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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2002

or

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

For transition period from _______ to _______

Commission file number: 000-27582

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

Delaware 13-3853788
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

140 58th Street, Suite 7E, Brooklyn, NY 11220
(Address of Principal Executive Offices) (Zip code)

(718) 567-4300
(Registrant's telephone number)

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

Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.01 per share

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 |X| No |_|

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes |_| No |X|

The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant was $10,031,000 on June 28, 2002, based on the
closing trade price of the Common Stock on the NASDAQ National Market on that
date.

The number of shares of Common Stock outstanding as of March 24, 2003 was
16,825,389.

--------------------------------------------------

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement for its 2003 Annual
Meeting of Stockholders are incorporated by reference into Part III of this Form
10-K.




SPEEDUS CORP.
TABLE OF CONTENTS

PART I

Item 1 Business
Item 2 Properties
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of Security Holders

PART II

Item 5 Market for Registrant's Common Equity and Related Stockholder
Matters
Item 6 Selected Consolidated Financial Data
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Item 8 Consolidated Financial Statements and Supplementary Data
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

PART III

Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions
Item 14 Controls and Procedures

PART IV

Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K

This Form 10-K contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). These statements appear in a number of
places in this Form 10-K and include statements regarding the intent, belief or
current expectations of the Company or its officers with respect to, among other
things, the ability of the Company to make capital expenditures, the ability to
incur additional debt, as necessary, to service and repay such debt, if any, as
well as other factors that may effect the Company's financial condition or
results of operations. Forward-looking statements may include, but are not
limited to, projections of revenues, income or losses, capital expenditures,
plans for future operations, financing needs or plans, compliance with covenants
in loan agreements, plans for liquidation or sale of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events, and the ability to obtain additional financing,
including the Company's ability to meet obligations as they become due, and
other pending and possible litigation, as well as assumptions relating to the
foregoing. All statements in this Form 10-K regarding industry prospects and the
Company's financial position are forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct. The
Company undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


2


PART I

ITEM 1. BUSINESS

Business Activities

Speedus Corp. is a holding company that owns significant equity interests
in diverse businesses. We seek business opportunities across all industries for
potential transactions and relationships in which we can apply our current
resources and management strengths. We are particularly focused on companies
with sound business plans and existing revenue bases that require growth
capital. We will continue to pursue opportunities involving our wireless
expertise and broadband assets as attractive opportunities present themselves.
The companies that we target, either public or privately held and regardless of
industry, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets.

We have co-invested with Siemens Corporate Research, Inc., a subsidiary of
Siemens Corporation, in Zargis Medical Corp. to develop a service solution,
initially targeted toward primary care physicians, that would be used as part of
general medical examinations for the early screening and detection of valvular
and congenital heart disease. We have acquired a 51% interest in F&B Gudtfood,
the creator and operator of the original Eurocentric "chic and quick" cafe,
which is operating its first store in Manhattan and is currently planning
expansion to other locations. We own a portfolio of patents that allow for
high-speed wireless communications. We also developed and launched an online
cell phone store, 007Phones, which we now license to a third-party. We also own
fixed wireless spectrum in the New York City metropolitan area that we may
commercialize in the future to support high-speed, or broadband, Internet access
service.

Zargis Medical Corp. In January 2001, we co-invested with Siemens
Corporate Research, Inc., a subsidiary of Siemens Corporation, in a new company,
Zargis Medical Corp. Zargis Medical is building a service solution, initially
targeted toward primary care physicians that would be used as part of general
medical examinations for the early screening and detection of valvular and
congenital heart disease. General medical examinations, according to the
National Center for Health Statistics, totaled 46 million in 1999 for the US
alone. We have signed an exclusive contract with Zargis Medical to design and
develop the wireless applications, as well as provide transaction processing to
support the commercial rollout of Zargis Medical's cardiac diagnostic products.
Under this contract, using a combination of wireless and wired technology,
Speedia Wireless, our wholly owned subsidiary, has demonstrated the ability to
transfer the heart sound file from a physician's office to the Speedus Data
Center which will enable Zargis Medical to pursue a business model based on a
fee per usage basis. Some of the major next steps remaining for Zargis Medical
include clinical trials, FDA approval, marketing and roll-out, along with the
formation of strategic partnerships.

In February 2003, we acquired a controlling interest in Zargis Medical.
The additional investment of $1,250,000 was represented by outstanding notes
payable to the Company by Zargis Medical at December 31, 2002 in the amount of
$250,000 and an additional cash investment of $1,000,000.

F&B Gudtfood. In May 2002, we acquired a 51% interest in F&B Gudtfood, the
creator and operator of the original Eurocentric "chic and quick" cafe, which is
operating its first store in Manhattan and is currently planning expansion to
other locations. The acquisition price was $3,500,000, which funds will be
applied principally for its expansion. We also entered into a management
services contract with this company that will result in direct revenues to us
apart from those arising out of our ownership interest although these revenues
will be eliminated on our consolidated financial statements.

On February 8, 2003, we reduced our cash investment in F&B Gudtfood and
received $1,775,000 while maintaining our 51% interest.

Broadband Patents. Through our wholly owned subsidiaries, Broadband
Patents, LLC and CellularVision Technology & Telecommunications, L.P., we have
accumulated a portfolio of patents that allow for high-speed wireless
communication systems with greater information content, reliability, clarity, or
more efficient use of licensed spectrum as compared to prior systems. We have
five domestic patents with expiration dates ranging from 2007 through 2017, with
numerous international counterparts. Any particular wireless communications
system may employ a number of different combinations of our patented technology
to maximize operational and spectrum efficiency. While we believe that it would
be difficult for any wireless communications company to construct a system
without using one or more of our patented technologies, it is a lengthy and
expensive process to pursue licensing/patent infringement cases. We are
evaluating a strategy for the utilization of these patents in the future, which
may include pursuit of licensing or development of other strategic opportunities
with users of the underlying technology. However, due to the current depressed
economic state of the telecommunications industry, licensing activity for the
patent portfolio is not currently being pursued. We have licensed technology in
the past, both domestically and


3


internationally, but are not currently receiving any license fees. Currently, we
have instituted litigation in the New York courts against an international
licensee in Canada.

007Phones. In August 2001, we launched 007Phones.com, an e-commerce portal
designed to provide consumers and businesses with an easy-to-use, online method
of researching and purchasing wireless phones and carrier services. We now
license 007Phones.com to a third-party.

Local Multipoint Distribution Service license. We have an FCC commercial
operating license, awarded to us in recognition of our efforts in developing and
deploying LMDS technology and for spearheading its regulatory approval at the
FCC, which covers 150 MHz of spectrum in the New York City area. The license has
been renewed as a standard LMDS license through February 1, 2006. Under FCC
authorization, the license includes an additional 150 MHz of spectrum until the
first Ka band satellite is launched, an event which is not currently
determinable. The license provides that the spectrum may be used for a wide
variety of fixed wireless purposes, including wireless local loop telephony,
high-speed Internet access and two-way teleconferencing.

We are conducting a limited pilot program of our SPEEDsm broadband super
high-speed Internet service. A full marketing effort will not commence until new
LMDS equipment becomes commercially available with cost and performance that
allow implementation of SPEEDsm service on an economically attractive basis. We
cannot determine when this will occur and this equipment may never be available
to us on this basis. During 2002, we recorded an impairment charge in the amount
of $3,650,000 for property and equipment taken out of service, generally related
to the pilot program.

Other. We have invested a portion of our assets in a portfolio of
marketable securities consisting of publicly traded equity securities. We have
also sold publicly traded equity securities we do not own in anticipation of
declines in the fair market values of these securities.

Competition

Many of our present and potential competitors have longer operating
histories and significantly greater financial, technical, marketing and other
resources than we do and therefore may be able to respond more quickly than we
can to new or changing opportunities, technologies, standards and customer
requirements.

Intellectual Property

To protect our proprietary rights, we rely on a combination of copyright
and trademark laws, trade secrets, confidentiality agreements with employees and
third parties and protective contractual provisions. All of our employees have
executed confidentiality and nonuse agreements that transfer any rights they may
have in copyrightable works or patentable technologies to us.

We have applied for registration of our service marks and trademarks in
the United States and in other countries. We may not be successful in obtaining
the service marks and trademarks for which we have applied. To the extent we
consider it necessary, we may file patents to protect our technology. Patents
with respect to our technology may not be granted, and, if granted, patents may
be challenged or invalidated. In addition, issued patents may not provide us
with any competitive advantages and may be challenged by third parties.

Despite our efforts to protect our proprietary rights, unauthorized
parties may copy aspects of our products or services or obtain and use
information that we regard as proprietary. The laws of some foreign countries do
not protect proprietary rights to as great an extent as do the laws of the
United States. In addition, others could possibly independently develop
substantially equivalent intellectual property. If we do not effectively protect
our intellectual property, our business could suffer. Companies have frequently
resorted to litigation regarding intellectual property rights. We may have to
litigate to enforce our intellectual property rights, to protect our trade
secrets or to determine the validity and scope of other parties' proprietary
rights.

From time to time, we have received, and may receive in the future, notice
of claims of infringement of other parties' proprietary rights. Any such claims
could be time-consuming, result in costly litigation, divert management's
attention, cause product or service release delays, require us to redesign our
products or services or require us to enter into royalty or licensing
agreements. These royalty or licensing agreements, if required, may not be
available on acceptable terms or at all. If a successful claim of infringement
were made against us and we could not develop non-infringing technology or
license the infringed or similar technology on a timely and cost-effective
basis, our business could suffer.

Government Regulation

We are not currently subject to direct federal, state or local government
regulation, other than regulations that apply to businesses generally. However,
the grant, renewal and administration of spectrum licenses is regulated by the
Federal Communications Commission. Our local multipoint distribution service
license expires in February


4


2006. While the FCC has historically renewed licenses as a matter of course, no
license in the local multipoint distribution service band has yet been up for
renewal. A failure by the FCC to renew our license could have a material adverse
effect on the Company.

The wireless network carriers that connect us to our users are subject to
regulation by the Federal Communications Commission. Changes in FCC regulations
could affect the availability of wireless coverage. We could also be adversely
affected by regulations that govern or may in the future govern the Internet,
the allocation of radio frequencies or the placement of cellular towers.

Risk Factors

Risks related to our business generally

Although we have been a public company since February 1996, we have reoriented
our business several times and our current business has not generated any
significant revenues to date.

At the time of our initial public offering, our business was primarily a
subscription television service. In November 1998, we terminated the
subscription television business and began a limited pilot program for the
delivery of high-speed Internet access. We encountered technical difficulties in
this pilot program and reoriented our business on wireless data and other
services. We have not yet generated any significant revenue from these
businesses.

We have recorded operating losses in each reporting period since our inception
and may never be profitable.

We have recorded operating losses and negative operating cash flows in all
reporting periods since inception and, at December 31, 2002, had an accumulated
deficit of approximately $53.7 million. We believe that we have sufficient
liquidity to finance our current level of operations. However, we do not expect
to have earnings from operations, exclusive of non-cash charges, until such time
as we substantially increase our customer base and/or form a strategic alliance
for use of our capabilities in the future.

Our existing operations and infrastructure may not be adequate to manage the
growth necessary for successful implementation of our business plan.

Successful implementation of our business plan will require the management
of growth. Our existing operations and infrastructure may not be adequate to
manage such growth, and any steps taken to improve such systems and controls may
not be sufficient. Our future success will depend in part upon attracting and
retaining the services of current management and technical personnel. We also
may not be successful in attracting, assimilating and retaining new personnel in
the future as future growth takes place. We do not maintain "key person" life
insurance policies on any of our key personnel.

Shant S. Hovnanian and Vahak S. Hovnanian, who in the aggregate own
approximately 34% of our common stock, may have the power acting together to
control the direction and future operations of our company.

Shant S. Hovnanian and Vahak S. Hovnanian in the aggregate own
approximately 34% of our outstanding common stock at March 1, 2003. As a
result, acting together they may have the power to elect all of the members of
our Board of Directors, amend our certificate of incorporation and by-laws and
control the direction and future operations of our Company, in each case without
the approval of any of our other stockholders.

Our stock price has historically been volatile, which may make it more difficult
for you to resell shares when you want at prices you find attractive.

The trading price of our common stock has been and may continue to be
subject to wide fluctuations. During 2002, 2001 and 2000, the high and low sale
prices of our common stock on the Nasdaq Stock Market ranged from $1.37 to
$0.68, $2.00 to $0.62 and from $24.75 to $0.56, respectively. The closing sale
price of our common stock was $0.77 on March 24, 2003. Our stock price may
fluctuate in response to a number of events and factors, such as quarterly
variations in operating results, announcements of technological innovations or
new products and media properties by us or our competitors, the operating and
stock price performance of other companies that investors may deem comparable,
and news reports relating to trends in our markets.

We have received notice from Nasdaq informing us that we have until July
14, 2003, to regain compliance with Marketplace Rule 4450(a)(5), which requires
listed companies to maintain a closing bid price equal to or greater than $1.00.
See Item 5. If our common stock were delisted from Nasdaq, trading in our common
stock would have to be conducted on the OTC Bulletin Board or in the non-Nasdaq
over-the-counter market, also referred to as the "pink sheets". If that were to
occur, liquidity for our common stock could be significantly decreased which
could reduce the trading price and increase the transaction costs of trading
shares of our common stock.


5


Sales of shares of common stock by Shant S. Hovnanian and Vahak S. Hovnanian
could adversely affect the market price of the common stock.

Future sales of shares of common stock, or the availability of shares of
common stock for future sale, may adversely impact the market price of the
common stock prevailing from time to time. Sales of substantial amounts of our
common stock, or the perception that such sales could occur, could adversely
affect the prevailing market price of the common stock.

Shares of common stock held by Shant S. Hovnanian and Vahak S. Hovnanian
have been held by each of them for the requisite holding periods under Rule 144
under the Securities Act and may be sold thereunder in accordance with volume
restrictions.

Risks related to certain short-term investments

Securities that we invest in are subject to market price risks

As part of our overall investment strategy, we invest in publicly traded
equity securities. We purchase these securities in anticipation of increases in
the fair market values of the securities.

We also sell publicly traded equity securities that we do not own in
anticipation of declines in the fair market values of the securities. When we
sell securities that we do not own, we must borrow the securities we sold in
order to deliver them and settle the trades. Thereafter, we must buy the
securities and deliver them to the lender of the securities. Our potential for
loss on these transactions is unlimited since the value of the underlying
security can keep increasing which could have a material adverse effect on the
Company's consolidated financial statements.

The Company is seeking to eliminate the risk that it could be deemed to be an
investment company.

The Company has substantial liquidity as a result of its dispositions of
wireless spectrum in 1998 and 1999. Although a portion of the Company's cash is
invested in securities, the Company is pursuing an acquisition strategy that
will, if successfully executed, eliminate any risk of it being deemed to be an
investment company.

Generally, a company must register under the Investment Company Act of
1940 and comply with significant restrictions on operations and transactions
with affiliates if its investment securities exceed 40% of the company's total
assets, or if it holds itself out as being primarily engaged in the business of
investing, owning or holding securities. If it is deemed to be an investment
company, it might need to dispose of or acquire investments in order to avoid
investment company status.

Risks related to investments in other companies

Ability to successfully identify investment opportunities

We will face substantial competition in identifying and closing
appropriate investment opportunities from, among others, venture capital firms,
large corporate investors and other publicly traded companies. These competitors
may limit our opportunity to acquire interests in new partner companies. In
addition, we may be unable to acquire interests in appropriate companies for
other reasons, including the inability to agree on terms, such as price and
ownership percentages, incompatibility between us and management and access to
sufficient funding. Our growth will be materially adversely affected if we
cannot successfully identify investments in a sufficient number of companies.

The value of our business may fluctuate because of companies that we invest in

The value of our business may fluctuate because of companies that we may
invest in. These companies may be development stage or privately held companies
for which no public market exists for their stock. The valuations of our
investments in privately held companies that we may invest in are indeterminate
prior to their public offerings, and there can be no assurance that these
offerings will occur since they will be dependent upon the development of these
businesses, market conditions and other conditions over which we may have no
control.

Capital and management resources

There will be a number of special issues that we will have to address for
investment in start-up companies, including: the diversion of management
attention in connection with both negotiating and overseeing these transactions;
the potential issuance of additional shares of our Common Stock in connection
with these transactions, which could dilute the rights of existing shareholders,
and the need to incur additional debt in connection with these transactions. In
addition, many, if not all, of these start-up companies will face the same, or
similar, risks as we face in our own business.


6


Managing growth

Successful implementation of our business plan will require the management
of growth. We cannot assure you that our existing operations and infrastructure
will be adequate to manage such growth, or that any steps taken to improve such
systems and controls will be sufficient. Our future success will depend in part
upon attracting and retaining the services of current management and technical
personnel. We cannot assure you that we will be successful in attracting,
assimilating and retaining new personnel in the future as future growth takes
place.

Risks related to our high-speed Internet access service

We may be unable to solve ongoing technical difficulties in our deployment and
equipment for our SPEEDsm super high-speed Internet access service is not, and
may never be, available at a cost and with performance levels that allow for
commercial implementation on an economically attractive basis.

Our super high-speed Internet service utilizes a new technology that has a
limited operating history and that remains subject to further development and
refinement.

The equipment necessary to provide our SPEEDsm super high-speed Internet
access service is not currently manufactured on a scale and at a cost suitable
for the commercialization of our service. Such equipment may never become
available at a cost and with performance levels that allow for commercial
implementation on an economically attractive basis.

Many financially stronger competitors with broader market coverage are offering
high-speed Internet access.

The market for Internet access and related services is highly competitive.
We expect local, regional and national Internet service providers to be
competitors for our super high-speed Internet access service. These Internet
service providers include large companies like America OnLine, Hughes DirecPC
and ATT World Net. Telephone companies with digital subscriber line technology,
which increases the effective capacity of existing copper telephone cables, are
among other competitors. Also, cable operators with high-speed cable modems are
among the other communications companies also providing high-speed Internet
access. Many of the competing Internet service providers have, or can be
expected to have, greater financial, marketing and other resources than us. We
may not be able to compete successfully with these entities.

ITEM 2. PROPERTIES

The Company leases 20,000 square feet of space at the Brooklyn Army
Terminal for its NOC, as well as, executive and administrative offices. This
lease expires in 2004 and provides for 1 five-year renewal option. The Company
also leases approximately 3,000 square feet of space in New York City under a
lease expiring 2004 with no renewal options.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to various claims and proceedings that occur in the
ordinary course of business. The Company believes it has substantial defenses to
a material portion of these claims and is prepared to pursue litigation if a
reasonable and structured settlement cannot be reached with the parties. Based
on information currently available, the Company believes it is remote that the
ultimate resolution of these current claims or proceedings, either individually
or in the aggregate, will have a material effect on its business.

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

There were no matters submitted to a vote of the stockholders during the
fourth quarter of fiscal 2002.


7


PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Through October 21, 2002, our Common Stock was listed for quotation on the
Nasdaq National Market system. Since October 22, 2002, our Common Stock is
listed for quotation on the Nasdaq SmallCap Market. Our Common Stock trades
under the symbol "SPDE." The following table sets forth high, low and closing
trade prices for the Common Stock for the fiscal quarters indicated.

High Sale Low Sale Closing Sale
--------- -------- ------------
2002
- ----
First quarter $1.100 $.760 $1.090
Second quarter 1.370 .890 .960
Third quarter .940 .700 .721
Fourth quarter .870 .680 .771

2001
- ----
First quarter $2.000 $.688 $.906
Second quarter 1.500 .750 1.100
Third quarter 1.150 .620 .930
Fourth quarter 1.000 .660 .890

We have received notice from Nasdaq informing us that we are not in
compliance with Marketplace Rule 4450(a)(5), which requires listed companies to
maintain a closing bid price equal to or greater than $1.00. Under newly issued
rules implemented on a pilot basis until December 31, 2003, the Company
transferred to the Nasdaq SmallCap Market on October 22, 2002. Under these
rules, the Company now has until July 14, 2003 to regain compliance. If at any
time until then, the closing bid price of our Common Stock is equal to or
greater than $1.00 for a minimum of ten consecutive trading days, we will have
complied with the minimum bid requirement. During this period, the Company would
also have the ability to transfer back to the Nasdaq National Market if it
maintained a closing bid price equal to or greater than $1.00 for thirty
consecutive trading days and maintained compliance with all other continued
listing requirements on that market.

If we are unable to demonstrate compliance with the $1.00 minimum bid
requirement by July 14, 2003, Nasdaq will notify us that our Common Stock will
be delisted from the Nasdaq SmallCap Market. At that time, we may appeal the
decision to a Nasdaq Listing Qualifications Panel. The Company is considering
all of its alternatives in order to maintain a listing on Nasdaq. At the
Company's last annual meeting, stockholders approved a proposal authorizing the
Company's Board of Directors, through June 24, 2003, to effect a reverse stock
split of all the issued and outstanding shares, as well as treasury shares, of
the Company's Common Stock at a ratio not to exceed one-for-six if necessary to
continue the Company's listing on Nasdaq.

On March 24, 2003, the closing trade price of our Common Stock was $0.77
per share. As of December 31, 2002, there were approximately 300 registered
shareholders and, to the best of our belief, approximately 9,000 beneficial
owners of our Common Stock. During the year ended December 31, 2002, we did not
make any sales of securities that were not registered under the Securities Act
of 1933, as amended.

We have never declared or paid any cash dividends on our Common Stock and
do not intend to declare or pay cash dividends on the Common Stock at any time
in the foreseeable future. Future earnings, if any, will be used for the
expansion of our business.

Information regarding equity compensation plans is incorporated herein by
reference to information that will be contained in the Company's definitive
proxy statement for its 2003 Annual Meeting of Stockholders.


8


ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data below should be read in conjunction
with"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the Company and Notes
thereto included elsewhere in this Form 10-K.



Year ended December 31,
-----------------------------------------------------------------------
2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- -----------
(in thousands, except per share data)

Statement of Operations Data
Revenues $ 907 $ 69 $ 105 $ 612 $ 3,648
Total operating expenses 11,380 16,353 11,889 8,204 18,074
----------- ----------- ----------- ----------- -----------
Operating loss (10,473) (16,284) (11,784) (7,592) (14,426)
Equity in loss of associated company (521) (125) (570) (351) --
Settlement of litigation -- -- (283) -- --
Net interest/investment income/(loss) (194) 9,059 3,468 1,278 (2,365)
Minority interest 80 -- -- -- --
Other income -- 86 100 624 --
Gain on assignment of spectrum -- -- -- 19,442 28,066
Intellectual property settlement -- -- -- (2,425) --
Income taxes -- -- -- (330) (302)
----------- ----------- ----------- ----------- -----------
Net earnings/(loss) $ (11,108) $ (7,264) $ (9,069) $ 10,646 $ 10,973
=========== =========== =========== =========== ===========
Per Common Share
Basic earnings/(loss) $ (0.62) $ (0.36) $ (0.44) $ 0.58 $ 0.59
Weighted average outstanding 17,927,000 19,947,784 20,445,586 18,465,974 16,551,417

Diluted earnings/(loss) $ (0.62) $ (0.36) $ (0.44) $ 0.57 $ 0.57
Weighted average outstanding 17,927,000 19,947,784 20,445,586 18,680,082 17,612,443


December 31,
-----------------------------------------------------------------------
2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- -----------
(in thousands)

Balance Sheet Data
Cash and cash equivalents $ 33,053 $ 39,934 $ 38,595 $ 44,613 $ 12,902
Working capital 29,481 37,528 36,765 42,794 9,312
Net property and equipment 820 5,828 8,660 10,959 12,836
Net other intangible assets 1,651 1,799 2,197 -- --
Net Goodwill 1,760 -- 6,049 -- --
Total assets 50,247 53,892 57,628 55,769 25,915
Minority interest 1,592 -- -- -- --
Total debt -- -- -- 211 338
Total liabilities 16,237 8,410 2,773 1,969 3,868
Total equity 32,418 45,482 54,855 53,799 22,047


In November 1998, the Company assigned an 850MHz portion of its FCC license to
an unaffiliated third party. As a result, the Company terminated its
subscription television service. In connection with this transaction, the
Company recognized a gain in the amount of $28,066,000. In October 1999, the
Company assigned a 150MHz portion of its license to another unaffiliated third
party. In connection with this transaction, the Company recognized a gain in the
amount of $19,442,000.

In June 2000, the Company purchased the remaining 55% interest in Speedia, LLC
that it did not already own. This acquisition was accounted for using the
purchase method of accounting and the results of operations of Speedia have been
included in the consolidated statements of operations for the periods subsequent
to June 30, 2000.

In May 2002, the Company acquired a 51% interest in F&B Gudtfood This
acquisition was accounted for using the purchase method of accounting and the
results of operations of F&B Gudtfood have been included in the consolidated
statements of operations for the periods subsequent to May 6, 2002.

For additional information on these transactions, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations".


9


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Operations

Speedus Corp. is a holding company that owns significant equity interests
in diverse businesses. We seek business opportunities across all industries for
potential transactions and relationships in which we can apply our current
resources and management strengths. We are particularly focused on companies
with sound business plans and existing revenue bases that require growth
capital. We will continue to pursue opportunities involving our wireless
expertise and broadband assets as attractive opportunities present themselves.
The companies that we target, either public or privately held and regardless of
industry, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets.

We have co-invested with Siemens Corporate Research, Inc., a subsidiary of
Siemens Corporation, in Zargis Medical Corp. to develop a service solution,
initially targeted toward primary care physicians, that would be used as part of
general medical examinations for the early screening and detection of valvular
and congenital heart disease. We have acquired a 51% interest in F&B Gudtfood,
the creator and operator of the original Eurocentric "chic and quick" cafe,
which is operating its first store in Manhattan and is currently planning
expansion to other locations. We own a portfolio of patents that allow for
high-speed wireless communications. We also developed and launched an online
cell phone store, 007Phones, which we now license to a third-party. We also own
fixed wireless spectrum in the New York City metropolitan area that we may
commercialize in the future to support high-speed, or broadband, Internet access
service.

Zargis Medical Corp. In January 2001, we co-invested with Siemens
Corporate Research, Inc., a subsidiary of Siemens Corporation, in a new company,
Zargis Medical Corp. Zargis Medical is building a service solution, initially
targeted toward primary care physicians that would be used as part of general
medical examinations for the early screening and detection of valvular and
congenital heart disease. General medical examinations, according to the
National Center for Health Statistics, totaled 46 million in 1999 for the US
alone. We have signed an exclusive contract with Zargis Medical to design and
develop the wireless applications, as well as provide transaction processing to
support the commercial rollout of Zargis Medical's cardiac diagnostic products.
Under this contract, using a combination of wireless and wired technology,
Speedia Wireless, our wholly owned subsidiary, has demonstrated the ability to
transfer the heart sound file from a physician's office to the Speedus Data
Center which will enable Zargis Medical to pursue a business model based on a
fee per usage basis. Some of the major next steps remaining for Zargis Medical
include clinical trials, FDA approval, marketing and roll-out, along with the
formation of strategic partnerships.

In February 2003, we acquired a controlling interest in Zargis Medical.
The additional investment of $1,250,000 was represented by outstanding notes
payable to the Company by Zargis Medical at December 31, 2002 in the amount of
$250,000 and an additional cash investment of $1,000,000.

F&B Gudtfood. In May 2002, we acquired a 51% interest in F&B Gudtfood, the
creator and operator of the original Eurocentric "chic and quick" cafe, which is
operating its first store in Manhattan and is currently planning expansion to
other locations. The acquisition price was $3,500,000, which funds will be
applied principally for its expansion. We also entered into a management
services contract with this company that will result in direct revenues to us
apart from those arising out of our ownership interest although these revenues
will be eliminated on our consolidated financial statements.

On February 8, 2003, we reduced our investment in F&B Gudtfood and
received $1,775,000 while maintaining our 51% interest.

Broadband Patents. Through our wholly owned subsidiaries, Broadband
Patents, LLC and CellularVision Technology & Telecommunications, L.P., we have
accumulated a portfolio of patents that allow for high-speed wireless
communication systems with greater information content, reliability, clarity, or
more efficient use of licensed spectrum as compared to prior systems. We have
five domestic patents with expiration dates ranging from 2007 through 2017, with
numerous international counterparts. Any particular wireless communications
system may employ a number of different combinations of our patented technology
to maximize operational and spectrum efficiency. While we believe that it would
be difficult for any wireless communications company to construct a system
without using one or more of our patented technologies, it is a lengthy and
expensive process to pursue licensing/patent infringement cases. We are
evaluating a strategy for the utilization of these patents in the future, which
may include pursuit of licensing or development of other strategic opportunities
with users of the underlying technology. However, due to the current depressed
economic state of the telecommunications industry, licensing activity for the
patent portfolio is not currently being pursued. We have licensed technology in
the past, both domestically and


10


internationally, but are not currently receiving any license fees. Currently, we
have instituted litigation in the New York courts against an international
licensee in Canada.

007Phones. In August 2001, we launched 007Phones.com, an e-commerce portal
designed to provide consumers and businesses with an easy-to-use, online method
of researching and purchasing wireless phones and carrier services. We now
license 007Phones.com to a third-party.

Local Multipoint Distribution Service license. We have an FCC commercial
operating license, awarded to us in recognition of our efforts in developing and
deploying LMDS technology and for spearheading its regulatory approval at the
FCC, which covers 150 MHz of spectrum in the New York City area. The license has
been renewed as a standard LMDS license through February 1, 2006. Under FCC
authorization, the license includes an additional 150 MHz of spectrum until the
first Ka band satellite is launched, an event which is not currently
determinable. The license provides that the spectrum may be used for a wide
variety of fixed wireless purposes, including wireless local loop telephony,
high-speed Internet access and two-way teleconferencing.

We are conducting a limited pilot program of our SPEEDsm broadband super
high-speed Internet service. A full marketing effort will not commence until new
LMDS equipment becomes commercially available with cost and performance that
allow implementation of SPEEDsm service on an economically attractive basis. We
cannot determine when this will occur and this equipment may never be available
to us on this basis. During 2002, we recorded an impairment charge in the amount
of $3,650,000 for property and equipment taken out of service, generally related
to the pilot program.

Other. We have invested a portion of our assets in a portfolio of
marketable securities consisting of publicly traded equity securities. We have
also sold publicly traded equity securities we do not own in anticipation of
declines in the fair market values of these securities.

We have generated operating losses and negative operating cash flows since
our inception and expect to continue to do so in the near future.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements. The preparation
of those financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the financial statements and the reported
amounts of operating revenues and expenses during the reporting periods. Actual
results could differ from those estimates. For a description of all of our
accounting policies, see Note 2 to our consolidated financial statements
included in this Form 10-K. However, we believe the following critical
accounting policies affect the more significant judgments and estimates used in
the preparation of our consolidated financial statements.

Financial instruments. Our financial instruments consist primarily of cash
equivalents, marketable securities and securities sold and not purchased. The
carrying value of cash equivalents approximates market value since these highly
liquid, interest earning investments are invested in money market funds.
Marketable securities consist of publicly traded equity securities classified as
trading securities and are recorded at fair market value, i.e., closing prices
quoted on established securities markets. Securities sold and not repurchased
are also carried at the fair market value of the securities. Significant changes
in the market value of securities that we invest in could have a material impact
on our financial position and results of operations.

Long-lived assets. Long-lived assets, including fixed assets, goodwill,
equity method investments and other intangibles, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
any such asset may not be recoverable through estimated future cash flows from
that asset. The estimate of cash flow is based upon, among other things, certain
assumptions about expected future operating performance. Specifically, we own
broadband assets, including fixed and intangible assets, which had a carrying
value of $1.8 million at December 31, 2002 and currently do not generate
significant revenues or cash flows. However, we estimate that, based upon our
review of recent transactions and other factors, the fair value of our remaining
FCC license and certain patents that have no carrying value on our books would
generate sufficient cash to fully realize our assets described above. This
estimate evaluated the recovery of these broadband assets compared to the fair
value of our remaining FCC license and certain patents as a group since it
represents the lowest level for which identifiable cash flows are largely
independent of the cash flows of other groups of assets and liabilities. These
estimates may differ from actual results due to, among other things,
technological changes, economic conditions, changes to our business model or
changes in our operating performance. We also reviewed the carrying value of
goodwill in the amount of $1.8 million at December 31, 2002, and estimate based
upon our review, taking into account such factors as projected operations and
Company's redemption rights in connection with the investment, that there has
been no impairment to this carrying value.


11


Contingencies. We account for contingencies in accordance with Statement
of Financial Accounting Standards No. 5, "Accounting for Contingencies". SFAS
No. 5 requires that we record an estimated loss when information available prior
to issuance of our financial statements indicates that it is probable that an
asset has been impaired or a liability has been incurred at the date of the
financial statements and the amount of the loss can be reasonably estimated.
Accounting for contingencies such as environmental, legal and income tax matters
requires us to use our judgment. While we believe that our accruals for these
matters are adequate, if the actual loss is significantly different than the
estimated loss, our results of operations may be misstated.

Twelve Months Ended December 31, 2002 Compared to Twelve Months Ended December
31, 2001

Revenues increased $838,000 from $69,000 for the twelve months ended
December 31, 2001 to $907,000 for the twelve months ended December 31, 2002.
$446,000 of this net increase is a result of revenues recognized by F&B Gudtfood
since May 6, 2002, the date of acquisition and $428,000 of this net increase is
a result of revenues recognized from the sale and activation of wireless phones
through the Company's online cell phone store, 007phones, which the Company now
licenses to a third-party. In accordance with the provisions of the Securities
and Exchange Commission Staff Accounting Bulletin No. 101, "Revenue Recognition
in Financial Statements", these revenues and associated costs are deferred due
to cancellation privileges and chargebacks from carriers. Revenues to be
recognized in the future from the sale and activation of wireless phones are
expected to decrease. The Company now licenses the cell phone store to a third
party and license fees are less than revenues from sale and activation.

Selling, general and administrative expenses decreased $624,000 from
$5,263,000 for the twelve months ended December 31, 2001 to $4,639,000 for the
twelve months ended December 31, 2002. This decrease is primarily attributable
to decreases in compensation and employee related expenses as a result of staff
reductions and decreases in stock based compensation. This decrease was offset
by selling, general and administrative expenses of F&B Gudtfood since the date
of acquisition in the amount of $506,000.

Research and development expenses decreased $770,000 from $1,716,000 for
the twelve months ended December 31, 2001 to $946,000 for the twelve months
ended December 31, 2002. This decrease is primarily attributable to decreases in
compensation and employee related expenses as a result of staff reductions.

Depreciation and amortization decreased $4,095,000 from $9,373,000 for the
twelve months ended December 31, 2001 to $5,278,000 for the twelve months ended
December 31, 2002. An aggregate decrease in the amount of $6,299,000 is a result
of the 2001 amortization of goodwill and intangibles resulting from the Speedia
acquisition in 2000, including a charge in the amount of $3,779,000 during 2001
for the impairment of goodwill and intangible assets associated with that
acquisition, eliminating the remaining balance of goodwill and those intangible
assets. The 2002 decrease was somewhat offset by a charge in the amount of
$3,650,000 during the three months ended June 30, 2002 for property and
equipment taken out of service. The balance of the decrease during 2002 is
generally a result of assets becoming fully depreciated, as well as depreciation
no longer being taken on the property and equipment taken out of service.

Cost of sales amounted to $516,000 for the twelve months ended December
31, 2002. $135,000 of this amount represents costs incurred by F&B Gudtfood
since the date of acquisition and $381,000 of this amount represents the direct
cost and expenses related to the sale and activation of wireless phones through
the Company's online cell phone store, 007phones, as discussed above.

Investment income decreased $9,253,000 from a net gain in the amount of
$9,059,000 for the twelve months ended December 31, 2001 to a net loss in the
amount of $194,000 for the twelve months ended December 31, 2002. This decrease
is primarily a result of realized and unrealized gains/(losses). Realized
gains/(losses) decreased $8,188,000 from net gains of $9,324,000 for the twelve
months ended December 31, 2001 to net gains of $1,136,000 for the twelve months
ended December 31, 2002. Unrealized gains/(losses) increased $1,721,000 from net
losses of $787,000 for the twelve months ended December 31, 2001 to net losses
of $2,508,000 for the twelve months ended December 31, 2002. Investment gains or
losses will fluctuate based upon changes in the market value of the underlying
investments and are not necessarily indicative of the results that may be
expected for any future periods.

Equity in loss of associated company increased $396,000 from $125,000 for
the twelve months ended December 31, 2001 to $521,000 for the twelve months
ended December 31, 2002. The 2002 period reflects the Company's share (47% at
December 31, 2002) in Zargis Medical's operations, accounted for under the
equity method.

Minority interest amounted to $80,000 the twelve months ended December 31,
2002. This amount represents the interest of minority stockholders in the
operations of F&B Gudtfood since the date of acquisition.


12


During the twelve months ended December 31, 2001, the Company recognized
other income in the amount of $86,000 from the sale of certain assets. During
the twelve months ended December 31, 2002, no such transactions occurred.

Twelve Months Ended December 31, 2001 Compared to Twelve Months Ended December
31, 2000

Revenues decreased $36,000 from $105,000 for the twelve months ended
December 31, 2000 to $69,000 for the twelve months ended December 31, 2001.
These revenues reflect the early results of the Company's pilot program to
connect its first Internet subscribers and co-hosting revenues from use of the
Company's Data Center. The Company intends to continue this pilot program until
a final determination can be made on the availability of equipment on an
economically attractive basis. We cannot determine when this will occur and this
equipment may never be available to us on this basis. We estimate that the total
annual cost of the pilot program is approximately $500,000.

Selling, general and administrative expenses decreased $581,000 from
$5,844,000 for the twelve months ended December 31, 2000 to $5,263,000 for the
twelve months ended December 31, 2001. This decrease is net of a $148,000
increase attributable to the June 30, 2000 acquisition of the remaining 55%
interest in Speedia Wireless that the Company did not already own. This
acquisition was accounted for using the purchase method of accounting. The
results of operations of Speedia are included in the consolidated statements of
operations beginning with the quarter ended September 30, 2000. The net decrease
in selling, general and administrative expenses for 2001 is primarily a result
of decreases in stock based compensation and legal expenses, as well as staff
reductions.

Research and development expenses increased $369,000 from $1,347,000 for
the twelve months ended December 31, 2000 to $1,716,000 for the twelve months
ended December 31, 2001. The increase for the twelve months is primarily
attributable to the June 30, 2000 acquisition of the remaining 55% interest in
Speedia, as discussed above.

Depreciation and amortization increased $4,675,000 from $4,698,000 for the
twelve months ended December 31, 2000 to $9,373,000 for the twelve months ended
December 31, 2001. $1,234,000 of this increase is a result of amortization of
the goodwill resulting from the Speedia acquisition on June 30, 2000, as
discussed above. As a result of continuing weak industry conditions and lower
market valuations, we determined that there were indications of impairment to
the carrying value of our goodwill and other purchased intangibles in connection
with our purchase in 2000 of the remaining 55% interest in Speedia that we did
not already own. Based on our review, we recorded a charge of $3,779,000 in the
fourth quarter of 2001 for the impairment of goodwill and intangible assets
associated with that acquisition. The increase in depreciation and amortization
for 2001 is also net of a decrease as a result of certain fixed assets having
become fully depreciated.

Investment income increased $5,583,000 from $3,476,000 for the twelve
months ended December 31, 2000 to $9,059,000 for the twelve months ended
December 30, 2001. This increase is primarily a result of realized and
unrealized gains/(losses). Realized gains/(losses) increased $8,527,000 from net
gains of $797,000 for the twelve months ended December 31, 2000 to net gains of
$9,324,000 for the twelve months ended December 31, 2001. Unrealized
gains/(losses) increased $777,000 from net losses of $10,000 for the twelve
months ended December 31, 2000 to net losses of $787,000 for the twelve months
ended December 31, 2001. Investment gains or losses will fluctuate based upon
changes in the market value of the underlying investments and are not
necessarily indicative of the results that may be expected for any future
periods.

Equity in loss of associated company decreased $445,000 from $570,000 for
the twelve months ended December 31, 2000 to $125,000 for the twelve months
ended December 31, 2001. The 2000 period primarily reflects the Company's 45%
interest in Speedia's operations, accounted for under the equity method. As
discussed above, subsequent to June 30, 2000, upon the acquisition of the
remaining 55% interest, the results of operations of Speedia are included in the
consolidated statements of operations. The 2001 period reflects the Company's
share (49% at December 31, 2001) in Zargis Medical's operations, accounted for
under the equity method.

During the twelve months ended December 31, 2001, the Company recognized
other income in the amount of $86,000 from the sale of certain assets. During
the twelve months ended December 31, 2000, the Company recognized other income
in the amount of $100,000 from negotiating settlements with vendors and others.

During the twelve months ended December 31, 2000, the Company recognized
an expense in the amount of $282,500 from the settlement of litigation. No such
amounts were recorded for the twelve months ended December 31, 2001.

Related Party Transactions

We have signed an exclusive contract with Zargis Medical to design and
develop the wireless applications, as well as provide transaction processing to
support the commercial rollout of Zargis Medical's cardiac diagnostic


13


products. Our investment in Zargis Medical is accounted for using the equity
method of accounting. During the years ended December 31, 2002 and 2001, no
revenues were recorded in connection with Zargis Medical.

We also entered into a management services contract with F&B Gudtfood that
will result in direct revenues to us apart from those arising out of our
ownership interest although these revenues will be eliminated on our
consolidated financial statements. In connection with this acquisition, the
Company extended loans to two employees of F&B Gudtfood, who are also minority
shareholders of F&B Gudtfood aggregating $120,000. The loans, which can be
increased by $40,000 each under certain conditions, will be forgiven if certain
milestones are achieved.

The information under Item 11. 'Certain Relationships and Related
Transactions' of this Form 10-K is incorporated by reference.

Liquidity and Capital Resources

The Company has recorded operating losses and negative operating cash
flows in each year of its operations since inception.

Net cash used in operating activities was $5.0 million for the year ended
December 31, 2002 compared to net cash provided by operating activities of $3.9
million for the year ended December 31, 2001. The net decrease of $8.9 million
was substantially the result of a $3.8 million increase in net loss and a
decrease in depreciation and amortization of $4.1 million.

Net cash used in financing activities was $2.0 million for the year ended
December 31, 2002 compared to $2.1 million for the year ended December 31, 2001.
This decrease of $0.1 million was a result of decreased repurchases of treasury
stock during 2002.

At December 31, 2002, the Company's future minimum lease payments due
under noncancelable leases aggregated $508,000. $275,000 and $175,000 of this
amount is due during 2003 and 2004, respectively, and the balance is payable
thereafter with no material amount due in any year.

The Company believes that it has sufficient liquidity to finance its
current level of operations and expected capital requirements through the 2003
fiscal year. However, the Company does not expect to have earnings from
operations until such time as it substantially increases its customer base
and/or forms a strategic alliance for use of its capabilities in the future. We
cannot predict when this will occur. We have no material non-cancelable
commitments and the amount of future capital funding requirements will depend on
a number of factors that we cannot quantify, including the success of our
business, the extent to which we expand our high-speed Internet service if
suitable equipment becomes available and the types of services we offer, as well
as other factors that are not within our control, including competitive
conditions, government regulatory developments and capital costs. The lack of
additional capital in the future could have a material adverse effect on the
Company's financial condition, operating results and prospects for growth.

We have invested a portion of our assets in a portfolio of marketable
securities consisting of publicly traded equity securities. We purchase these
securities in anticipation of increases in the fair market values of the
securities. We have also sold publicly traded equity securities we do not own in
anticipation of declines in the fair market values of these securities. When we
sell securities that we do not own, we must borrow the securities we sold in
order to deliver them and settle the trades. Thereafter, we must buy the
securities and deliver them to the lender of the securities. Our potential for
loss on these transactions is unlimited since the value of the underlying
security can keep increasing.

Recent Accounting Pronouncements

In July 2002, Statement of Financial Accounting Standards No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" was issued.
SFAS No. 146 supersedes Emerging Issues Task Force No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Associated with a Restructuring)," and
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. Such liabilities should
be recorded at fair value and updated for any changes in the fair value each
period. A notable change from EITF 94-3 involves one-time employee termination
costs whereby the employee to be terminated is required to render service
between the notification date and the date the employee will be terminated in
order to receive any termination benefits. For these situations whereby the
required post-notification service period extends beyond the minimum retention
period required by local law (e.g., 60 days in the United States), the fair
value liability will be amortized over the service period. This change is
effective for new exit or disposal activities initiated after December 31, 2002.
We do not expect the adoption of this accounting standard to have a material
effect on our results of operations commencing January 1, 2003.

In December 2002, Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation--Transition and Disclosure--an
amendment of FASB Statement No. 123" was issued. SFAS No. 148 amends SFAS No.
123, "Accounting for Stock-Based Compensation", to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in


14


both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. This statement is effective for fiscal years ending after December 15,
2002 for transition guidance and annual disclosure provisions; for financial
reports containing financial statements for interim periods beginning after
December 15, 2002 for interim disclosure provisions. This standard also allows
accounting for such options under the "intrinsic value method" in accordance
with Accounting Principles Board No. 25, "Accounting for Stock Issued to
Employees." The Company has elected to account for its stock options under this
method. As a result, this accounting standard did not have a material effect on
our results of operations.

In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45
requires that a liability be recorded in the guarantor's balance sheet upon
issuance of a guarantee. In addition, FIN 45 requires disclosures about the
guarantees that an entity has issued, including a reconciliation of changes in
the entity's product warranty liabilities. The initial recognition and initial
measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantor's fiscal year-end. The disclosure requirements of FIN 45 are effective
for financial statements of interim or annual periods ending after December 15,
2002. The Company does not expect the adoption of this standard to have a
material impact on the Company's financial statements.

In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51." FIN 46 requires certain variable interest
entities to be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN 46 is effective immediately for all new variable interest
entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46
must be applied for the first interim or annual period beginning after June 15,
2003. The Company is currently evaluating the impact that the adoption of this
standard will have on its financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments at December 31, 2002 consist primarily
of cash equivalents, which are subject to interest rate risk, and marketable
securities and securities sold and not purchased, which are subject to equity
price risk.

As part of our overall investment strategy, we invest in publicly traded
equity securities. We purchase these securities in anticipation of increases in
the fair market values of the securities. We also sell publicly traded equity
securities that we do not own in anticipation of declines in the fair market
values of the securities. When we sell securities that we do not own, we must
borrow the securities we sold in order to deliver them and settle the trades.
Thereafter, we must buy the securities and deliver them to the lender of the
securities. Our potential for loss on these transactions is unlimited since the
value of the underlying security can keep increasing which could have a material
adverse effect on the Company's consolidated financial statements.

The carrying value of cash equivalents approximates market value since
these highly liquid, interest earning investments are invested in money market
funds. The Company's investment in marketable securities consists of publicly
traded equity securities classified as trading securities and are recorded at
fair market value. Securities sold and not repurchased are carried at the fair
market value of the securities.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company and related Notes
thereto and the financial information required to be filed herewith are included
under Item 15 of this Form 10-K.

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

None.


15


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Information regarding Directors and Executive Officers of the Company, as
required by Part III, Item 10, is incorporated herein by reference to
information that will be contained in the Company's definitive proxy statement
for its 2003 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding Executive Compensation, as required by Part III,
Item 11, is incorporated herein by reference to information that will be
contained in the Company's definitive proxy statement for its 2003 Annual
Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKDOLDER MATTERS

Information regarding Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters, as required by Part III, Item 12, is
incorporated herein by reference to information that will be contained in the
Company's definitive proxy statement for its 2003 Annual Meeting of
Stockholders.

ITEM 13. Certain Relationships and Related Transactions

Information regarding Certain Relationships and Related Transactions, as
required by Part III, Item 13, is incorporated herein by reference to
information that will be contained in the Company's definitive proxy statement
for its 2003 Annual Meeting of Stockholders.

ITEM 14. CONTROLS AND PROCEDURES

Within the 90 days prior to the filing of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rules 13a-14 and 15d-14
under the Securities Exchange Act of 1934, as amended. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company's periodic SEC filings.

There have been no significant changes in the Company's internal controls
or in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.


16


PART IV

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

(a) Financial Statements and Financial Schedule

(1) Consolidated Financial Statements Page(s)
-------

Report of Independent Accountants .............................. 19

Consolidated Balance Sheets as of December 31, 2002 and
2001 ........................................................... 20

Consolidated Statements of Operations for the years ended
December 31, 2002, 2001 and 2000 ............................... 21

Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 2002, 2001 and 2000 ........... 22

Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000 ............................... 23

Notes to Consolidated Financial Statements ..................... 24-33

(b) Reports on Form 8-K

There were no Current Reports on Form 8-K filed during the fourth quarter
of fiscal 2002.

(c) Exhibits

3.1a Certificate of Incorporation. (1)

3.1b Certificate of Ownership and Merger of CVUSA Merger Corporation With
and Into Cellularvision USA, Inc. (2)

3.2 By-laws. (1)

4.1 Form of Common Stock Certificate. (1)

4.2 Stockholders Agreement, dated as of January 12, 1996, by and among
CellularVision USA, Inc., Shant S. Hovnanian, Bernard B. Bossard and
Vahak S. Hovnanian. (1)

4.3 Form of Rights Agreement between SPEEDUS.COM, Inc. and Equiserve
Trust Company, N.A., as Rights Agent. The Rights Agreement includes
as Exhibit A the Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock of SPEEDUS.COM,
Inc., as Exhibit B the form of Rights Certificate and as Exhibit C
the form of Summary of Rights to Purchase Shares of Series A Junior
Participating Preferred Stock. (3)

10.1 SPEEDUS.COM, Inc. 1995 Stock Incentive Plan. (Amended and Restated
as of July 19, 2001) (4)

10.2 Employment Agreement, dated as of April 25, 2002, between
SPEEDUS.COM. Inc. and Shant S. Hovnanian. (7)

10.3 Amended and Restated Agreement of Limited Partnership of
CellularVision of New York, L.P., dated as of July 7, 1993, by and
between Hye Crest Management, Inc., Bell Atlantic Ventures, XXIII,
Inc. and the limited partners set forth on the signature page
thereto. (1)

10.4 Agreement, dated as of January 12, 1996, by and among CellularVision
USA, Inc., CellularVision of New York, L.P., Hye Crest Management,
Inc., Shant S. Hovnanian, Vahak S. Hovnanian, Bernard B. Bossard and
Bell Atlantic Ventures XXIII, Inc. (1)

10.5 Stock Purchase Agreement, dated as of June 13, 1999, between
SPEEDUS.COM, INC. and NEXTLINK Communications, Inc. (5)

10.6 Strategic Agreement, dated as of June 13, 1999, between SPEEDUS.COM,
INC. and NEXTLINK Communications, Inc. (5)

10.7 Amended and Restated Agreement to Assign LMDS License, dated as of
June 13, 1999, between SPEEDUS.COM. Inc., SPEEDUSNY, L.P. and
NEXTLINK Communications, Inc. (6)


17


21 Subsidiaries of SPEEDUS.COM, Inc. (1)

23.1 Consent of PricewaterhouseCoopers LLP (7)

99.1 Certification Pursuant To U.S.C. Section 1350, As Adopted Pursuant
To Section 906 Of The Sarbanes-Oxley Act Of 2002 (7)

99.2 Certification Pursuant To U.S.C. Section 1350, As Adopted Pursuant
To Section 906 Of The Sarbanes-Oxley Act Of 2002 (7)

- ----------
(1) Incorporated by reference to the Company's Registration Statement in
Form S-1 (File No. 33-98340) which was declared effective by the
Commission on February 7, 1996.

(2) Incorporated by reference to the Company's Form 10-K filed on March
31, 1999.

(3) Incorporated by reference to the Company's Form 8-K filed on January
16, 2001.

(4) Incorporated by reference to the Company's Definitive Proxy
Statement filed on July 27, 2001.

(5) Incorporated by reference to the Company's Form 8-K filed on June
28, 1999.

(6) Incorporated by reference to the Company's Form 8-K filed on October
26, 1999.

(7) Filed herewith.


18


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Speedus Corp.:

In our opinion, the consolidated financial statements listed in the index
appearing under Item 15(a) on page 17 present fairly, in all material respects,
the financial position of Speedus Corp. and its subsidiaries (the "Company") at
December 31, 2002 and December 31, 2001, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
2002 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP

New York, New York
March 31, 2003


19


SPEEDUS CORP.
CONSOLIDATED BALANCE SHEETS



December 31,
----------------------------
2002 2001
------------ ------------

ASSETS
Current assets:
Cash and cash equivalents $ 33,052,815 $ 39,933,881
Marketable securities 879,194 31,471
Due from broker 11,728,880 4,921,177
Accounts and other receivables 40,099 670,120
Prepaid expenses and other 17,488 381,332
------------ ------------
Total current assets 45,718,476 45,937,981
Property and equipment, net of accumulated
depreciation of $2,015,662 and $9,650,192 819,714 5,828,315
Other intangible assets, net of accumulated
amortization of $418,929 and $271,071 1,651,071 1,798,929
Goodwill 1,760,106 --
Other assets 297,544 326,881
------------ ------------
Total assets $ 50,246,911 $ 53,892,106
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 228,144 $ 206,871
Accrued liabilities 1,734,252 1,461,460
Securities sold and not purchased 14,212,566 6,277,837
Other current liabilities 62,336 464,217
------------ ------------
Total current liabilities 16,237,298 8,410,385

Minority interest 1,591,557 --

Commitments and Contingencies -- --

Stockholders' equity:
Common stock ($.01 par value; 50,000,000
shares authorized; 21,384,838 shares issued 213,848 213,848
Preferred stock ($.01 par value; 20,000,000
shares authorized):
Series A Junior Participating ($.01 par value;
4,000 shares authorized; no shares issued
and outstanding) -- --
Additional paid-in-capital 90,289,432 90,289,432
Treasury stock (at cost; 4,418,577 and 2,277,532 shares) (4,371,778) (2,416,089)
Accumulated deficit (53,713,446) (42,605,470)
------------ ------------
Stockholders' equity 32,418,056 45,481,721
------------ ------------
Total liabilities and stockholders' equity $ 50,246,911 $ 53,892,106
============ ============


The accompanying notes are an integral part of these consolidated financial
statements.


20


SPEEDUS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS



For the years ended December 31,
--------------------------------------------
2002 2001 2000
------------ ------------ ------------

Revenues $ 906,809 $ 68,847 $ 105,395
------------ ------------ ------------
Expenses:
Selling, general and administrative 4,639,394 5,263,179 5,844,260
Research and development 946,482 1,716,118 1,346,549
Depreciation and amortization 5,277,956 9,373,353 4,697,823
Cost of sales 515,956 -- --
------------ ------------ ------------
Total operating expenses 11,379,788 16,352,650 11,888,632
------------ ------------ ------------
Operating loss (10,472,979) (16,283,803) (11,783,237)
Investment income (194,280) 9,058,801 3,475,789
Equity in loss of associated company (520,822) (125,297) (569,782)
Minority interest 80,105 -- --
Other income -- 86,465 99,856
Settlement of litigation -- -- (282,500)
Interest expense -- -- (8,793)
------------ ------------ ------------
Net loss $(11,107,976) $ (7,263,834) $ (9,068,667)
============ ============ ============
Per share:
Basic loss per common share $ (0.62) $ (0.36) $ (0.44)
============ ============ ============
Weighted average common shares
outstanding 17,927,000 19,947,784 20,445,586
============ ============ ============
Diluted loss per common share $ (0.62) $ (0.36) $ (0.44)
============ ============ ============
Weighted average common shares
outstanding 17,927,000 19,947,784 20,445,586
============ ============ ============


The accompanying notes are an integral part of these consolidated financial
statements.


21


SPEEDUS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the years ended December 31, 2000, 2001 and 2002



Common Stock Total
--------------------- Additional Treasury Accumulated Shareholders'
Amount Shares Paid-in-capital Stock Deficit Equity
-------- ---------- --------------- ----------- ------------ -------------

Balance, January 1, 2000 $196,710 19,670,959 $ 79,875,699 $ -- $(26,272,969) $ 53,799,440
Issuance of common stock 13,638 1,363,879 8,919,733 8,933,371
Repurchase of common stock (305,741) (305,741)
Stock based compensation 1,497,000 1,497,000
Net loss (9,068,667) (9,068,667)
-------- ---------- --------------- ----------- ------------ -------------
Balance, December 31, 2000 210,348 21,034,838 90,292,432 (305,741) (35,341,636) 54,855,403
Issuance of common stock 3,000 300,000 (3,000) 0
Exercise of warrants 500 50,000 500
Repurchase of common stock (2,110,348) (2,110,348)
Net loss (7,263,834) (7,263,834)
-------- ---------- --------------- ----------- ------------ -------------
Balance, December 31, 2001 213,848 21,384,838 90,289,432 (2,416,089) (42,605,470) 45,481,721
Repurchase of common stock (1,955,689) (1,955,689)
Net loss (11,107,976) (11,107,976)
-------- ---------- --------------- ----------- ------------ -------------
Balance, December 31, 2002 $213,848 21,384,838 $ 90,289,432 $(4,371,778) $(53,713,446) $ 32,418,056
======== ========== =============== =========== ============ =============


The accompanying notes are an integral part of these consolidated financial
statements.


22


SPEEDUS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS



For the years ended December 31,
--------------------------------------------
2002 2001 2000
------------ ------------ ------------

Cash flows from operating activities:
Net loss $(11,107,976) $ (7,263,834) $ (9,068,667)
Adjustments to reconcile net earnings/(loss) to
net cash used in operating activities:
Depreciation and amortization 5,277,956 9,373,353 4,697,823
Unrealized losses 2,507,920 787,000 13,938
Equity in loss of associated company 520,822 125,297 569,782
Minority interest (80,105) -- --
Stock based compensation -- 653,000 844,000
Other Income -- (86,465) --
Settlement of litigation -- -- 282,500
Changes in operating assets and liabilities:
Marketable securities (1,110,669) 575 (629,332)
Due from broker (6,807,703) (4,296,387) (624,790)
Accounts and other receivables 132,399 (22,182) (86,752)
Prepaid expenses and other 363,844 (319,234) (12,098)
Other assets (162,397) 12,900 (485,699)
Due from affiliates -- 93,112 --
Accounts payable (73,727) (63,331) (284,537)
Accrued liabilities 254,936 (71,082) 467,306
Securities sold and not purchased 5,689,755 4,574,925 1,499,260
Other current liabilities (401,881) 446,212 (120,932)
------------ ------------ ------------
Net cash provided by/(used in) operating
activities (4,996,826) 3,943,859 (2,938,198)
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of assets 553,122 -- --
Loans and other receivables, net of repayments (114,247) -- --
Loans to related parties (373,426) -- --
Acquisition of business, net of cash acquired 6,000 -- --
Property and equipment additions -- (94,945) (1,039,885)
Investment in associated company -- (400,000) (954,957)
Intangible assets -- -- (570,000)
------------ ------------ ------------
Net cash provided by/(used in) investing
activities 71,449 (494,945) (2,564,842)
------------ ------------ ------------
Cash flows from financing activities:
Repurchase of stock (1,955,689) (2,110,348) (305,741)
Proceeds from exercise of sock options or warrants -- 500 1,433
Repayment of notes payable -- -- (210,938)
------------ ------------ ------------
Net cash provided by/(used in) financing
activities (1,955,689) (2,109,848) (515,246)
------------ ------------ ------------
Net increase/(decrease) in cash
and cash equivalents (6,881,066) 1,339,066 (6,018,286)
Cash and cash equivalents, beginning of period 39,933,881 38,594,815 44,613,101
------------ ------------ ------------
Cash and cash equivalents, end of period $ 33,052,815 $ 39,933,881 $ 38,594,815
============ ============ ============
Supplemental Cash Flow Disclosures:
Cash paid for interest during the period $ -- $ -- $ 8,793
============ ============ ============
Non cash transactions-common stock:
Issued for intangible assets $ -- $ -- $ 1,800,000
============ ============ ============
Issued /contingently issuable for acquisition $ -- $ -- $ 6,849,438
============ ============ ============
Non cash transaction:
Accounts receivable from sale of other assets $ -- $ 553,122 $ --
============ ============ ============
Supplemental information of business acquired:
Fair value of assets acquired:
Cash $ 6,000 $ -- $ --
Other current assets 13,000 -- --
Non current assets 196,166 -- --
Goodwill 1,760,106 -- --
Less-liabilities assumed:
Current liabilities (150,856) -- --
Acquisition costs (152,754) -- --
Minority interest (1,591,557) -- --
------------ ------------ ------------
Cash paid -- -- --
less-cash acquired (6,000) -- --
------------ ------------ ------------
Acquisition of business, net of cash acquired $ (6,000) $ -- $ --
============ ============ ============


The accompanying notes are an integral part of these consolidated financial
statements.


23


SPEEDUS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business

Organization

Speedus Corp. ("Speedus" or the "Company"), a Delaware corporation, was
formed in October 1995 as CellularVision USA, Inc. ("CVUS") to combine the
ownership of predecessor companies that were under common control. In January
1999, through a 'short form merger' as allowed under Delaware law, CVUS changed
its name to SPEEDUS.COM, Inc. In June 2002, in the same manner, SPEEDUS.COM,
Inc. changed its name to Speedus Corp. Unless the context requires otherwise,
the term Company includes Speedus and its wholly owned subsidiaries.

Business activities

Speedus Corp. is a holding company that owns significant equity interests
in diverse businesses. We seek business opportunities across all industries for
potential transactions and relationships in which we can apply our current
resources and management strengths. We are particularly focused on companies
with sound business plans and existing revenue bases that require growth
capital. We will continue to pursue opportunities involving our wireless
expertise and broadband assets as attractive opportunities present themselves.
The companies that we target, either public or privately held and regardless of
industry, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets.

We have co-invested with Siemens Corporate Research, Inc., a subsidiary of
Siemens Corporation, in Zargis Medical Corp. to develop a service solution,
initially targeted toward primary care physicians, that would be used as part of
general medical examinations for the early screening and detection of valvular
and congenital heart disease. We have acquired a 51% interest in F&B Gudtfood,
the creator and operator of the original Eurocentric "chic and quick" cafe,
which is operating its first store in Manhattan and is currently planning
expansion to other locations. We own a portfolio of patents that allow for
high-speed wireless communications. We also developed and launched an online
cell phone store, 007Phones, which we now license to a third-party. We also own
fixed wireless spectrum in the New York City metropolitan area that we may
commercialize in the future to support high-speed, or broadband, Internet access
service.

2. Summary of Significant Accounting Policies

Financial statements and principles of consolidation

The consolidated financial statements include the accounts of Speedus and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Companies in which Speedus directly or indirectly owns more than 50% of
the outstanding voting securities or that Speedus has effective control over are
accounted for under the consolidation method of accounting. Under this method,
those companies' balance sheets and results of operations, from the date Speedus
acquired control, are included in Speedus' consolidated financial statements.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The interest in the net assets and operations of these companies'
other stockholders is reflected in the caption 'Minority interest' in Speedus'
consolidated balance sheet and statements of operations.

The Company's share of earnings or losses of associated companies, that
are 20% to 50% owned, is included in the consolidated operating results using
the equity method of accounting.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of operating revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid interest earning investments with
original maturities of three months or less to be cash equivalents. At December
31, 2002 and 2001, cash equivalents consisted of money market funds.

Marketable Securities

All marketable securities are defined as trading securities under the
provisions of Statement of Financial


24


Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." At December 31, 2002 and 2001, marketable securities
consisted of publicly traded equity securities and were recorded at fair market
value. Their original cost was $1,479,000 and $631,000, unrealized losses were
$600,000 and $600,000 and the carrying value was $879,000 and $31,000,
respectively.

Securities sold and not purchased

The Company may sell publicly traded equity securities it does not own in
anticipation of declines in the fair market values of the securities. When the
Company effects such transactions, it must borrow the securities it sold in
order to deliver them and settle the trades. The amounts shown on the balance
sheet as 'Securities sold and not purchased' represent the value of these
securities at fair market value. At December 31, 2002 and 2001, the Company had
sold securities it had not purchased. The aggregate proceeds were $12,001,000
and $5,504,000, unrealized gains/(losses) were $(2,212,000) and $(774,000) and
the market value of the securities was $14,213,000 and $6,278,000, respectively.

During the years ended December 31, 2002, 2001 and 2000, realized
gains/(losses) in the amounts of $1,136,000, $9,324,000 and $797,000 were
recorded and included in Investment Income in the accompanying Consolidated
Statements of Operations.

Due from broker

In connection with selling publicly traded securities that it does not
own, the Company is obligated to maintain balances with brokerage firms as
security for these transactions. At December 31, 2002 and 2001, restricted cash
balances in the amounts of $11,729,000 and $4,921,000, respectively, were held
by brokerage firms.

Concentrations of Credit Risk

Financial instruments that potentially could subject the Company to
concentrations of credit risk consist largely of cash equivalents and marketable
securities. These instruments are potentially subject to concentrations of
credit risk but the Company believes that this risk is limited due to
diversification and investments being made in investment grade securities.

The Company also sells publicly traded equity securities that it does not
own in anticipation of declines in the fair market values of the securities.
When the Company sells securities that it does not own, it must borrow the
securities it sold in order to deliver them and settle the trades. Thereafter,
the Company must buy the securities and deliver them to the lender of the
securities. The Company's potential for loss on these transactions is unlimited
since the value of the underlying security can keep increasing which could have
a material adverse effect on the Company's consolidated financial statements.

Property and Equipment

Transmission equipment, customer premises equipment, office equipment and
leasehold improvements are recorded at cost and depreciated on a straight-line
basis over the estimated useful lives of the assets, ranging from two to seven
years.

Through the quarter ended September 30, 2000, fiber optic lines were
depreciated over an estimated useful life of 40 years. Commencing with the
quarter ended December 31, 2000, the Company considers the remaining useful life
to be ten years and accounted for this determination as a change in an estimate.
The effect of this change is not material.

When assets are fully depreciated, it is the Company's policy to remove
the costs and related accumulated depreciation from its books and records.

During the year ended December 31, 2002, the Company recorded a charge,
included in 'Depreciation and amortization' in the accompanying Consolidated
Statements of Operations, in the amount of $3,650,000 for property and equipment
taken out of service.

Long-lived assets

The Company periodically evaluates the net realizable value of long-lived
assets, including fixed and intangible assets, relying on anticipated future
cash flows. The Company's evaluation of anticipated future cash flows considers
operating results, business plans and economic projections, as well as,
non-financial data such as market trends, product and development cycles, and
changes in management's market emphasis. An impairment in the carrying value of
an asset is recognized when the expected future operating cash flows derived
from the asset are less than its carrying value.

Goodwill and Other Intangible Assets

In July 2001, Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible


25


Assets" was issued. FAS No. 142 requires the use of a nonamortization approach
to account for purchased goodwill and certain intangibles. Under a
nonamortization approach, goodwill and certain intangibles will not be amortized
into results of operations, but instead would be reviewed for impairment and
charged against results of operations only in the periods in which the recorded
value of goodwill and certain intangibles is more than its fair value.

The Company owns broadband assets, including fixed and intangible assets,
with a carrying value of $1.8 million at December 31, 2002 and currently does
not generate significant revenues or cash flows. However, the Company estimated
that, based upon its review of recent transactions and other factors, the fair
value of its remaining FCC license and certain patents that have no carrying
value on its books would generate sufficient cash to fully realize its assets
described above. This estimate evaluated the recovery of these broadband assets
compared to the fair value of the remaining FCC license and certain patents as a
group since it represents the lowest level for which identifiable cash flows are
largely independent of the cash flows of other groups of assets and liabilities.

Other intangible assets consist of the cost of a patent which, through the
year ended December 31, 2002, was amortized over its life of fourteen years at
the time of acquisition. Effective January 1, 2003, the Company considers the
remaining useful life to be four years and will account for this determination
as a change in an estimate.

Amortization expense relating to intangible assets for the years ended
December 31, 2002, 2001 and 2000 amounted to $147,858, $397,857 and $173,214,
respectively. Annual amortization expense for each of the next four years, the
remaining useful life of the Company's intangible asset at December 31, 2002, is
expected to be approximately $413,000.

The Company reviewed the carrying value of goodwill in the amount of $1.8
million at December 31, 2002, and estimated based upon its review, taking into
account such factors as projected operations and Company's redemption rights in
connection with the investment, that there has been no impairment to this
carrying value. As a result, there were no changes in the carrying amount of
goodwill for the year ended December 31, 2002.

As a result of continuing weak industry conditions and lower market
valuations, we determined that there were indications of impairment to the
carrying value of our goodwill and other purchased intangibles in connection
with our purchase in 2000 of the remaining 55% interest in Speedia, LLC (see
Note 4) that we did not already own. Based on our review, we recorded a charge
of $3,779,000, included in 'Depreciation and amortization' for the year ended
December 31, 2001, for the impairment of intangible assets associated with that
acquisition.

Revenue Recognition

Revenues from F&B Gudtfood's operations are recorded on a cash basis.

The Company earns fees from a licensee for the sale and activation of
wireless phones. In accordance with the provisions of the Securities and
Exchange Commission Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements", these revenues and associated costs are deferred until
the expiration of cancellation privileges and chargeback periods from carriers.
At December 31, 2002, the amount recorded for these deferred revenues was not
material.

Income Taxes

As required by Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," the Company is required to provide for deferred
tax assets or liabilities arising due to temporary differences between the book
and tax basis of the Company's assets and liabilities.

As of December 31, 2002, the Company has a deferred tax asset of
approximately $23.4 million, relating primarily to operating losses. An
offsetting valuation allowance of $23.4 million has been established as the
Company had no ability to carryback its losses and a limited earnings history.
For the year ended December 31, 2002, the Company has accrued approximately
$110,000 in state and local income taxes.

A reconciliation of the Company's effective income tax rate and the
federal tax rate is as follows:

Year ended December 31,
-----------------------
2002 2001 2000
---- ---- ----
Statutory rate (34%) (34%) (34%)
Permanent difference - stock based compensation 0% 3% 3%
State and local income taxes, net of federal benefit (10%) (11%) (3%)
Change in valuation allowance 44% 42% (34%)
---- ---- ----
Effective rate --% --% --%
==== ==== ====


26


At December 31, 2002, the Company had net operating loss carryforwards of
approximately $50.8 million which expire between 2005 and 2024. Under the
provisions of the Internal Revenue Code, certain substantial changes in the
Company's stock ownership may result in a limitation on the amounts of net
operating loss carryforwards which can be utilized in future years.

Earnings Per Share

Basic and diluted earnings/(loss) per common share are determined in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
Per Share".

For the years ended December 31, 2002, 2001 and 2000, basic and diluted
net loss available for common shareholders was equal to net loss. Weighted
average shares for the assumed exercise or conversion of stock options in the
amounts of,56,282, 88,068 and 102,338 and warrants in the amounts of 19,281,
104,607 and 261,598 for the years ended December 31, 2002, 2001 and 2000,
respectively, have been excluded from the diluted loss per share since their
effect would be antidilutive.

Stock Options

The Company accounts for its employee stock options in accordance with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", as amended by SFAS 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No.
123", which defines a "fair value method" of measuring and accounting for
compensation expense from employee stock options. This standard also allows
accounting for such options under the "intrinsic value method" in accordance
with Accounting Principles Board No. 25, "Accounting for Stock Issued to
Employees." The Company has elected to use the intrinsic value method and is
presenting pro forma disclosures of earnings and earnings per share as if the
fair value method of accounting was applied. See Note 6.

Recent Accounting Pronouncements

In July 2002, Statement of Financial Accounting Standards No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" was issued.
SFAS No. 146 supersedes Emerging Issues Task Force No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Associated with a Restructuring)," and
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. Such liabilities should
be recorded at fair value and updated for any changes in the fair value each
period. A notable change from EITF 94-3 involves one-time employee termination
costs whereby the employee to be terminated is required to render service
between the notification date and the date the employee will be terminated in
order to receive any termination benefits. For these situations whereby the
required post-notification service period extends beyond the minimum retention
period required by local law (e.g., 60 days in the United States), the fair
value liability will be amortized over the service period. This change is
effective for new exit or disposal activities initiated after December 31, 2002.
We do not expect the adoption of this accounting standard to have a material
effect on our results of operations commencing January 1, 2003.

In December 2002, Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation--Transition and Disclosure--an
amendment of FASB Statement No. 123" was issued. SFAS No. 148 amends SFAS No.
123, "Accounting for Stock-Based Compensation", to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. This statement is effective for fiscal years ending
after December 15, 2002 for transition guidance and annual disclosure
provisions; for financial reports containing financial statements for interim
periods beginning after December 15, 2002 for interim disclosure provisions.
This standard also allows accounting for such options under the "intrinsic value
method" in accordance with Accounting Principles Board No. 25, "Accounting for
Stock Issued to Employees." The Company has elected to account for its stock
options under this method. As a result, this accounting standard did not have a
material effect on our results of operations.

In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45
requires that a liability be recorded in the guarantor's balance sheet upon
issuance of a guarantee. In addition, FIN 45 requires disclosures about the
guarantees that an entity has issued, including a reconciliation of changes in
the entity's product warranty liabilities. The initial recognition and initial
measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantor's fiscal year-end. The disclosure requirements of FIN 45 are effective
for financial statements of interim or annual periods ending after December 15,
2002. The Company does not expect the adoption of this standard to have a
material impact on the Company's financial statements.


27


In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51." FIN 46 requires certain variable interest
entities to be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN 46 is effective immediately for all new variable interest
entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46
must be applied for the first interim or annual period beginning after June 15,
2003. The Company is currently evaluating the impact that the adoption of this
standard will have on its financial statements.

3. Related Party Transactions

a. The Company has signed an exclusive contract with Zargis Medical to
design and develop the wireless applications, as well as provide transaction
processing to support the commercial rollout of Zargis Medical's cardiac
diagnostic products. During the years ended December 31, 2002 and 2001, no
revenues were recorded in connection with Zargis Medical.

b. We also entered into a management services contract with F&B Gudtfood
that will result in direct revenues to us apart from those arising out of our
ownership interest although these revenues will be eliminated on our
consolidated financial statements. In connection with this acquisition, the
Company extended loans to two employees of F&B Gudtfood, who are also minority
shareholders of F&B Gudtfood aggregating $120,000. The loans, which can be
increased by $40,000 each under certain conditions, will be forgiven if certain
milestones are achieved.

4. Acquisitions

a. On May 6, 2002, the Company acquired a 51% interest in F&B Gudtfood,
the creator and operator of the original Eurocentric "chic and quick" cafe,
which is operating its first store in Manhattan and is currently planning
expansion to other locations. The acquisition price was $3,500,000, which funds
will be applied principally for its expansion.

This acquisition was accounted for using the purchase method of
accounting. The results of operations of F&B Gudtfood have been included in the
consolidated statements of operations from the date of acquisition. The excess
of the purchase price over the fair value of the net assets acquired was
approximately $1.8 million and has been recorded as goodwill.

In connection with this acquisition, the Company extended loans to two
minority shareholders of F&B Gudtfood aggregating $120,000. The loans, which can
be increased by $40,000 each under certain conditions, will be forgiven if
certain milestones are achieved.

Unaudited pro forma operating results of the Company as though the
acquisition of F&B Gudtfood had occurred on January 1, 2001, are as follows:

Year ended December 31,
----------------------------
(unaudited)
2002 2001
------------ ------------
Revenues $ 1,175,523 $ 675,327
Operating loss $(10,457,705) $(16,305,963)
Net earnings/(loss) $(11,092,702) $ (7,285,994)
Basic and diluted net earnings/(loss) per share $ (0.62) $ (0.37)

b. On June 30, 2000, the Company purchased the remaining 55% interest in
Speedia, LLC that it did not already own. The Company issued an aggregate of
950,000 shares of its Common Stock to Speedia's selling shareholders, Starpoint
Solutions, Inc. (formerly TIS Worldwide, Inc.) and Daniel Doyon (collectively,
the "Sellers). Thereafter, as a result of not having met certain contingencies,
the Company was obligated to issue an additional 300,000 shares of its Common
Stock.

This acquisition was accounted for using the purchase method of
accounting. The results of operations of Speedia have been included in the
consolidated statements of operations for the periods subsequent to June 30,
2000. The excess of the purchase price, valued at approximately $6.8 million
(including the value of the additional shares), over the fair value of the net
assets acquired was approximately $7.2 million which was recorded as goodwill
and was being amortized over a period of 3 years. However, as a result of
continuing weak industry conditions and lower market valuations, we determined
that there were indications of impairment to the carrying value of our goodwill
and


28


other purchased intangibles in connection with our purchase in 2000 of the
remaining 55% interest in Speedia that we did not already own. Based on our
review, we recorded a charge of $3,779,000 during the year ended December 31,
2001 to write off the value of goodwill and intangible assets associated with
that acquisition.

5. Property and Equipment

Property and equipment consists of the following:

December 31,
----------------------------
2002 2001
---------- -----------
Leasehold improvements ............... $2,120,107 $ 2,111,076
Office equipment ..................... 269,732 480,609
Transmission equipment ............... 258,037 11,476,412
Fiber optics ......................... 187,500 375,000
Customer premises equipment .......... 0 684,400
Equipment deposits ................... 0 351,010
---------- -----------
2,835,376 15,478,507
Less--accumulated depreciation ....... 2,015,662 9,650,192
---------- -----------
Property and equipment ............ $ 819,714 $ 5,828,315
========== ===========

Depreciation expense was approximately $5,130,000, $2,988,000 and
$3,430,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

6. Stockholders' Equity

Stock Options

The Company's 1995 Stock Incentive Plan, as amended, provides for the
grant of various stock-based incentives, including non-qualified and incentive
stock options. The Plan has reserved 2,750,000 shares of Common Stock of the
Company for issuance to employees, directors and consultants, including an
additional 500,000 shares approved by stockholders in each of 1999, 2000 and
2001.

Stock option activity and weighted average prices for the three years
ended December 31, 2002 is summarized as follows:



2002 2001 2000
------------------ ------------------ ------------------
Options Price Options Price Options Price
--------- ----- --------- ----- --------- -----

Outstanding at January 1 1,604,980 $2.90 1,052,094 $4.22 540,616 $4.86
Granted 290,000 1.08 682,246 1.02 582,750 4.01
Exercised -- -- -- -- (937) 1.53
Cancelled (193,456) 2.66 (129,360) 3.77 (70,335) 7.42
--------- --------- ---------
Outstanding at December 31 1,701,524 $2.61 1,604,980 $2.90 1,052,094 $4.22
========= ========= =========
Exercisable at December 31 1,405,436 $2.87 840,817 $4.09 567,761 $4.79
========= ========= =========
Available for grant at December 31 884,639 981,183 1,034,069
========= ========= =========


The following table summarizes information concerning currently
outstanding and exercisable stock options at December 31, 2002:


29




Stock Stock
options outstanding options exercisable
--------------------------------- -------------------
Weighted Weighted Weighted
average average average
Range of remaining exercise exercise
exercise prices Options life (years) price Options price
- ----------------------- ------- ------------ -------- ------- --------

$0.83 - 1.00 609,910 8 $ 0.98 364,655 $ 0.97
1.07 - 2.08 310,000 9 1.22 310,000 1.22
3.00 - 4.84 721,500 7 4.03 670,667 4.09
5.20 - 9.88 45,114 4 7.74 45,114 7.74
13.75 - 15.00 15,000 6 14.17 15,000 14.17


The Company accounts for its employee stock options in accordance with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", as amended by SFAS 148, and has elected to account for its stock
options under the intrinsic value method as outlined in APB 25 and permitted by
SFAS 123. Since all options to date have been granted at the market price per
share on the date of grant, no compensation expense has been recognized by the
Company for its stock-based compensation plans during the years ended December
31, 2002, 2001 and 2000. Pro forma earnings information giving effect to
compensation expense based upon the fair value at the date of grant in
accordance with SFAS 123 for the years ended December 31, 20002, 2001 and 2000
is summarized as follows:



2002 2001 2000
------------ ------------ ------------

Net loss as reported $(11,107,976) $ (7,263,834) $ (9,068,667)
After tax effect of pro forma compensation (1,107,642) (975,000) (1,154,000)
------------ ------------ ------------
Pro forma net loss $(12,215,618) $ (8,238,834) $(10,222,667)
============ ============ ============
Loss per share:
Basic - as reported $ (0.62) $ (0.36) $ (0.44)
============ ============ ============
Basic - pro forma $ (0.68) $ (0.41) $ (0.50)
============ ============ ============
Diluted - as reported $ (0.62) $ (0.36) $ (0.44)
============ ============ ============
Diluted - pro forma $ (0.68) $ (0.41) $ (0.50)
============ ============ ============


In determining fair value, the stock options were valued using the
Black-Scholes option pricing model. Key assumptions used in valuing the options
granted during the years ended December 31, 2002, 2001 and 2000 are summarized
as follows:

2002 2001 2000
------- ------- -------
Risk free investment rate 4% 6% 6%
Expected lives 3 years 3 years 4 years
Expected volatility factors 175% 175% 125%

Warrants

The Company accounts for warrants granted to non-employees under the
provisions of Statement of Financial Accounting Standards No. 123 and Emerging
Issues Task Force No. 96-18, "Accounting for equity instruments that are issued
to other than employees for acquiring or in conjunction with selling, goods and
services". The fair value of the warrants at the time of issuance was determined
using the Black-Scholes option-pricing model. Expenses are recognized over the
service terms.

During 2000, a total of 125,000 warrants were issued at an exercise price
of $4.78 per share. No warrants were exercised. The warrants have five-year
terms.

During 2001, no warrants were issued and warrants to purchase 50,000
shares of Common Stock were exercised.


30


During 2002, no warrants were issued or exercised and warrants to purchase
425,000 shares of Common Stock expired.

At December 31, 2002, there were outstanding warrants, all of which are
exercisable, to purchase an aggregate of 238,256 shares of Common Stock with
exercise prices ranging from $4.78 to $15.03 and a weighted average price of
$9.05.

During the years ended December 31, 2001 and 2000, stock based
compensation in the aggregate amounts of $653,000 and $844,000, respectively,
for financial advisory and other services was recorded and are included in
selling, general and administrative expenses. No stock based compensation was
recorded during the year ended December 31, 2002.

Treasury Stock

During the years ended December 31, 2002, 2001and 2000, the Company
repurchased 2,141,045, 1,967,732 and 309,800 shares, respectively, of its own
Common Stock.

Stockholder Rights Plan

On January 11, 2001, the Company's Board of Directors adopted a
stockholder rights plan in which preferred stock purchase rights will be
distributed as a dividend at the rate of one right for each share of the
Company's Common Stock.

Each right generally will entitle stockholders, in certain circumstances,
to buy one one-ten thousandth of a newly issued share of Series A Junior
Participating Preferred Stock of the Company at an exercise price of $50.00. The
rights generally will be exercisable and transferable apart from the Common
Stock only if a person or group acquires beneficial ownership of 17% or more of
the Common Stock or commences a tender or exchange offer upon consummation of
which such person or group would beneficially own 17% or more of the Common
Stock.

If any person becomes the beneficial owner of 17% or more of the Company's
Common Stock, then each right not owned by a 17% or more stockholder or certain
related parties will entitle its holder to purchase, at the right's then-current
exercise price, shares of Common Stock (or, in certain circumstances as
determined by the Board, cash, other property, or other securities) having a
value of twice the right's exercise price. In addition, if, after any person has
become a 17% or more stockholder, the Company is involved in a merger or other
business combination transaction with another person in which its Common Stock
is changed or converted, or sells 50% or more of its assets or earning power to
another person, each right will entitle its holder to purchase, at the right's
then-current exercise price, shares of common stock of such other person having
a value of twice the right's exercise price.

The Company will generally be entitled to redeem the rights at $.01 per
right at any time until the tenth day following public disclosure that a person
or group has become the beneficial owner of 17% or more of the Company's common
stock. The rights will expire on January 26, 2011.

Reverse Stock Split

At the Company's 2002 annual meeting, stockholders approved a proposal
authorizing the Company's Board of Directors at its discretion, through June 24,
2003, to effect a reverse stock split of all the issued and outstanding shares,
as well as treasury shares, of the Company's Common Stock at a ratio not to
exceed one-for-six if necessary to continue the Company's listing on Nasdaq. As
of December 31, 2002, the reverse stock split had not been implemented.

7. Commitments and Contingencies

Noncancelable Leases

At December 31, 2002, future minimum lease payments due under
noncancelable leases are as follows:

2003 .................................................. $275,000
2004 .................................................. 175,000
2005 .................................................. 11,000
2006 .................................................. 11,000
2007 .................................................. 12,000
Thereafter ............................................ 24,000
--------
Total .............................................. $508,000
========

Rent expense was approximately $355,000, $294,000 and $300,000 for the
years ended December 31, 2002, 2001 and 2000, respectively.

Indemnification

As permitted under Delaware law, the Company's Certificate of
Incorporation and By-Laws provide circumstances by which the Company shall
indemnify each director, officer, employee or agent of the Company. The maximum
potential exposure under these provisions is unlimited; however, the Company has
an Officers and Directors insurance policy that limits its exposure and enables
it to recover a portion of any amounts paid. The Company has not provided for
any potential exposure under these provisions at December 31, 2002.


31


8. Legal Proceedings

The Company is subject to various claims and proceedings that occur in the
ordinary course of business. The Company believes it has substantial defenses to
a material portion of these claims and is prepared to pursue litigation if a
reasonable and structured settlement cannot be reached with the parties. Based
on information currently available, the Company believes it is remote that the
ultimate resolution of these current claims or proceedings, either individually
or in the aggregate, will have a material effect on its business.

9. Business Segment Information

The following table sets forth the Company's financial performance by
reportable operating segment. During the year ended December 31, 2002, the
Company recognized revenues from the operations of F&B Gudtfood since May 6,
2002, the date of acquisition. During 2002, the Company also recognized revenues
from the sale and activation of wireless phones through the Company's online
cell phone store, 007phones. Revenues to be recognized in the future from the
sale and activation of wireless phones are expected to decrease. The Company now
licenses the cell phone store to a third party and license fees are less than
revenues from sale and activation.



Corporate
F&B and other Totals
---------- ------------ ------------

Revenues from external customers $ 445,841 $ 460,968 $ 906,809
Depreciation and amortization 3,946 5,274,010 5,277,956
Operating loss (267,136) (10,205,843) (10,472,979)
Interest revenues 35,591 (229,871) (194,280)
Interest expenses 0 0 0
Total assets 3,211,582 47,035,329 50,246,911
Fixed assets 120,054 699,660 819,714


The Company has no foreign operations. During 2002, the Company did not
have sales to any individual customer greater than 10% of total Company
revenues. The Company's accounting policies for segments are the same as those
described in Note 1.

10. Selected Quarterly Data (unaudited)

Quarterly financial information is summarized in the table below (amounts
in thousands, except per share amounts):


32




Year ended December 31, 2002
------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------

Revenues $ 235 $ 325 $ 149 $ 198
Selling, general and
administrative expenses 1,053 990 1,184 1,412
Research and development 216 267 226 237
Cost of Sales 205 213 49 49
Operating loss (1,899) (5,409) (1,490) (1,675)
Investment income/(loss) 514 1,019 1,857 (3,584)
Net earnings/(loss) $ (1,981) $ (4,503) $ 254 $ (4,878)
Per share (1):
Basic $ (0.10) $ (0.25) $ 0.01 $ (0.29)
Diluted $ (0.10) $ (0.25) $ 0.01 $ (0.29)


Year ended December 31, 2001
------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------

Revenues $ 25 $ 22 $ 20 $ 2
Selling, general and
administrative expenses 1,537 1,464 966 1,296
Research and development 485 443 380 408
Operating loss (3,382) (3,285) (2,661) (6,956)
Investment income/(loss) 5,879 (240) 3,240 181
Net earnings/(loss) $ 2,476 $ (3,546) $ 536 $ (6,730)
Per share (1):
Basic $ 0.12 $ (0.18) $ 0.03 $ (0.35)
Diluted $ 0.12 $ (0.18) $ 0.03 $ (0.35)


(1) Earnings per share is computed separately for each period. Therefore, the
sum of the quarterly per share amounts may differ from the total for the
year.

During the fourth quarter of 2001, as a result of continuing weak industry
conditions and lower market valuations, the Company undertook a review of its
business model. As a result, the Company determined to not actively pursue new
initiatives in the wireless market and undertook a downsizing of Speedia and its
personnel. In June 2000, the Company had recorded $7.2 million in goodwill as a
result of the purchase of the remaining 55% interest in Speedia that it did not
already own and was amortizing this goodwill over a period of three years
commencing in the third quarter of 2000. As a result of its review and
downsizing, however, the Company determined that there were indications of
impairment to the carrying value of its goodwill and other purchased intangibles
in connection with this acquisition and recorded a charge of $3,779,000 in the
fourth quarter of 2001 for the impairment of goodwill and intangible assets
associated with that acquisition.

11. Subsequent Events

a. On February 8, 2003, we reduced our cash investment in F&B Gudtfood and
received $1,775,000 while maintaining our 51% interest.

b. In February 2003, we acquired a controlling interest in Zargis Medical.
The additional investment of $1,250,000 was represented by outstanding notes
payable to the Company by Zargis Medical at December 31, 2002, in the amount of
$250,000 and an additional cash investment of $1,000,000.


33


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in New York, New York
on March 31, 2003.


SPEEDUS CORP.


s/s Shant S. Hovnanian
----------------------------------------
Shant S. Hovnanian
President, Chief Executive Officer and
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----


s/s Shant S. Hovnanian Chairman of the Board of March 31, 2003
- ------------------------- Directors, President and Chief
Shant S. Hovnanian Executive Officer


s/s Thomas M. Finn Treasurer and Chief Financial March 31, 2003
- ------------------------- Officer
Thomas M. Finn


s/s Angela M. Vaccaro Controller and Chief Accounting March 31, 2003
- ------------------------- Officer
Angela M. Vaccaro


s/s Vahak S. Hovnanian Director March 31, 2003
- -------------------------
Vahak S. Hovnanian


s/s William F. Leimkuhler Director March 31, 2003
- -------------------------
William F. Leimkuhler


s/s Jeffrey Najarian Director March 31, 2003
- -------------------------
Jeffrey Najarian


s/s Christopher Vizas Director March 31, 2003
- -------------------------
Christopher Vizas



CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Shant S. Hovnanian, certify that:

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

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

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

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

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

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

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

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

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 31, 2003


By: /s/ Shant S. Hovnanian
----------------------

Name: Shant S. Hovnanian
Title: Chairman of the Board of Directors and Chief Executive Officer



CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Thomas M. Finn, certify that:

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

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

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

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

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;

b) evaluated the effectiveness of the registrant 's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

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

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

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

6. The registrant 's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 31, 2003


By: /s/ Thomas M. Finn
------------------

Name: Thomas M. Finn
Title: Treasurer and Chief Financial Officer