------------------- | ----------- | --------- | -------------------- | --------- | ------------------- | --------- | ---- | ---------- | ---- | - | ---- | ---------- | - | - | ---- | ---------- | -
|                                                                  |             |           | For the Three Months |           | For the Nine Months
|                                                                  |             |           | Ended September 30,  |           | Ended September 30,
|                                                                  |             |           |                      |           |                    
|                                                                  |             |           | 2002                 |           | 2001                |           | 2002 |            | 2001
|Pro-Forma                                                         |             | Pro-Forma |                      | Pro-Forma |                     | Pro-Forma |      | Pro-Forma 
|                                                                  |             |           |                      |           |                     |           |      |           
|Net loss                                                          |             |           |                      |           |                     |           |      |            |      |   |      |            |   |   |      |           
|                                                                  |  U.S. GAAP |           | $                    | (113,412  | )                   |           | $    | (2,821,600 | )    |   | $    | (1,428,840 | ) |   | $    | (3,229,106 | )
|Net loss per share                                                |             |           |                      |           |                     |           |      |            |      |   |      |            |   |   |      |           
|                                                                  | Basic       |           |                      | ($0.02    | )                   |           |      | ($0.39     | )    |   |      | ($0.20     | ) |   |      | ($0.45     | )
|                                                                  | Diluted     |           |                      | ($0.02    | )                   |           |      | ($0.39     | )    |   |      | ($0.20     | ) |   |      | ($0.45     | )
|                                                                  |             |           |                      |           |                     |           |      |            |      |   |      |            |   |   |      |            |  
|Weighted average fair value of
options granted during this period |             | $         | 0.00                 |           |                     | $         | 0.00 |            |      | $ | 2.10 |            |   | $ | 1.79 |           

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CABLETEL COMMUNICATIONS CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian Funds)
(Unaudited)

SEPTEMBER 30, 2002



|14. |  | SUBSEQUENT EVENTS
|--- |  | -----------------



| | (i)  |  | 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. As part
of the proposed transaction, Allied and the Company have agreed upon
repayment terms for the approximately $675,000 owed by Allied to the
Company for inventory previously provided by the Company. In addition,
Cabletel has agreed to provide and additional $100,000 in inventory and
advance $50,000 in cash to Allied. At any time prior to full repayment by
Allied of such amounts owed, Cabletel has the option to acquire all of the
capital stock of Allied for a price equal to the amount of the
indebtedness owed by Allied to the Company on the exercise date of that
option.                                                                                                                                                                                                 
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |      |  | As previously reported, the Companys second quarter results included a
write-off related to Allied. That amount is included in the indebtedness
now being restructured by the Company and Allied. The Company took that
write-off in connection with the termination of its previously announced
agreement to acquire Allied. The new transaction allows the Company to
restructure the payment terms of the Allied obligations while at the same
time providing the Company with the right to acquire ownership of the
Allied business at a later date if Cabletels management determines that
it is in the Companys best interest to do so. All of Allieds
indebtedness to the Company is secured by a security interest in Allieds
assets second to the rights of Allieds senior bank lender.                                                                                                                                                                                                          
|
| | (ii) |  | In May, 2002 the Company entered into a new revolving credit facility
with its main bank lender. The new CDN $15 million facility, which
replaced Cabletels previous working capital line, has a three-year term
and provides for up to a $3 million increase over the maximum availability
under Cabletels prior facility. The new facility contains certain
customary covenants, including, among others, certain debt servicing
ratios. The Company estimates that as of September 30, 2002, as a result
of a minor variation from the required debt service ratio, the Company had
a technical violation of an applicable covenant. The Company is working
with its lender to resolve the matter and expects to receive either a
waiver or amendment to the agreement shortly. There can be no assurance
that the Company will be successful in obtaining either a waiver or
amendment. In the event that the Company is unable to obtain such waiver
or amendment it could adversely affect the Company.

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Results of Operations

Three and Nine Months Ended September 30, 2002

Consolidated net sales for the three months ended September 30, 2002
decreased by $1,391,619 or 9% to $13,650,216 as compared to consolidated net
sales of $15,041,835 for the three months ended September 30, 2001.
Consolidated net sales of $41,794,281 for the nine months ended September 30,
2002 decreased by $1,550,430 or 4% as compared to consolidated net sales of
$43,344,711 for the nine months ended September 30, 2001. The primary reason
for the decrease for the three and nine month periods ending September 30, 2002
is 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. There is a risk that the softening will continue
within the Distribution segment with respect to reduced capital
expenditures among the major cable companies throughout the remainder of the year.
The Distribution segment however continued to show strength
with respect to the supply of product to Canadian cable operators, primarily
for a major project in Eastern Canada. This was supplemented by increased
sales in the Manufacturing segment of which sales increased by 132% for the
quarter and were slightly higher for the nine month period ending September 30,
2002 when compared to the prior year periods. Virtually all of the
Manufacturing segments sales were exported to foreign countries, primarily to
the United States. The following table shows comparative sales by
segment:

|                          |  |                      |            |                     |  |      |            |      |  |   |            |   |  |   |            |  
|------------------------- |  | -------------------- | ---------- | ------------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                          |  | For the Three Months |            | For the Nine Months
|                          |  | Ended September 30,  |            | Ended September 30,
|                          |  |                      |            |                    
|                          |  | 2002                 |            | 2001                |  | 2002 |            | 2001
|                          |  |                      |            |                     |  |      |            |     
|Distribution              |  | $                    | 10,454,523 |                     |  | $    | 12,951,257 |      |  | $ | 34,298,626 |   |  | $ | 34,256,536 |  
|Manufacturing             |  |                      | 2,820,681  |                     |  |      | 1,215,552  |      |  |   | 6,223,171  |   |  |   | 6,139,125  |  
|Technology                |  |                      | 608,458    |                     |  |      | 1,240,952  |      |  |   | 1,858,317  |   |  |   | 3,497,271  |  
|Less: Inter-company sales |  |                      | (233,446   | )                   |  |      | (365,926   | )    |  |   | (585,833   | ) |  |   | (548,221   | )
|                          |  |                      |            |                     |  |      |            |      |  |   |            |   |  |   |            |  
|Net Sales                 |  | $                    | 13,650,216 |                     |  | $    | 15,041,835 |      |  | $ | 41,794,281 |   |  | $ | 43,344,711 |  
|                          |  |                      |            |                     |  |      |            |      |  |   |            |   |  |   |            |  

Net sales of $10,454,523 in the Distribution segment for the three months
ended September 30, 2002 reflects a decrease of $2,496,734 or 19% compared to
$12,951,257 for the three months ended September 30, 2001. Net sales of
$34,298,626 in the Distribution segment for the nine months ended September 30,
2002 reflects a decrease of $42,090 or 0.1% compared to $34,256,536 for the
nine months ended September 30, 2001. The primary reason for the decrease for
the three and nine month periods ending September 30, 2002 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.

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Net sales in the Manufacturing segment of $2,820,681 for the three months
ended September 30, 2002, reflects an increase of $1,605,129 or 132% when
compared to $1,215,552 for the three months ended September 30, 2001. Net
sales in the Manufacturing segment of $6,223,171 for the nine months ended
September 30, 2002 reflects an increase of $84,046 or 1.4% when compared to
$6,139,125 for the nine months ended September 30, 2001. The increase is
primarily due to an increase in sales to foreign countries. For the three
months ended September 30, 2002 sales to foreign countries, primarily the
United States were $2,587,235 compared to $849,626 for the three months ended
September 30, 2001. Sales to foreign countries for the nine months ended
September 30, 2002 were $5,637,338 compared to $5,590,904 for the nine months
ended September 30, 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 previously announced acquisition of a distributor in the United
States, the Company established sales forces throughout the U.S. to better
service customers.

Net sales of $608,458 in the Technology segment for the three months ended
September 30, 2002 reflects a decrease of $632,494 or 51% when compared to
$1,240,952 for the three months ended September 30, 2001. Net sales of
$1,858,317 in the Technology segment for the nine months ended September 30,
2002 reflects a decrease of $1,638,594 or 47% when compared to $3,497,271 for
the nine months ended September 30, 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 three months ended September 30, 2002 of $3,186,651
increased $1,421,465 or 80% compared to gross profit of $1,765,186 for the
three months ended September 30, 2001. Gross margin for the three months ended
September 30, 2002 was 23.3% as compared to 11.7% for the three months ended
September 30, 2001. Gross profit for the nine months ended September 30, 2002
of $8,297,657 increased $1,459,715 or 21% compared to gross profit of
$6,837,942 for the nine months ended September 30, 2001. Gross margin for the
nine months ended September 30, 2002 was 19.9% as compared to 15.8% for the
nine months ended September 30, 2001. The reason for the increase in gross
margin for the three and nine month periods ended September 30, 2002 results
primarily from better efficiencies achieved in the Companys Manufacturing
segment. This segment is now concentrating on manufacturing only one style of
connector in house more cost effectively 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 produced equates to better efficiencies and a higher
gross margin. In addition, the Manufacturing segment comprises a higher
percentage of sales for the three and nine months ended September 30, 2002,
which generate a higher gross margin when blended with the results of the
Companys other segments. For the three and nine months ended September 30,
2001, the comparable prior period, the manufacturing segment experienced
unfavorable manufacturing cost variances as production levels declined
resulting from manufacturing costs being spread over a lower volume of units.

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Gross profit of $2,045,862 in the Cabletel Distribution segment for the
three months ended September 30, 2002 reflects an increase of $174,159 or 9%
when compared to $1,871,703 for the three months ended September 30, 2001.
Cabletel Distribution segment gross margin for the three months ended September
30, 2002 was 19.6%, an increase when compared to a gross margin of 14.5% for
the three months ended September 30, 2001. Gross profit of $5,968,899 in the
Cabletel Distribution segment for the nine months ended September 30, 2002
reflects an increase of $262,305 or 4.6% when compared to $5,706,594 for the
nine months ended September 30, 2001. Cabletel Distribution segment gross
margin for the nine months ended September 30, 2002 was 17.4% an increase when
compared to a gross margin of 16.7% for the nine months ended September 30,
2001. The increase for the three and nine months ended September 30, 2002 is
primarily due to a change in product mix.

Gross profit of $1,018,376 in the Manufacturing segment for the three
months ended September 30, 2002 reflects an increase of $1,297,805 or 464% when
compared to a gross profit loss of $279,429 for the three months ended
September 30, 2001. Manufacturing segment gross margin for the three months
ended September 30, 2002 was 36% an increase when compared to a negative gross
margin of 23.0% for the three months ended September 30, 2001. Gross profit of
$2,045,090 in the Manufacturing segment for the nine months ended September 30,
2002 reflects an increase of $1,447,629 or 243% when compared to gross profit
of $597,461 for the nine months ended September 30, 2001. Manufacturing segment
gross margin for the nine months ended September 30, 2002 was 32.9% an increase
when compared to a gross margin of 10% for the nine months ended September 30,
2001. The increase for the three and nine months ended September 30, 2002 is
primarily due to better 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 $122,413 in the Technology segment for the three months
ended September 30, 2002 reflects a decrease of $43,499 or 26.2% when compared
to $165,912 for the three months ended September 30, 2001. Technology segment
gross margin for the three months ended September 30, 2002 was 20%, which is an
increase when compared to the prior period gross margin of 13.4%. Gross profit
of $283,668 in the Technology segment for the nine months ended September 30,
2002 reflects a decrease of $250,219 or 47% when compared to $533,887 for the
nine months ended September 30, 2001. Technology segment gross margin for the
nine months ended September 30, 2002 was 15.3%, which is virtually the same as
the prior period gross margin of 15.3%. For the three and nine months ended
September 30, 2002, 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 three months ended
September 30, 2002 decreased $143,259 or 5% to $2,878,464 when compared to
$3,021,723 for the three months ended September 30, 2001. As a percentage of
sales, selling, general and administrative expenses for the three months ended
September 30, 2002 were 21% compared to 20% for the three months ended
September 30, 2001. Selling, general and administrative expenses for the nine
months ended

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September 30, 2002 decreased $778,264 or 10% to $7,274,515 when compared to
$8,052,779 for the nine months ended September 30, 2001. As a percentage of
sales, selling, general and administrative expenses for the nine months ended
September 30, 2002 were 17.4% compared to 18.6% for the nine months ended
September 30, 2001. The Company has made a conscious effort to reduce certain
costs which have contributed in returning the Company to operating
profitability. Such cost cutting measures included reductions in the Companys
labour force as well as reductions in international marketing costs. Included
in selling, general and administrative expenses for the three months ended
September 30, 2002 are international marketing costs of approximately $89,000
and for the nine month period ending September 30, 2002, a write-off of
accounts receivable amounting to $99,273 related to the Companys second
quarter decision not to pursue the acquisition of Allied Wire and Cable Ltd.

Interest expense increased $121,752 to $329,247 for the three months ended
September 30, 2002 compared to $207,495 for the three months ended September
30, 2001. Interest expense on bank indebtedness for the three months ended
September 31, 2002 increased by $41,780 due to higher borrowings under the
Companys new credit facility, and interest expense on long-term debt increased
by $79,972. For the nine months ended September 30, 2002, interest expense
increased by $46,266 to $750,291 compared to $704,025 for the nine months ended
September 30, 2001. Interest on bank indebtedness decreased by $80,397, and
interest on long-term debt increased by $126,663. The decrease in interest
expense on bank indebtedness reflects lower interest rates on lower levels of
borrowings of the Companys line of credit during the first six months of the
year while 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 in the prior year.

Earnings from operations before write-off of other assets, loss on
settlement of debt and income taxes for the three months ended September 30,
2002 was a loss of $93,371 as compared to a loss of $2,129,076 for the three
months ended September 30, 2001. Total operating expenses of $3,280,022 for
the three months ended September 30, 2002 were $614,240 lower than $3,894,262
reported for the three months ended September 30, 2001. Earnings from
operations before write-off of other assets, loss on settlement of debt and
income taxes for the nine months ended September 30, 2002 was $80,235 as
compared to a loss of $2,704,955 for the nine months ended September 30, 2001.
Total operating expenses of $8,217,422 for the nine months ended September 30,
2002 were $1,325,475 lower than $9,542,897 reported for the nine months ended
September 30, 2001.

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
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 ended December 31,
2001, management re-evaluated the likelihood of realization of the benefits of
the future tax assets and decided to revise the valuation

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allowance, as a result the balance of future income taxes as of December 31,
2001 were reduced to nil.

For the nine months ended September 30, 2002, the Company wrote off of
other assets in the amount of $615,850 related to an amount owed to the Company
by Allied Wire and Cable Ltd. 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 the Company and Allied
have reached a mutual agreement pursuant to which Cabletel was granted an
option to acquire all of the capital stock of Allied. As part of that
transaction, Allied and the Company have agreed upon repayment terms of the
previously written off amount by the Company.

For the nine months ended September 30, 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 shares of the Companys common stock 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 three months
ended September 30, 2002, the Company incurred a net loss of $113,412 compared
to a net loss of $2,816,942 for the three months ended September 30, 2001.
Basic and fully diluted loss per share was $0.02 for the three months ended
September 30, 2002 compared to basic and fully diluted loss per share of $0.39
for the three months ended September 30, 2001. Inclusive of the previously
mentioned write offs, for the nine months ended September 30, 2002, net loss
was $726,615 compared to a net loss of $3,123,762 for the nine months ended
September, 30, 2001. Basic and fully diluted loss per share was $0.10 for the
nine months ended September 30, 2002 compared to basic and fully diluted loss
per share of $0.44 for the nine months ended September 30, 2001.

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 $1,493,169 was provided during the three months ended September 30, 2002 by
financing activities. Of such amount $1,621,983 was provided by bank
indebtedness and $128,814 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 to repay long-term debt on an equipment loan.
Net cash of $3,148,400 was provided during the nine months ended September 30,
2002 by financing activities. Of such amount $3,536,534 was provided by bank
indebtedness and $388,134 was used to repay long-term

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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 to repay long-term
debt on an equipment loan.

Net cash used in operating activities for the three months ended September
30, 2002 was $1,499,940. Cash flow from reductions in inventory amounted to
$141,930 while decreases in accounts payables and accrued liabilities amounted
to $309,915 and outflows of cash to finance accounts receivable and prepaid
expenses, deposits and other amounted to $1,300,360 and $114,885, respectively.
Net cash used in operating activities for the nine months ended September 30,
2002 was $3,100,822. Cash flow from reductions in inventory amounted to
$687,957 and increases in accounts payables and accrued liabilities amounted to
$1,663,059 while outflows of cash to finance accounts receivable and prepaid
expenses, deposits and other amounted to $4,669,205 and $1,110,076,
respectively. Income taxes recoverable increased by $80,192 for the nine
months ended September 30, 2002.

Net cash used in investing activities for the three months ended September
30, 2002 was $23,460 relating to the purchase of capital assets. Net cash used
in investing activities for the nine months ended September 30, 2002 was
$49,020 relating to the purchase of capital assets.

On May 16, 2002, Cabletel entered into a Revolving Credit Facility
Agreement with LaSalle Business Credit, a division of ABN AMBRO BANK N.V.,
Canada Branch (LaSalle) for a three year committed fifteen million Canadian
dollars (CAD$15,000,000), or its United States dollar equivalent. The new
facility replaces the Companys previous $12 million credit facility with HSBC
Bank Canada. At September 30, 2002 the Company owed $14,845,506 on its
Revolving Credit Facility compared to $11,308,972 at December 31, 2001.

The new facility contains certain customary covenants, including, among
others, certain debt servicing ratios. The Company estimates that as of
September 30, 2002, as a result of a minor variation from the required debt
service ratio, the Company had a technical violation of the applicable
covenant. The Company is working with its lender to resolve the matter and
expects to receive either a waiver or amendment to the agreement shortly.
There can be no assurance that the Company will be successful in obtaining
either a waiver or amendment. In the event that the Company is unable to
obtain such waiver or amendment it could adversely affect the Company.

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 shares of the Companys common stock at an exercise price
of Cdn. $1.64 per share up to and including May 31, 2007.

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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, COGECO Cable Inc., Shaw Communications Inc., and Regional
Cablesystems, Cabletels largest customers which have accounted for
approximately 21%, 9%, 6%, 5% and 5% respectively for the 12 month period
ending December 31, 2001, 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.

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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

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.

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 of
September 30, 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 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

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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.

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.

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.

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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, COGECO Cable Inc., Shaw Communications Inc., and Regional
Cablesystems, Cabletels largest customers which have accounted for
approximately 21%, 9%, 6%, 5% and 5% respectively for the 12 month period
ending December 31, 2001, 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.

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.

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

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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 4. 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
weaknesses.

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PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

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.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits



| |                                             
| | --------------------------------------------
| | (i) Certification of Chief Executive Officer



| |                                              
| | ---------------------------------------------
| | (ii) Certification of Chief Financial Officer

(b)  Reports on Form 8-K



| |     
| | ----
| | None

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SIGNATURES

Pursuant to requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be filed on its behalf by the
undersigned, thereunto duly authorized.

|                        |  |                                                           
|----------------------- |  | ----------------------------------------------------------
|                        |  | CABLETEL COMMUNICATIONS CORP.                             
|                        |  |                                                           
|Date: November 11, 2002 |  | By: /s/ Gregory Walling                                   
|                        |  |                                                           
|                        |  | Gregory Walling
President and Chief Executive Officer     
|                        |  |                                                           
|Date: November 11, 2002 |  | By: /s/ Ron Eilath                                        
|                        |  |                                                           
|                        |  | Ron Eilath
Chief Financial Officer and
Secretary Treasurer

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CERTIFICATIONS

I, Greg Walling, certify that:

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

2.     Based on my knowledge, this quarterly 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
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 quarterly 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 quarterly 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
quarterly 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: November 11, 2002

/s/ Gregory Walling

Gregory Walling
President and CEO

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CERTIFICATION

I, Ron Eilath, certify that:

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

2.     Based on my knowledge, this quarterly 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
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 quarterly 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 quarterly 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
quarterly 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: November 11, 2002

/s/ Ron Eilath

Ron Eilath
Chief Financial Officer

36