(Mark One)

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

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008

OR

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

EXCHANGE ACT OF 1934

For the transition period from ____________to __________

OR

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

Date of event requiring this shell company report _______________

Commission file number 0-30942

N/A
(Translation of Registrant's name into English)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
None

Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
(Title of Class)

__________________________________________________________________________________

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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

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

Yes ___   No X

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

Yes ___   No X

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

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ___ No X

ii

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

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17   X     Item 18 ___

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

Yes ___ No X

iii

iv

v

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

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7

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

The following table sets forth our selected consolidated financial data for the five year period ended December 31, 2008, prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). The table also summarizes certain corresponding information prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). This selected consolidated financial data include the accounts of the Company and our subsidiaries.

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(1) Including current portion of long-term debt

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

Since June 1, 1970, the Government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar against the U.S. dollar. The high and low exchange rates, the average rates (average of the exchange rates on the last day of each month during the period) and the end of the period rates for Canadian dollars, expressed in U.S. dollars, from January 1, 2004 to December 31, 2008 was as follows:

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In this report, several references are made to business in Poland and the Polish currency, the zloty. The high and low exchange rates, the average rates (average of the exchange rates on the last day of each month during the period) and the end of the period rates for Polish zloty (PLN), expressed in U.S. dollars, from January 1, 2004 to December 31, 2008 were as follows:

N/A

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In addition, our future prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing new businesses, which can be characterised by intense competition and rapidly changing events. The financial statements have been prepared on a going concern basis as we are confident that we will be able to continue as a going concern.

Penta brought additional capital to Stream Poland amounting to $7.5 m. in 2008 and approximately $24 m. in 2009. Succeeding owners didn't bring additional capital.

At the date of the report we are seeking new opportunities to conduct business.

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

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

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

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

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

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

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

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

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

The president of the Office of Competition and Consumer Protection ("UOKiK") has broad powers to sanction companies in the interests of consumer protection by ordering companies to comply and by levying fines against companies that act against consumer interests. Polish law does not clearly define the extent of the powers of this agency. We believe we have not engaged in any activity that might subject us to such sanctions. However, because of the broad powers of this agency, it is possible that our business may be adversely affected in the future by consumer protection related sanctions imposed against us or by sanctions directed at other businesses that in turn would indirectly affect how we conduct our business.

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

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

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

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

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

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

We do not hedge currency risk. Our revenues are generated in PLN and most of our costs are denominated in foreign currencies. Accordingly, significant fluctuations of the PLN in relation to those currencies may adversely affect our business and our financial results.

As at December 31, 2008, the company has issued a total of 81,596,491 shares. There are unexercised options to purchase a total of 590,000 of our shares, and unexercised warrants to purchase an additional 10,200,000 shares (10,790,000 shares in total). All of these options and warrants were unexercised and expired in 2009.

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As of December 2008, our constituent documents authorise the issuance of up to 150,000,000 shares of common stock. Consistent with our strategy, we may issue some or all of such shares to acquire one or more businesses or other types of property or to provide additional financing. In addition, we may grant additional options and issue additional warrants in the future. The issuance of those shares may result in a reduction of the market price of our outstanding shares. The issuance of any additional shares will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change of our voting control.

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

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

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

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

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

As we disclose in Part II, Item 15, "Controls and Procedures" of this Form 20-F, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2008. While we are in the process of correcting our internal control weaknesses, the material weaknesses in internal control over financial reporting that have been identified will not be remediated until numerous internal controls are implemented and operate for a period of time, are tested, and we are able to conclude that such internal controls are operating effectively. Pending the successful completion of such implementation and testing of the internal controls, we will perform additional procedures to reduce the risk that material weaknesses in internal control over financial reporting result in material misstatements to the financial statements. We cannot provide assurance that these procedures will be successful in identifying material misstatements that may exist in the financial statements. Any failure to implement and maintain the improvements in the internal controls over our financial reporting, or difficulties encountered in the implementation of these improvements in our controls, could result in misstatements in the financial statements that would not be prevented or detected, or cause us to fail to meet our reporting obligations. We cannot assure you that we will not identify additional material weaknesses in our internal controls in the future. Any failure to improve the identified material weakness or any identification of any additional material weaknesses could cause investors to lose confidence in our reported financial information which could have a negative impact on the trading price of our stock.

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On January 24, 2011 we sold 100% of our shares in Stream Investment to Almerio Consultancy Limited located in Cyprus. On January 24, 2012 we sold all of remaining share in Stream Poland (22.73%) to Multimedia Polska S.A.

At the date of the report the company's Management is seeking new opportunities to conduct business in various sectors.

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

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

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

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

Our registered office is Suite 1500 - 1055 West Georgia Street, P.O. Box 11117 Vancouver, British Columbia, V6E 4N7, Canada. Our principal offices are located at Goraszewska 6 Street, Warsaw, 02-910, Poland, telephone +48- 22-842-7666.

We have the following operating subsidiary company:

We have the following operating investment in unconsolidated company:

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The following company is a subsidiary, but no longer has an operating business. We plan to liquidate this Company, as the business purpose is no longer in line with our corporate strategy. The liquidation (legally not yet started) of the company commenced in the second half of 2007 and is expected to be completed by the end of 2012.

We are a reporting issuer in the Province of British Columbia, Canada and our common shares are listed for trading on the OTCBB Pink Sheets under the trading symbol "SCNWF". Our shares also were traded in the past on the Frankfurt exchange under the symbol "TPJ".

Until October 2007, we utilized about 1,000 square feet of office space in Vancouver, British Columbia. Our rent was $1,700 per month. In addition, we paid approximately $1,500 per month for office support that includes a photocopier, telephones, a fax machine, computers, printers, scanners, secretarial services, reception services and consumables.

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

Stream provides cable television services and high-speed Internet access in the Polish districts of Slaskie, Malopolskie, Swietokrzyskie and Podkarpackie through its hybrid fibre coax ("HFC") networks. Recently, it has also begun offering limited Internet telephony services based on Voice over Internet Protocol ("VoIP"). Stream Poland provides its customers with a high quality product by employing modern, reliable networks, a broad selection of programmes, professional management and customer service.

As at December 31, 2008 Stream owned of 48,86% business activities in Poland through a group of companies, in particular through our unconsolidated company Stream Communications Sp. z o.o. ("Stream Poland") with a registered office in Krakow, ul. Aleja 29 Listopada 130, 31-406 Krakow, and indirectly, through the following subsidiaries of Stream Poland:

Gimsat Sp. Z o. o. ("Gimsat")

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

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

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

Broker Service Sp. z o.o ("Broker") - acquired in 2008

Homenet Technologies Sp. z o.o. ("Homenet") - acquired in 2008

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

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

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

Stream Poland's Management Board as at December 31, 2008:

Andrzej Strehlau (President and CEO)

Vladimir Petrzilka (Director)

Tomasz Danowski (Director)

Stream Poland's Supervisory Board currently comprises of the following members on December 31, 2008 and was changed in 2008 as a result of the investment agreement with Penta:

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

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

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

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

As at December 31, 2007, Stream owns 100% of shares of IEWS. During the second half of 2007, Stream began the process to liquidate he business affairs of IEWS and intends to be liquidated at all. The liquidation is expected to be completed by the end of 2012.

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

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

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

In January 2008, Streamline changed its name to Stream Investments Sp. z o.o. In August 2008 Stream Investment started its operating activity in Suwalki town.

On January 24, 2011 we concluded the transaction to sell Stream Investment for PLN 4,000,000 (US$ 1,400,500) to Almerio Consultancy Limited the company based in Nicosia. The Buyer took over from Stream Communications Network & Media Inc. 100% of the share capital of Stream Investment.

The funds allowed for the partial repayment of outstanding debts of Stream Communications Network & Media Inc. and to continue its business operation.

The Company is not subject to any unresolved SEC issues, comments or disputes, besides the Company is not compliant with reporting requirements.

We prepare our financial statements in Canadian dollars. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in Canada, or Canadian GAAP, with reconciliation to US GAAP.

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

OPERATING RESULT FOR PERIOD ENDED DECEMBER 31

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The results for the year 2008 is only to a limited extent comparable to previous years, due to the company's disposal of shares in Stream Communications Sp. z o. o. (Stream Poland) which is not consolidated with the company as of February 22, 2008.

Revenue decreased by 80% in the current year as compared to 2007 as result of only consolidating
2 months of revenue from Stream Poland, whereas in previous years is was a fully consolidated subsidiary. Although the Greenfield site in Suwalki commenced operation in April 2008, it has only started selling of services in August 2008. It brought only $15,261 of revenues. All remaining revenues in 2008 and all revenues in 2007 were derived from Stream Poland.

Income Taxes were provided for the year of 2008 for the amount of $17,015, which is entirely related to the period January 1, 2008 - February 22, 2008 when Stream Poland was consolidated. In the same period of 2007, the company made a tax provision of $162,809 also relating to the result of the Polish operations.

Stream Communications Network & Media, Inc. is reporting a negative Adjusted EBITDA of $(1,255,799) for the year ended December 31, 2007 (2006 - $(502,984); 2005 - $(2,547,755)). The deterioration of Adjusted EBITDA in 2007 from 2006 is a result of transactions with advisors engaged by the company to assist in the completion of the transaction with Penta.

Revenue increased by 14% in the current year as compared to 2006, as result of actively promoting internet services to subscribers for the network modernized in 2006 as well as focused direct sales efforts to upgrade existing subscribers to premium service packages. The rates for services increased in 2007 by 14% to off-set the increased costs for programming and system lease expenses.

Operating Expenses increased by 13% from December 31, 2006 to December 31, 2007 as a result of the company engaging professional advisors to support the management at raising funds, and in particular to provide advisory services to management in the finalization of the terms on the agreement entered into with Penta on their investment in Stream Poland.

Programming and System lease expenses increased by 13% from December 31, 2006 to December 31, 2007, due to higher penetration of internet services and therefore a need to purchase additional bandwidth. The upgrade of subscribers to premium programming packages has also increased the cost of programming.

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Management and professional fees as well as Travel and Entertainment increased by 119% and 48% respectively in 2007 compared to 2006, as a result of the company's effort to raise financing which was successfully completed with the investment of Penta in Stream Poland.

Amortization the amortization charge for the year was $2,159,233 compared to $2,388,716 in 2006, a decrease of 10%, since the cable TV systems acquired in 2003 and earlier are fully amortized.

Other Operating Expenses (Income) as of December 31, 2007 was positively affected by the weak US-dollar and strong Canadian dollar and Polish zloty, resulting in an unrealized foreign exchange gain of $837,153 on the Company's long term debt outstanding at December 31, 2007. The restructuring expenses incurred in 2006 were a non-recurring item and therefore did not impact the company's operating results in 2007.

Financial and Other Items: In 2007, the company had other expenses of $648,737 versus $1,021,140 in 2006. This decrease is due to three main items: (1) all costs for the Standby Guarantee were incurred in 2006 ($798,289) (2) incremental financing expenses of $231,743 were incurred in 2007 related to the bond issue at Stream Poland, and (3) increased interest expenses of $145,869 due to the bond issue in Stream Poland.

Income Taxes decreased in 2007 as a result of future income tax assets created at the Polish operational level for non-deductible expenses.

All together, the Company ended 2007 with a net loss of $3,107,320 versus a net loss of $4,485,893 in 2006.

As of December 31, 2008 there was very substantial doubt about the Group's ability to continue as a going concern. However as the date of this report company's Management believe the company is able to continue its activity for the next 12 month.

Our working capital deficiency as at December 31, 2008 was $2,210,044, compared to the working capital deficiencies at December 31, 2007 which was $11,123,202.

The company received in October 2009 the escrowed amount of $817,013 from Penta.

On January 24, 2011 we concluded the transaction of sale of Stream Investment for PLN 4,000,000 (US$ 1,400,500) to Almerio Consultancy Limited the company based in Nicosia. The funds allowed for the partial repayment of outstanding debts of Stream Communications Network & Media Inc. and to continue its business operation.

On January 24, 2012 we sold all of remaining share in Stream Poland (22.73%) to Multimedia Polska S.A for total price of PLN 29.000.000,00 (US$9,000,000).

According to the sale agreement, the price for the above mentioned shares will be paid as follows:

• the amount of PLN 2.900.000 (two million nine hundred thousand) (US$900,000) was paid by the date of 30^th January 2012;
• the amount of PLN 26.100.000 (twenty six million one hundred thousand) (US$8,100,000) will be payable within 7 days from the date on which the President of Antimonopoly Office will pass a decision with consent to a concentration, however in any case, even when the President of Antimonopoly Office will refuse to give a consent to the concentration, not later than on 30^th September 2012. Stream Communications received final consent before this report has been signed.

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The proceeds received from the sale of shares in Stream Poland will be used for financing our further business activity and repayment of private loans.

At the date of the report the Management is seeking new opportunities to conduct business in various lines.

Contractual obligations at December 31, 2008 are as follows:

On December 15, 2006 and March 2, 2007, Stream Investment ("Streamline") entered into two preliminary agreements for two greenfield sites, the Suwalki project and the Lubin project, respectively. The Company has developed one of the sites (Suwalki) in 2007 and starting from 2008 it generates revenue; the preliminary agreement for development of the second site (Lubin) was terminated by contractor on January 12, 2009.

The company is maintaining its accounting records in accordance with general accepted accounting principles ("GAAP") in Canada, with reconciliation to US GAAP for financial reporting purposes.

When reconciling the consolidated financial statements to US GAAP, there are no differences
in 2008, however the Company recorded the following differences in previous years:

• Stock-Based Compensation which under Canadian GAAP is an expense to the Company
  is excluded from the Statement of Operations under US GAAP.
• Under Canadian GAAP, a proportionate amount of the cumulative foreign currency translation account is recognized in net income on a partial realization or disposition of an investment in a self-sustaining subsidiary. Under US GAAP such recognition occurs only when there has been a substantially complete realization of the investment.

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

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

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

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

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

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

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

In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, FIN 48 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under FIN 48, the impact of an uncertain tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Under US GAAP, the Company adopted the provisions of FIN 48 on January 1, 2007. The new standard did not have a material impact on the Company's consolidated financial statements.

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There were no other changes in accounting policies in 2008.

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

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Our board of directors is elected by our shareholders as indicated in our Articles. Directors receive directors' fees (see Directors' Fees under Executive Compensation). Our executive officers are appointed by our board of directors and have service agreements with us. The normal notice period for executive officers is 12 months. In the case of Stream Poland, both the Supervisory Board and the Management Board are elected by the General Meeting of Shareholders (in practice - by the only shareholder i.e. the Parent Company). The following sets out our directors and officers:

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

Robert Dziublowski brings over 20 years of experience in investing, consulting and management and has advised a number of international companies on doing business, building a Central European presence or making acquisitions in Poland and Central Europe. His clients have included Nasdaq and Eiffage Construction, one of the largest construction groups in Europe. He has advised leading Polish companies in acquisitions in the insurance, media and telecommunications sectors. His clients have included Wussler Group, a partner of company of Ted Turner Pictures, WPI, a U.S. telecommunications group, and Grupa PZU, a leading Polish financial services firm. He has served on the boards of a number of companies traded on the Warsaw Stock Exchange, and currently serves on the board of Mobiltek, a company he launched in 2002. Mr. Dziublowski received an M.A. in Political Science from Warsaw University in 1988 and an M. A. in International Relations from University of Hawaii in Honolulu in 1990.

Mr. Aussenberg graduated from Warsaw University, the Faculty of Management.

He held a number of senior executive positions, including Financial Director for ITI Group, a media conglomerate in Poland active in various sectors of entertainment, such as television, multiplex cinemas and movie production companies.

Mr. Aussenberg was also a Chief Financial Officer and a Board member with TVN, a leading commercial television company in Poland, listed on the Warsaw Stock Exchange.

He served as a Chief Financial Officer of Elektrim S.A., an energy and telecom conglomerate listed on the Warsaw Stock Exchange which indirectly controlled 25% of PTC, the largest mobile telephone operator in Poland.

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Mr. Aussenberg gained his experience in funds raising for companies from various industries in Poland like food, fuel and energy, pharmacy.

Since 2004, Mr. Aussenberg has been also working with Warsaw Equity Holding (WEH), private equity fund in Poland serving as a board member for several businesses from fund's portfolio. WEH invests in various business areas in Poland concentrating on development and execution of the company's turnaround and restructuring strategy.

Mr. Aussenberg has been co-operating with Stream Communications since 2006 as non-executive Director. Since April 2010 is working for the Company as CFO as well.

Zbigniew Tragarz Mr Tragarz has over 25 years of professional practice and experience in organization building, management turnaround, sales and business development in de range
of companies: from commodity trade and manufacturing to equity investment projects.

In 1977 joined Foreign Trade Enterprise specialized in electronic goods. In 80's he has extensively traveled in Middle East and Far East as a company trade representative and Director of Company Branch Office in India. Spent almost three years in New Delhi working on several investment projects including picture tubes plant and electronic components plant.

In 1986 joined the biggest electronic plant in Poland, Polkolor in Warsaw, as project and export manager dealing with company's export activity and investment projects abroad (Turkey, China, USA). From 87 to 89 Board Member in Terla-Polkolor joint venture in Istanbul.

From 1990 associated to INVESCO fund in Poland, working on several investment and privatisation projects in Poland (Zywiec, Okocim, Pudliszki, and other EEDF investments in Poland).

He graduated from Warsaw Technical College. He aslo completed professional foreign trade courses in SGPiS (now SGH) in Warsaw.

From 2000 served as board member for various Stream Communications group of companies. Since December 2011 non-executive director of Stream Communications

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

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

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

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

The following table details the compensation paid to our executive officers for the year ended December 31, 2008

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

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

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

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

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

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

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

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

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

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

(c) Shares allocated to all persons employed in contacts with investors may not exceed 2% of the outstanding shares; and

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

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

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

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

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

Audit Committee Members:

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

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Compensation Committee Members:

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

Corporate Governance Committee Members:

The average number of employees was as follows:

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

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

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The Company has received invoices from a creditor for amounts due for work performed in regards to an IPO on the Warsaw exchange in 2003. The amount claimed is USD $3,145,885 of which $NIL has been accrued at December 31, 2008 (December 31, 2007 - $NIL; December 31, 2006 - $NIL). The Company is of the opinion that these amounts are due if the IPO on the Warsaw Exchange is completed.

The Company was defending an action pursuant to certain alleged unpaid legal invoices. The lawsuit was estimated for the amount of $280,245 of which $NIL has been accrued at December 31, 2008 (December 31, 2007 = $NIL; December 31, 2006 - $NIL). The Company is of the opinion that these legal costs related to the IPO on the Warsaw Exchange were not directed by the Company or on its behalf.

As of the date of this report, the above claim, if existed, would have expired. We are not aware of any circumstances which point to the fact that anyone would find this claim be payable.

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

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Our authorized share capital as at December 31, 2008 was 150,000,000 common shares without par value. At December 31, 2008 our issued and outstanding share capital was 81,596,491.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TAXATION OF DIVIDENDS

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

DISPOSITION OF COMMON SHARES

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

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

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

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

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

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

We do not believe the Company was a passive foreign investment company during the fiscal period ended December 31, 2008 or any other year.

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

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

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

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

Corporations are subject to corporate income tax at a rate of 19% in 2008, 2007, and 2006.

Depreciation and depletion

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

Net operating losses

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

Payments to foreign affiliates

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

Deduction for taxes paid

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

Non-deductible expenditures

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

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

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

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

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

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

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

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

We did not have any foreign currency derivatives outstanding at December 31, 2008. Accordingly, no market risk existed for such instruments at this date.

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

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

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

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

On March 17, 2009, the Lender has prolonged the maturity date and it is to be repaid not later than December 31, 2012

On August 18, 2009, the Lender has prolonged the maturity date of the loan and it is to be repaid not later than December 31, 2012.

Not applicable

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

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

The Company has evaluated, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the effectiveness of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2008. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of December 31, 2008, due to the material weaknesses in the Company's internal control over financial reporting described below in "Management's Report on Internal Control over Financial Reporting".

Management's Report on Internal Control over Financial Reporting

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

As of the end of the period covered by this report, the Company's management, including the principal executive officer and principal financial officer, completed our evaluation of the effectiveness of our internal control over financial reporting, which we had been conducting based on the criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treasury Commission ("COSO"). Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective during the fiscal period ending December 31, 2008.

Management completed its assessment of internal control over financial reporting ("ICFR"), and has identified certain material weaknesses that existed in the design or operation of our internal control over financial reporting. The Public Company Accounting Oversight Board has defined a material weakness as a "deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis". The following material weaknesses were identified in our 2008 assessment:

386

• Insufficient staffing in Accounting and Finance, leading to an Ineffective Internal Control Environment & Failure to retain evidence supporting Management's Testing - We did not have a sufficient number of accounting personnel with an appropriate level with the necessary expertise within its accounting and finance function. The lack of sufficient staff did not allow the Company to maintain an effective internal control environment. Specifically, management concluded that the deficiencies in the control environment contributed to the Company's inability to document and retain evidence supporting our tests of design and operations of all controls over our ICFR as at and for the year ending December 31, 2008.

• Implementing GAAP-Compliant Accounting Policies - We did not have a formalized process for monitoring, updating, disseminating, and implementing GAAP-compliant accounting policies and procedures, resulting in the issuance of interim financial statements that were not in compliance with new CICA Handbook Accounting Standards for Financial Instruments: Handbook Section 1530 - Comprehensive Income; Handbook Section 3251 - Equity; Handbook Section 3855 - Financial Instruments - Recognition and Measurement; Handbook Section 3861 - Financial Instruments - Disclosure and Presentation; and Handbook Section 3865 - Hedges.

• Ineffective Controls over the Financial Close and Reporting Process - The Company's design and operation of controls with respect to the process of preparing and reviewing the annual and interim financial statements are ineffective. The material weakness includes failures in the design and operating effectiveness of controls which would ensure (i) preparation of interim and annual financial statements on a timely basis; (ii) account analyses, summaries and reconciliations are prepared, reviewed and approved; (iii) subsidiary ledgers are reconciled to the general ledger, including check registers, accounts receivable ledgers, fixed asset ledgers and accounts payable ledgers; (iv) journal entries are reviewed and approved; (v) analysis of non-routine transactions performed; (vi) analysis of intercompany activity performed; and (vii) application of accounting standards under Canadian and US GAAP, including also the accuracy and completeness of the financial statement disclosures and presentation. These control deficiencies could result in a material misstatement of the financial statements due to the significance of the financial closing and reporting process to the preparation of reliable financial statements and the potential pervasiveness of the deficiencies to the significant account balances and disclosures.

• Inadequate controls related to the expenditure cycle: The internal controls were not adequately designed or operating in a manner to effectively support the requirements of the expenditure cycle. This material weakness is the result of aggregate deficiencies in internal control activities. The material weakness includes the design and operating effectiveness of controls which would ensure (i) purchase requisitions and related vendor invoices are reviewed and approved; (ii) reconciliations of related bank accounts and accounts payable subsidiary ledgers are prepared, reviewed and approved; (iii) changes to vendor master files are reviewed and approved and (iv) adequate segregation of duties related to check signing, invoice processing and invoice approval. These control deficiencies could result in a material misstatement of operating expenses, accounts payable and accrued liabilities that would not be prevented or detected.

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This annual report does not include an attestation report of our independent registered public accounting firm regarding the effectiveness of internal control over financial reporting. The effectiveness of internal control over financial reporting was not subject to attestation by the Company's independent chartered accountants pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

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

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

Except as set forth above, there have been no changes in our internal control over financial reporting that occurred during the twelve months ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

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

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

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

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

(5) An understanding of audit committee functions.

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

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

During the financial years ended 2006 to 2008 we employed the following auditing firms. Their remuneration and services performed are as follows:

Year ended December 31, 2008

Year ended December 31, 2007

Year ended December 31, 2006

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

Not applicable.

Not applicable.

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As Deloitte&Touche LPP, Chartered Accountants has tendered its resignation as the auditor of the Company effective November 28, 2008, on December 17, 2008 the General Meeting of Shareholder resolved that BDO Numerica Auditors&Consultants Sp. z o.o. would be appointed as an Auditor of the Company for the fiscal year 2008.

Prior to the resolution of the General Meeting of Shareholders, on December 15, 2008 the appointment of BDO Numerica Auditors&Consultants was resolved by the Board of Directors.

The audit reports on the financial statements for either of the past two years did not

contain an adverse opinion or a disclaimer of opinion, or was not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the two most recent fiscal years and any subsequent interim period preceding the resignation of Deloitte&Touche LPP there were not any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of the former accountant, would have caused it to make reference to the subject matter of the disagreement(s)

in connection with its report.

Not applicable.

See Item 19

Not applicable.

1. Report of Independent Registered Public Accounting Firm
2. Consolidated Statement of Operations and Deficit for each of the years ended December 31, 2008, 2007 and 2006
3. Consolidated Statement of Shareholders' Equity and Comprehensive Income (Loss) for each of the years ended December 31, 2008, 2007 and 2006
4. Consolidated Balance Sheet for the years ended December 31, 2008, 2007 and 2006
5. Consolidated Statement of Cash Flows for each of the years ended December 31, 2008, 2007 and 2006
6. Notes to the Consolidated Financial Statements.

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44

45

46

47

48

49

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

These financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has recurring operating losses, an accumulated deficit of $55,549,004 and negative working capital of $2,210,044 at December 31, 2008. The continuing operations of the Company are dependent upon its ability to commence profitable operations in the future. Therefore, as of the date these financial statements have been prepared, there is a substantial doubt about the Group's ability to continue as a going concern.

On January 24, 2011 we concluded the transaction of sale of Stream Investment for PLN 4,000,000 (US$ 1,400,500) to Almerio Consultancy Limited the company based in Nicosia. The funds allowed for the partial repayment of outstanding debts of Stream Communications Network & Media Inc. and to continue its business operation.

On January 24, 2012 we sold all of remaining share in Stream Poland (22.73%) to Multimedia Polska S.A for total price of PLN 29.000.000,00 (US$9,000,000).

According to the sale agreement, the price for the above mentioned shares will be paid as follows:

• the amount of PLN 2.900.000 (two million nine hundred thousand) (US$900,000) was paid by the date of 30^th January 2012;
• the amount of PLN 26.100.000 (twenty six million one hundred thousand) (US$8,100,000) will be payable within 7 days from the date on which the President of Antimonopoly Office will pass a decision with consent to a concentration, however in any case, even when the President of Antimonopoly Office will refuse to give a consent to the concentration, not later than on 30^th September 2012. Stream Communications received final consent before this report has been signed.

The proceeds received from the sale of shares in Stream Poland will be used for financing our further business activity and to repay private loans.

At the date of the report the Management is seeking new opportunities to conduct business in various lines.

Management has prepared these financial statements on the basis that the Company will be able to continue as a going concern for at least 12 months after December 31, 2008. These financial statements do not include any adjustments that might be necessary as a result of the uncertainty regarding going concern. Such adjustments could be material.

These consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles ("GAAP") applicable in Canada. Canadian GAAP differs in certain respects from accounting principles generally accepted in the United Stated ("US GAAP") as explained in Note 27. A summary of the significant accounting policies are as follows:

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

These consolidated financial statements include in the comparatives for 2007 and 2006 the accounts of the following subsidiaries. All significant intercompany transactions and balances have been eliminated. Since February 22, 2008 the Company holds 48,86% of Stream Poland, which is accounted for using the equity method.

Subsidiaries of Stream Communication Sp. z o. o. ("Stream Poland"):

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

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

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

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

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

Long-lived assets are comprised of property, plant and equipment and intangibles assets subject to amortization. The Company reviews the carrying value of long-lived assets for potential impairment when there is evidence that events or changes in circumstances exist that indicate the carrying value might not be recoverable. The recoverability of long-lived assets is determined by evaluating whether the carrying value of such assets can be recovered from estimated undiscounted future operating cash flows. When an asset is impaired, according to the foregoing test, an impairment loss is measured and recognized as the excess of the carrying value of the asset over its fair value. The intangible assets impairment test had no impact on the Company's results for the years ended December 31, 2008, 2007 and 2006.

For the year 2008 the recoverability of cable TV equipment in Suwalki has been tested for potential impairment. Management has estimated the undiscounted future cash flow associated with these assets below the carrying value. Consequently the impairment loss amounted for $1,213,281 has been recorded

Transaction costs directly attributable to the acquisition or issue of a financial asset or financial liability are expensed directly into income and are included in financing (expense) income on the consolidated statement of operations and deficit.

(i)   Comprehensive income

Comprehensive income comprises the Company's net income and other comprehensive income. Other comprehensive income represents changes in shareholders' equity during a period arising from the unrealized effect of foreign currency translation of foreign operations. The Company's comprehensive income, and accumulated other comprehensive income are presented in the statements of shareholders' equity and comprehensive loss.

CICA Handbook Section 1530 introduces comprehensive income, which consists of net earnings on the consolidated statements of earnings (loss) and other comprehensive income (loss) ("OCI"). OCI represents changes in shareholders' equity in a period arising, in the case of the Company, from the unrealized effect of foreign currency translation of foreign operations.

(ii)   Derivatives

All derivative instruments are recorded on the balance sheet at fair value. At December 31, 2008 and 2007, the Company does not have any derivative instruments designated as hedging instruments.

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(iii)  Embedded derivatives

Derivatives may be embedded in other financial instruments (host instruments). Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative, and the combined contract is not classified as held-for-trading. These embedded derivatives are measured at fair value on the balance sheet with subsequent changes in fair value recognized in income. The Company has not identified any material embedded derivatives that are required to be accounted for separately from the host contract.

CICA Handbook Sections 3855 and 3861 establish standards for the recognition, measurement, presentation and disclosure of financial instruments. Financial instruments are initially recognized at fair value. The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm's-length transaction between knowledgeable, willing parties who are under no compulsion to act. Fair values of financial instruments are based on independent prices quoted in active markets. In the absence of an active market, fair values are determined based on valuation models such as discounted cash flows, which require the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. Subsequent measurement depends on management's classification of the financial assets as held-for-trading, available-for-sale, held-to-maturity or as loans and receivables, and financial liabilities as held-for-trading or as other liabilities. The classification of financial instruments depends on the nature of and the purpose of the financial instruments, management's choice and in some circumstances, management's intentions.

The following summarizes the Company's selected financial instrument classifications based on intentions:

(v)   Held-for-trading

Financial instruments classified as held-for-trading are measured at fair value with the realized and unrealized changes in fair value recognized each reporting period through financing (expense) income on the consolidated statement of operations and deficit. The Company had no transition adjustments at January 1, 2007 for held-for-trading financial instruments.

(vi)   Available-for-sale

Financial assets classified as available-for-sale are measured at fair value with the unrealized changes in fair value recorded each reporting period in OCI. Investments in equity instruments classified as available-for-sale that do not have a quoted price in an active market are recorded at cost. Each reporting period, available-for-sale assets are written down to fair value through financing expense (income) on the consolidated statement of operations and deficit to reflect impairments that are considered to be other than temporary. The Company had no transition adjustments at January 1, 2007 for available-for-sale financial instruments.

(vii)  Held-to-maturity

Financial instruments classified as held-to-maturity are measured at amortized cost using the effective interest method. The Company had no transition adjustments at January 1, 2007 for held-to-maturity financial instruments.

(viii) Loans and receivables and other liabilities

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Financial instruments classified as loans and receivables and other liabilities are measured at amortized cost. Transaction costs of the loans and receivables and other liabilities are expensed directly into income on the consolidated statement of operations and deficit. The Company had no transition adjustments at January 1, 2007 for loans and receivables or other liabilities.

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

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

As specified in CICA Handbook Section 1530, since transition on January 1, 2007, the Company presented the unrealized effect of foreign currency translation of foreign operations as
a component of accumulated OCI for the current and prior periods.

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

The Company applies the fair value method of accounting for all stock option awards. Under this method, the Company estimates compensation expense for stock option awards using the Black-Scholes model based on the fair value of the options at the later of the date of grant or the date of shareholder approval of the grant. The fair value of the options is expensed over the expected life of the options.

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

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

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In December 2006, the CICA issued Handbook Section 1535, Capital Disclosures. The new standard requires disclosure of qualitative and quantitative information that enables users of financial statements to evaluate the Company's objectives, policies and processes for managing capital. These recommendations are effective for the Company's interim and annual reporting periods beginning January 1, 2008. This new standard requires incremental disclosures, however, it has not a material effect on the Company's consolidated financial statements.

In December 2006, the CICA issued Handbook Sections 3862, Financial Instruments - Disclosures, and 3863, Financial Instruments - Presentation, which will replace Section 3861, Financial Instruments - Disclosure and Presentation. The new disclosure standard increases the emphasis on the risks associated with both recognized and unrecognized financial instruments and how those risks are managed. The new presentation standard carries forward the former presentation requirements and are effective for the Company's interim and annual reporting periods beginning January 1, 2008. These new standards requires revised disclosures, however, it has not a material effect on the Company's consolidated financial statements.

In March 2007, the CICA issued Handbook Section 3031, Inventories, which has replaced Section 3030 with the same title. The new Section establishes that inventories should be measured at the lower of cost and net realizable value, with guidance on the determination of cost. These recommendations are effective for the Company's interim and annual reporting periods beginning January 1, 2009. This new standard is not expected to have a material effect on the Company's consolidated financial statements.

In June 2007, the CICA issued changes to Section 1400, General Standards of Financial Statement Presentation. Section 1400 has been amended to include requirements to assess and disclose an entity's ability to continue as a going concern. Management shall make an assessment of an entity's ability to continue as a going concern. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern, those uncertainties shall be disclosed. When financial statements are not prepared on a going concern basis, that fact shall be disclosed, together with the basis on which the financial statements are prepared and the reason why the entity is not regarded as a going concern. Section 1400 is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008. The adoption of this standard has no impact on the Company's operating results or financial position and on the Company's financial statement disclosure.

In February 2008, the CICA released Section 3064 Goodwill and Intangible Assets which supersedes Section 3062 Goodwill and Other Intangible Assets and Section 3450 Research and Development. This new section establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. This section applies to interim and annual reporting periods beginning January 1, 2009. The Company does not expect the adoption of this standard to have
a material impact on its financial statements.

In February 2008, the Accounting Standards Board ("AcSB") of the CICA confirmed that Canadian GAAP for publicly accountable enterprises will be converged with International Financial Reporting Standards ("IFRS") effective in the calendar year 2011. The conversion to IFRS will be required, for the Company, for interim and annual financial statements beginning on January 1, 2011. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences on recognition, measurement and disclosures. In the period leading up to the conversion, the AcSB will continue to issue accounting standards that are converged with IFRS such as IAS 2 "Inventories" and IAS 38 "Intangible Assets", thus mitigating the impact of adopting IFRS at the mandatory transition date. The Company continues to monitor changes arising from this convergence and, as required by CSA Staff Notice 52-320, the Company will include a discussion of the key elements and timing of its IFRS changeover plan in its annual MD&A for the following year.

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On January 1, 2007, the Company adopted new accounting policies for financial instruments by adopting the following new standards of the Canadian Institute of Chartered Accountants ("CICA"): Handbook Section 1530 - Comprehensive Income; Handbook Section 3251 - Equity; Handbook Section 3855 - Financial Instruments - Recognition and Measurement; Handbook Section 3861 - Financial Instruments - Disclosure and Presentation; and Handbook Section 3865 - Hedges. These new standards have been applied retrospectively without prior period restatement, except for the presentation of the cumulative unrealized effect of foreign currency translation of foreign operations on the consolidated balance sheet as a component of accumulated other comprehensive loss. The change in accounting policies had no other material impact on the Company's consolidated financial statements at January 1, 2007.

Cash equivalents are guaranteed investment certificates (Mastercard security term deposit).

At December 31, 2008 the Company did not hold any cash equivalents in asset-backed commercial paper.

The main position in accounts receivable at December 31,2008 is escrow amount ($928,844), received from Cyfoca Holidings (Penta) in October, 2009.

Stream Communications makes prepayments for services, goods and property, plant and equipment purchases.

The Company policy is to keep only the most basic parts and inventory supplies on hand, as equipment suppliers in general are able to deliver ordered parts within 48 hours. At the end of 2007, the Company commenced an upgrade program of existing networks. This was related only to Stream Poland, so at December 31, 2008 the Company had no inventory.

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The recoverability of cable TV equipment in Suwalki has been tested for potential impairment as of December 31, 2008. Management has estimated the undiscounted future cash flow associated with these assets below the carrying value. Consequently the impairment loss amounted for $1,213,281 has been recorded.

Since February 22, 2008 the Company holds 48,86% of Stream Poland, which is accounted for using the equity method. The change in cost of property , plant and equipment between December 31, 2008 and December 31, 2007 is due to the disposal of 51.4% of our shares in Stream Poland.

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Since February 22, 2008 the Company holds 48,86% of Stream Poland, which is accounted for using the equity method. The change in cost of cable TV subscriber base between December 31, 2008 and December 31, 2007 is due to the disposal of 51.4% of our shares in Stream Poland.

Since February 22, 2008 the Company holds 48,86% of Stream Poland, which is accounted for using the equity method. The change in cost of cable TV subscriber base between December 31, 2008 and December 31, 2007 is due to the disposal of 51.4% of our shares in Stream Poland.

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In 2001, Stream Poland made an advance payment to Bielsat.com Sp. z o.o. of $180,332 (PLN 450,000) for an option to purchase the outstanding 49% of shares in Bielsat. The advance was deducted from the purchase price when the option is exercised. Since February 22, 2008 the Company holds 48,86% of Stream Poland, which is accounted for using the equity method. The change in cost of cable TV subscriber base between December 31, 2008 and December 31, 2007 is due to the disposal of 51.4% of our shares in Stream Poland.

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12. Outstanding balances are as follows:

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