10-Q/A 1 a2102858z10-qa.htm FORM 10-Q/A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q/A

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

1-15015

(COMMISSION FILE NUMBER)

For The Quarterly Period Ended March 31, 2002
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

STARMEDIA NETWORK, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

06-1461770
(I.R.S. Employer Identification Number)

999 Brickell Ave.
Miami, FL 33131
(305)-938-3000
(Address, including zip code, and telephone number,
of registrant's principal executive offices)

Indicate by check mark whether the Registrant (1) has filed all reports required 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 ý No o

As of July 1, 2002, there were 79,969,230 shares of the Registrant's Common Stock, $0.001 par value per share, outstanding.

STARMEDIA NETWORK, INC. AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets at March 31, 2002 (unaudited) and December 31, 2001	4
	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	25

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 2.	Changes In Securities and Use of Proceeds	28
Item 3.	Defaults upon Senior Securitiesul	28
Item 4.	Submission of Matters to a Vote of Security Holders	28
Item 5.	Other Information	28
Item 6.	Exhibits and Reports on Form 8-K	28
Item 7.	Signatures	29

EXPLANATORY NOTE

This Amendment is being filed to include additional disclosure and information in certain sections in response to comments received by the SEC and after consultation with the Company's auditors. In order to preserve the nature and character of the disclosures set forth in the Quarterly Report on Form 10-Q as originally filed, this Amendment continues to speak as of the date of the original filing with the SEC on July 11, 2002, and the Company has not updated the disclosures in this report to speak as of a later date. All information contained in this Amendment is subject to update and supplement by the Company's reports filed with the SEC for periods subsequent to the date of the original filing of the Quarterly Report on Form 10-Q.

PART I
FINANCIAL INFORMATION

RECENT DEVELOPMENTS

Since March 31, 2002, the Company has experienced the following developments:

•: Effective as of April 19, 2002, Enrique Narciso resigned as CEO, President and director of the Company. As disclosed in the Report on Form 8-K filed by the Company on April 19, 2002, in tendering his resignation Mr. Narciso informed the Company that he needed to focus on a personal matter that resulted in his pleading guilty to a tax violation involving his 1998 individual federal tax return. Mr. Narciso joined the Company in October 1999. Following Mr. Narciso's resignation, Jose Manuel Tost was appointed President of the Company and Jorge Rincon was appointed Chief Operating Officer of the Company.
•: Effective as of April 29, 2002, Ana Maria Lozano-Stickley was appointed as Chief Financial Officer of the Company. Prior to that time Ms. Lozano-Stickley had been Acting Vice President of Accounting and Administration of the Company since January 2002.
•: The Company has continued to undertake a realignment for the purposes of focusing its resources on its mobile solutions business. As part of this realignment, the Company reduced its number of full-time employees from 520 as of close of business on December 31, 2001 to 391 as of June 21, 2002. In addition, following the Company's change of its headquarters in late 2001 from New York to Miami, Florida, which was previously the headquarters of the Company's mobile solutions business, the Company has substantially reduced its presence in New York. As of June 21, 2002, the Company had 30 employees based in its New York City offices, as compared to 118 employees based in such office as of close of business on December 31, 2001.
•: In late 2001 and early 2002, eleven lawsuits were filed against the Company in the Southern District of New York in connection with the Company's announcement relating to the Restatement referred to in "Restatement Information" above. A lead plaintiff for the class and lead plaintiff's counsel were subsequently selected and a motion filed to consolidate the various claims. The Consolidated Amended Complaint was filed on May 31, 2002 in the Southern District of New York under the caption In re StarMedia Network, Inc. Securities Litigation 01 Civ. 10556 (S.D.N.Y.). In June 2002, the lead plaintiffs and all defendants executed a settlement agreement that resolves all claims in the consolidated action. The settlement amount will be paid by the Company's directors and officers liability insurance carrier. This settlement agreement is subject to review and ratification by the Honorable Denny Chin of the United States District Court for the Southern District of New York. See "Legal Proceedings".
•: On July 1, 2002, Fernando Espuelas notified the Company that effective as of that date he resigned as a director of the Company.
•: On July 3, 2002 the Company sold most of its assets associated with starmedia.com, its Spanish- and Portuguese-language portal, and LatinRed, its Spanish language online community, to eresMas Interactive S.A. ("EresMas"). Following the sale of starmedia.com and LatinRed to EresMas, the Company is principally engaged in the business of providing integrated Internet solutions to wireless telephone operators targeting Spanish- and Portuguese-speaking audiences, principally in Latin America, and the Company retains only the following Internet media services:
•: batepapo.com.br, a Brazilian chat service, which the Company is considering either selling or closing;

•: the local city guides such as nacidade.com.br; guiasp.com.br; guiarj.com.br; paisas.com; openchile.cl; panoramas.cl and AdNet.com.mx, which the Company anticipates that it will continue to operate in support of its mobile solutions business.

As part of the terms of the sale, the Company agreed to cease using the "StarMedia" brand commercially and, subject to shareholder approval, to amend its certificate of incorporation to change its name. Following the sale, the Company operates commercially under the name "CycleLogic."

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STARMEDIA NETWORK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2002			December 31, 2001
		(Unaudited)			(See Note 2)
ASSETS
Current assets:
	Cash and cash equivalents	$	17,405,000		$	21,635,000
	Accounts receivable, net of allowance for bad debts of $4,095,000 (2002) and $4,453,000 (2001)		2,940,000			2,963,000
	Unbilled receivables		1,347,000			2,079,000
	Receivable from sale of investment		—			13,000,000
	Other current assets		2,993,000			3,768,000

Total current assets			24,685,000			43,445,000
Fixed assets, net			21,667,000			25,184,000
Intangible assets, net of accumulated amortization of $5,386,000 (2002) and $5,397,000 (2001)			2,111,000			2,109,000
Goodwill, net of accumulated amortization of $1,111,000 (2002 and 2001)			425,000			425,000
Other assets			1,156,000			573,000

Total assets		$	50,044,000		$	71,736,000

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
	Accounts payable	$	3,129,000		$	4,419,000
	Accrued expenses		11,873,000			15,112,000
	Deferred revenues		1,668,000			2,534,000

Total current liabilities			16,670,000			22,065,000
Preferred dividends payable			1,825,000			1,278,000
Series A Convertible Preferred Stock
	Series A Convertible Preferred Stock, $.001 par value, 1,960,784 shares authorized, 1,431,373 shares issued and outstanding at March 31, 2002 (liquidation preference of $37,778,000 (2001) and $38,325,000 at March 31, 2002)		35,277,000			35,204,000
Stockholders' equity:
	Preferred stock authorized 10,000,000 shares:
	Series 1999A junior-non-voting convertible preferred stock, $.001 par value 2,300,000 shares authorized, 58,140 shares issued and outstanding at March 31, 2002, and December 31, 2001, respectively
	Common stock, $.001 par value, 200,000,000 shares authorized, 80,320,089 shares issued (2002 and 2001)		80,000			80,000
	Common stock issuable		1,000,000			1,000,000
	Treasury stock, cost of 350,859 shares (2002), 349,912 shares (2001)		(149,000	)		(143,000	)
	Additional paid-in capital		542,115,000			542,144,000
	Accumulated deficit		(543,625,000	)		(527,116,000	)
	Deferred compensation		(43,000	)		(87,000	)
	Accumulated comprehensive loss		(3,106,000	)		(2,689,000	)

Total stockholders' (deficit) equity			(3,728,000	)		13,189,000

Total liabilities and stockholders' equity		$	50,044,000		$	71,736,000

See accompanying notes to Unaudited Condensed Consolidated Financial Statements.

STARMEDIA NETWORK, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,
	2002			2001
	(Unaudited)
Revenues
Mobile Solutions		1,018,000			693,000
Internet Media Services		1,433,000			8,178,000

Total revenues	$	2,451,000		$	8,871,000
Operating expenses: Product and technology development, (exclusive of $1,000 and $87,000, respectively, reported below as stock-based compensation);		7,546,000			14,542,000
Sales and marketing, (exclusive of $12,000; and $133,000, respectively, reported below as stock-based compensation)		2,157,000			11,352,000
General and administrative, (exclusive of $1,000; and $495,000, respectively, reported below as stock-based compensation)		4,216,000			9,158,000
Restructuring and other charges		347,000			—
Bad debt (recoveries) expense		(7,000	)		6,120,000
Depreciation and amortization		3,867,000			5,739,000
Stock-based compensation expense		14,000			715,000
Impairment of fixed assets		—			1,153,000
Loss on sale of fixed assets		104,000			—

Total operating expenses		18,244,000			48,779,000

Loss from operations		(15,793,000	)		(39,908,000	)
Other income (expense):
Interest income		123,000			1,375,000
Interest expense		—			(75,000	)
Other expenses		(219,000	)		(35,000	)

Loss before provision for income taxes		(15,889,000	)		(38,643,000	)
Provision for income taxes		—			—

Net loss	$	(15,889,000	)	$	(38,643,000	)
Preferred stock dividends and accretion		(620,000	)		—

Net loss applicable to common stockholders	$	(16,509,000	)	$	(38,643,000	)

Basic and diluted net loss per common share	$	(0.21	)	$	(0.57	)

Number of shares used in computing basic and diluted net loss per share		79,969,851			67,467,437

See accompanying notes to Unaudited Condensed Consolidated Financial Statements.

STARMEDIA NETWORK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For The Three Months Ended March 31,
	2002			2001
	(Unaudited)
OPERATING ACTIVITIES
Net loss	$	(15,889,000	)	$	(38,643,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,867,000			5,739,000
Provision for (recoveries of) bad debts		(7,000	)		6,120,000
Loss on asset impairment		—			1,153,000
Loss on sale of fixed assets		104,000			—
Amortization of stock-based compensation		14,000			715,000
Realized loss on foreign currency exchange		176,000			35,000
Deferred rent expense		—			335,000
Changes in operating assets and liabilities:
Accounts receivable		(46,000	)		(11,000	)
Unbilled receivables		732,000			143,000
Other assets		387,000			421,000
Accounts payable and accrued expenses		(4,389,000	)		(230,000	)
Deferred revenues		(862,000	)		297,000

Net cash used in operating activities		(15,913,000	)		(23,926,000	)
INVESTING ACTIVITIES
Purchase of fixed assets		(308,000	)		(7,186,000	)
Intangible assets		—			(104,000	)
Other assets		(587,000	)		1,918,000
Proceeds from the sale of investment		13,000,000			—
Officer loans		—			(2,478,000	)

Net cash provided by (used in) investing activities		12,105,000			(7,850,000	)
FINANCING ACTIVITIES
Issuance of common stock		—			22,000
Purchase of treasury stock		(6,000	)		—
Repayment of long-term debt		—			(731,000	)

Net cash used in financing activities		(6,000	)		(709,000	)
Effect of exchange rate changes on cash and cash equivalents		(416,000	)		457,000

Net decrease in cash and cash equivalents		(4,230,000	)		(32,028,000	)
Cash and cash equivalents, beginning of period		21,635,000			93,408,000

Cash and cash equivalents, end of period	$	17,405,000		$	61,380,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid		—		$	184,000
Income taxes paid		—		$	392,000
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES
Accrued costs for acquisitions		—		$	5,576,000
Shares issued for acquisitions		—		$	4,639,000

See accompanying notes to Unaudited Condensed Consolidated Financial Statements.

STARMEDIA NETWORK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR MARCH 31, 2002

1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

The accompanying condensed consolidated financial statements include the accounts of StarMedia Network, Inc. and its wholly-owned subsidiaries (collectively, the "Company"). All intercompany account balances and transactions have been eliminated in consolidation. StarMedia Network, Inc. was incorporated under Delaware law in March 1996. The Company, after a significant change in business strategy during the second half of 2001, is now principally engaged in providing mobile Internet software and application solutions to wireless telephone operators businesses targeting Spanish- and Portuguese-speaking audiences worldwide, described herein as the "mobile solutions business" or "mobile internet solutions". The Company's mobile Internet solutions allow users to access and receive Internet content, tools and applications through wireless devices, such as pagers, cellular phones, PCS handsets and personal digital assistants, or PDAs. The Company was originally established to develop Internet sites tailored specifically to the interests and needs of Spanish and Portuguese speakers, selling advertising to advertisers seeking to reach its user base, and historically derived a majority of its revenues from fees paid by advertisers on its sites, described herein as the "Internet media business" or "media solutions business". Although the Company continues to provide Internet media services, these services are no longer an integral part of the Company's business.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2001.

The Company has incurred recurring operating losses and may have insufficient capital to fund all of its obligations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

While management believes that additional financing or proceeds from the sale of the Company's Internet media services business will be available, there can be no assurance that the Company will obtain such additional capital or that such additional financing will be sufficient for the Company's continued existence. Furthermore, there can be no assurances that the Company will be able to generate sufficient revenues from the operation of the mobile solutions business to meet the Company's obligations.

2. RESTATEMENT OF FINANCIAL STATEMENTS

The Company, in consultation with its independent accountants, determined to restate its audited consolidated financial statements for the year ended December 31, 2000, which includes adjustments to

the fiscal quarters ended March 31, June 30, September 30, and December 31, 2000, and its unaudited consolidated financial statements for the quarters ended March 31 and June 30, 2001, respectively, and its audited consolidated financial statements for the fiscal year ended December 31, 2000.

The Company initially announced its intention to restate these consolidated financial statements on November 19, 2001. That announcement related to the preliminary conclusion of a Special Committee of the Board of Directors that approximately $10,000,000 in revenues was improperly recognized by two of the Company's Mexican subsidiaries during the period October 1, 2000 through June 30, 2001. Subsequent to that announcement, the Special Committee authorized the Company's management to undertake an additional investigation in order to confirm whether any additional accounting irregularities occurred during the periods in question.

The Company's restatements of its audited consolidated financial statements for the fiscal year ended December 31, 2000 and the quarters therein and its unaudited consolidated financial statements for the quarters ended March 31, 2001 and June 30, 2001 contain adjustments that fall into five categories. The first category of adjustments arise from the independent investigation conducted by a Special Committee of the Board of Directors and referred to in the Company's November 19, 2001 announcement. The findings of the Special Committee's investigation indicate that the Company improperly recognized certain revenues and pre-paid expenses. The majority of these revenues and pre-paid expenses were recognized by its Mexican subsidiary, SMN de Mexico (d/b/a StarMedia Mexico). The remainder was recognized by its other Mexican subsidiary, AdNet, S.A. de C.V. ("AdNet"). The transactions in question involved transactions in which StarMedia Mexico and AdNet sold advertising to third parties with the assistance of two former shareholders of AdNet and, at the same time, made payments to such former shareholders in apparent anticipation of future services rendered, which payments were booked as pre-paid expenses. Based in part on the failure to receive confirmations of sales from the third party purchasers of advertising and the failure to substantiate the delivery and value of services that were pre-paid, the Special Committee determined to restate such transactions.

The other categories of adjustments arise from management's additional investigation to confirm the accuracy of the consolidated financial statements to be restated based on the Special Committee's investigation. The findings of management's investigation indicate that the following accounting regularities occurred in addition to those identified by the independent investigation conducted by the Special Committee:

(A) The Company improperly recognized approximately $9.8 million of revenues and related expenses that should have been classified as barter transactions in accordance with U.S. GAAP. These revenues and expenses were all recognized by AdNet, and also involved sales of advertising made with the assistance of AdNet's former shareholders and payments made to such former shareholders in consideration for advertising and other services rendered by them. The revenues and related expenses were originally recognized as unrelated cash transactions. However, upon review of such transactions during the additional investigation management determined that they should have more appropriately been classified as barter revenues under U.S. GAAP because the former shareholders of AdNet and AdNet's management understood that certain transactions where the Company was purchasing advertising and selling advertising, in the aggregate, were linked and the amount of the payments made to shareholders of AdNet for the services rendered

by them roughly matched the amount of revenues received by AdNet for sales made to its customers with the assistance of the former AdNet shareholders. As a result of the classification of these transactions as barter, they became subject to the provisions of EITF 99-17 which sets forth certain additional criteria applicable to the recognition of barter revenues. For example, advertising-for-advertising barter revenues can only be recognized to the extent that the value and amount of such revenues for similar services is matched by an equal amount of cash revenues for similar services during the period in question. When this test was applied to the AdNet revenues reclassified as barter, the requirements to recognize most of the reclassified revenue pursuant to EITF 99-17 were not met. Consequently the amount of the corresponding barter revenues and related expenses recognized by the Company were less than the amount of the cash revenues originally recognized by $9.8 million.

(B) The Company improperly recognized approximately $7.5 million of revenues and related expenses from a number of sales that provided for future contingencies, were not appropriately authorized by the customer, or for some other reason should not have been recognized. Typically, these transactions involved arrangements, such as conditions to payment obligations, which were reached between clients and lead sales people of the Company and which management learned of during the course of its additional investigation to confirm the accuracy of the Company's consolidated financial statements. Management determined that if these arrangements had been considered as part of the terms and conditions of the transactions that generated the revenues in question, then such revenues would not have been permitted to be recognized under U.S. GAAP.

(C) The Company improperly failed to write down approximately $1.2 of certain assets at March 31, 2001 upon the shutting down of a subsidiary that that Company had earlier acquired as part of its broadband Internet strategy. Although this subsidiary was shut down as of the end of the first quarter of 2001, its value was not written off in that period.

(D) The final category primarily consisted of business taxes that were incorrectly recognized as revenue in Brazil when a liability to the Government existed for these taxes and the reversal of an earn-out contingency that after further review the Company realized it had not incurred and was not obligated to settle with future shares.

As a result of the restatement, the consolidated financial statements of the Company have been restated as summarized below (in thousand except per share amounts):

	For the period ended March 31, 2001
	As previously Reported			As restated
Consolidated Statement of Operations:
Revenues	$	16,039		$	8,871
Sales and marketing		19,664			11,352
Bad debt expense		—			6,120
General and administrative		7,674			9,158
Loss from impairment of fixed assets		—			1,153
Total operating expenses		48,334			48,779
Loss from operations		(32,295	)		(39,908	)
Interest expense		(184	)		(75	)
Loss before provision for income taxes		(31,139	)		(38,643	)
Provision for income taxes		(87	)		—
Net Loss		(31,226	)		(38,643	)
Basic and diluted net loss per Common Share	$	(0.46	)	$	(0.57	)

For additional information concerning the Company's consolidated financial results, as restated, see the Company's selected restated consolidated financial information data and Management's Discussion and Analysis of Financial Condition and Results of Operations.

Management believes that it has made all the adjustments considered necessary as a result of the special committee's investigation and management's own investigation into prior periods financial statements. Management further believes that the Company's consolidated financial statements for the fiscal quarters ended March 31, June 30, September 30, and December 31, 2000; March 31 and June 30, 2001 and for the fiscal year ended December 31, 2000, as restated, include all adjustments necessary for a fair presentation of the Company's financial position and results of operations for such periods.

3. BARTER TRANSACTIONS

A portion of the Company's revenues are derived from barter transactions (agreements whereby the Company trades advertising on its Network or services in exchange for advertising from unrelated parties). Barter advertising revenues and expenses are recognized in accordance with Emerging Issues Task Force Issue No. 99-17, "Accounting for Barter Advertising". Barter service revenues and expenses are recognized in accordance with Accounting Principals Board Opinion No. 29, "Accounting for Non-monetary Transactions". Revenues from barter transactions are recognized during the period in which the advertisements are displayed on the Company's network or the services are rendered. Barter expense is recognized when the Company's advertisements are run by the unrelated party, which is typically the same period when the barter revenues are recognized. For the three months ended March 31, 2002 and 2001, revenue derived from advertising barter transactions were approximately $319,000 and $3.1 million, respectively.

4. FOREIGN CURRENCY AND INTERNATIONAL OPERATIONS

The functional currency of the Company's active subsidiaries in Argentina, Brazil, Chile, Mexico, Spain and Colombia is the local currency. The financial statements of these subsidiaries are translated to U.S. dollars using period-end exchange rates for assets and liabilities, and average rates for the period for revenues and expenses. Translation gains and losses are deferred and accumulated as a component of stockholders' (deficit) equity. The functional currency of the Company's Venezuelan subsidiary which in a highly inflationary is the U.S. dollar. Accordingly, the U.S. dollar is the functional currency, and monetary assets and liabilities are translated using the current exchange rate in effect at the period-end date, while nonmonetary assets and liabilities are translated at historical rates. Operations are generally translated at the weighted average exchange rate in effect during the period. The resulting foreign exchange gains and losses are recorded in the consolidated statement of operations.

5. STOCKHOLDERS' (DEFICIT) EQUITY

In May 2001, the Company issued 1,431,373 shares of its Series A Convertible Preferred Stock at a price per share of $25.50 to Bell South Enterprises, Inc. ("BellSouth") and certain other investors resulting in total proceeds of approximately $35.1 million to the Company, net of issuance costs of approximately $1,400,000 (the "BellSouth Investment"). These shares are convertible into 14,313,730 shares of the Company's common stock at any time at the option of the holder. After 60 months from the date of issuance, the Company shall redeem the Series A Preferred Stock for cash or shares of the Company's common stock, in an amount equal to $36.5 million, plus accrued dividends thereon. The carrying value of the Series A Convertible Preferred Stock is being accreted up to its redemption value over 60 months using the effective interest method. Such accretion was $73,000 during the quarter ended March 31, 2002. Dividends accrue at 6% per annum and totaled approximately $547,000 during the quarter ended March 31, 2002.

During the quarter ended March 31, 2002, the Company repurchased 947 shares of its common stock in connection with the termination agreement of a certain employee.

6. STOCK OPTIONS

In connection with the granting of stock options in 1998 and the exchange of non-qualified options to incentive stock options, the Company recorded deferred compensation of approximately $19,500,000. In connection with the granting of stock options in 1999, the Company recorded additional deferred compensation of approximately $6,400,000. Deferred compensation is adjusted quarterly for exercises, cancellations and terminations and is being amortized for financial reporting purposes over the vesting period of the options. The amounts recognized as expense during the three-month period ended March 31, 2002 and March 31, 2001 were approximately $14,000 and $715,000, respectively.

Diluted net loss per share does not include the effect of options and warrants to 15,822,528 and 23,399,256 shares of common stock at March 31, 2002 and 2001, respectively. Diluted net loss per share for the three-months ended March 31, 2002 also does not include the effect of 14,313,730 shares and 708,824 shares of common stock issuable upon the conversion of preferred stock and accrued dividends on preferred stock, respectively, on an "as if converted" basis, as the effect of their inclusion is antidilutive.

7. RESTRUCTURING AND OTHER CHARGES

In May 2001, the Company announced a restructuring, the purpose of which was to realign the Company's business operations and reduce its operational overhead. In connection with such restructuring, the Company recorded during the three months ended March 31, 2002 aggregate charges of approximately $347,000, which includes severance payments to employees of the Company. The following table details the changes to restructuring costs during the three months ended March 31, 2002.

				Changes during the three month period
		Accrual bal at 12/31/01		Restructuring Charge		Cash Payment		Non-Cash Adjustment		Accrual bal at 3/31/02
Severance Costs		1,000,000		347,000		(1,159,000	)	—		188,000

The following table details the number of employees terminated during the three months ended March 31, 2002, their location and department.

	Argentina	Brazil	Chile	Columbia	Mexico	Uruguay	USA	Venezuela	Total
Product & technology	—	18	—	—	9	5	12	—	44
Sales & marketing	—	4	1	2	10	—	12	1	30
General & administrative	1	2	1	—	2	2	9	—	17

	1	24	2	2	21	7	33	1	91

8. RELATED PARTY TRANSACTIONS

BELLSOUTH

In May 2001, the Company entered into an agreement with BellSouth to create multi-access portals in Latin America (the "BellSouth Strategic Agreement"). Under the terms of the five-year agreement, the Company will design and service the multi-access portals and mobile applications and provide content, software application integration and support to BellSouth's operating companies in Latin America. BellSouth will supply wireless communications, marketing of services and billing capabilities. The two companies will share revenues generated by the new multi-access portals. All revenues associated with design and maintenance activities and the technology licenses are being recognized ratably over the life of the agreement, while the user fees and transaction revenues are being recognized when the services are rendered.

In addition, in connection with the BellSouth Strategic Agreement (see Note 5), the Company agreed to issue warrants to BellSouth to purchase up to 4,500,000 shares of the Company's common stock, with exercise prices ranging from $4.55 to $8.55 per share that vest in May 2002 and expire during the period from May 2005 through May 2007. These warrants were valued, by an independent appraiser, at approximately $2.2 million and are being amortized over 60 months. During August 2001, the Company issued 251,172 shares of the Company's common stock valued at $500,000 to its placement agent "JP Morgan Ventures Corporation" in connection with the aforementioned financing. Under the terms of the agreement with "JP Morgan Ventures Corporation," if the Company does not have in place an effective registration statement covering these shares by November 30, 2001, "JP Morgan Ventures Corporation" will have the right to cause the Company to repurchase such shares for $500,000. The value of these shares has been treated as a reduction of the carrying value of the

Series A Convertible Preferred Stock and, since the Company has not yet filed such registration statement, has been included in accrued expenses in the accompanying balance sheet.

For the period ended March 31, 2002, the Company recognized $200,000 in revenue, net of amortization for the warrants, in connection with the BellSouth Strategic Agreement.

9. COMPREHENSIVE LOSS

Total comprehensive loss was approximately $16.3 million and $38.8 million for the three months ended March 31, 2002, and three months ended March 31, 2001, respectively.

10. NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 41 also includes guidance on the initial recognition and measurement of goodwill and other intangible assets arising from business combinations completed after June 30, 2001. SFAS No. 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. The impact of adopting Statement 142 was to decrease the net loss and net loss per share by $291,000 and $.004, respectively, for the three months ended March 31, 2002. SFAS No. 142 requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will continue to be amortized over their estimated useful lives. Additionally, SFAS No. 142 requires that goodwill included in the carrying value of equity method investments no longer be amortized. The adoption of this statement had no material effect on the Company's financial position and results of operations.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations for a Disposal of a Segment of a Business. The adoption of this statement had no material effect on the Company's financial position and results of operations.

11. LEGAL PROCEEDINGS

In August 2001, the Company, three of its executive officers and each of the underwriters who participated in the Company's May 25, 1999 initial public offering were named as defendants in three class action complaints filed in the United States District Court for the Southern District of New York: Earl Arneson v. StarMedia Network, Inc, et al; John R. Longman v. StarMedia Network, Inc., et al; and BH Holdings LLC v. StarMedia Network, Inc., et al. The complaints, which are substantially identical, each seek unspecified damages for alleged violations of Sections 11, 12 and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder in connection with the Company's initial public offering. The complaints allege that the underwriters charged the Company excessive commissions and inflated transaction fees not disclosed in the registration statement and allocated shares of the Company's initial public offering to favored customers in exchange for purported promises by such customers to purchase additional shares in the aftermarket, thereby allegedly inflating the market price for the Company's common stock. These actions have been consolidated with hundreds of other securities class actions commenced against more than 300 companies and approximately 40 investment banks in which plaintiffs make substantially similar allegations as those made against the Company with respect to the initial public offerings at issue in those cases. All of these actions have been consolidated under the caption In re: Initial Public Offering Securities Litigation, 21 MC 92 (SAS). The judge in the consolidated action has adjourned without date the time for all defendants to respond to the complaints.

On November 19, 2001, the Company announced to the public that it had commenced an investigation into the facts and circumstances related to certain accounting irregularities related to Mexican subsidiaries and that a restatement (the "Restatement") of its audited financial statements for the year ended December 31, 2000 and its unaudited financial statements for the quarters ended March 31, 2001 and June 30, 2001 would likely be necessary. The Company informed the SEC of this matter concurrently with its public announcement. Subsequently, the SEC has informed the Company that it has opened an investigation into this matter. The SEC investigation is on-going.

In late 2001 and early 2002, eleven lawsuits were filed against the Company in the Southern District of New York in connection with the Company's announcement relating to the restatement referred to above. A lead plaintiff for the class and lead plaintiff's counsel were subsequently selected and a motion filed to consolidate the various claims. The Consolidated Amended Complaint was filed on May 31, 2002 in the Southern District of New York under the caption In re StarMedia Network, Inc. Securities Litigation 01 Civ. 10556 (S.D.N.Y.). The lead plaintiffs and all defendants have executed a settlement agreement that resolves all claims in the consolidated action. The settlement amount will be paid by the Company's directors and officers' liability insurance carrier. This settlement agreement is subject to review and ratification by the Honorable Denny Chin of the United States

District Court for the Southern District of New York. A list of the eleven lawsuits before consolidation follows:

CASE NAME		DATE FILED
Kramon v. StarMedia Network, et al.		November 20, 2001
Stourbridge Ltd., et al. v. StarMedia Network, et al.		November 20, 2001
Rennel Trading Corp. v. StarMedia Network, et al.		November 21, 2001
Ehrenreich v. StarMedia Network, et al.		November 27, 2001
Howe v. StarMedia Network, et al.		November 27, 2001
Mayper v. StarMedia Network, et al.		November 28, 2001
Dorn v. StarMedia Network, et al.		December 3, 2001
Hindo v. StarMedia Network, et al.		December 12, 2001
Mather v. StarMedia Network, et al.		December 19, 2001
Nulf v. StarMedia Network, et al.		December 19, 2001
Vasko v. StarMedia Network, et al.		January 7, 2002

In April 2002, AT&T Corp filed a claim in the United States District Court for the Southern District of New York seeking payment from the Company for telecommunications services rendered to the Company in the amount of approximately $337,000, and in June 2002 AT&T amended that complaint to increase the amounts claimed to approximately $1,400,000. In addition, for over a year the Company has engaged in periodic discussions with AT&T regarding the Company's alleged commitments to purchase a variety of services from AT&T, and in April 2002 had received correspondence from AT&T alleging that approximately a total of $1,100,000 was payable by the Company. The Company denies that it owes most of the amounts alleged to be payable by AT&T. The parties have commenced settlement discussions.

In October 2001, Fausto Zapata, formerly President of SMN de Mexico, S de RL, filed a notice in the applicable Labor Courts in Mexico City alleging that the Company failed to make payments due to him under an employment agreement following his termination by the Company. The amounts claimed by Mr. Zapata exceed 8.5 million Pesos, or approximately $900,000. The Company maintains that it owes Mr. Zapata solely the minimum amounts required to be paid following termination of his at-will employment, which the Company calculates to be approximately 600,000 Mexico Pesos, or approximately $65,000.

In January 2002 Mr. Carlos Ponce filed a claim in the U.S. District Court in the Southern District Court of Florida in connection with allegations by Mr. Ponce that the Company exceeded the scope of a license to use his image in connection with an advertising campaign. Mr. Ponce claims violations of common law and statutory rights of publicity under Florida law, unfair business practices, misappropriation, and also asserts claims under the Lanham Act. Mr. Ponce seeks damages allegedly in excess of $1,000,000, treble damages, punitive damages, and injunctive and other equitable relief. The Company filed an answer to the complaint in February 2002. In June 2002 the judge in this case issued an order to show cause directing the plaintiff to show cause why the case should not be dismissed. Mr. Ponce has responded and delivered to the Company a request to produce documents. The

Company denies Mr. Ponce's claims and believes that even if such claims were proven, the damages sought are grossly overstated, and that the Lanham Act claim may be legally deficient.

In May 2002 the Company was notified that Digital Impact has presented a demand for arbitration seeking payment of approximately $594,000 allegedly owed to Digital Impact by the Company in connection with the Company's termination of an agreement between Digital Impact and the Company.

In June 2001, the Company commenced an action entitled StarMedia Network, Inc. v. Patagon.com International, Inc. in the Commercial Division of the Supreme Court of the State of New York, New York County against Patagon.com International, Inc. ("Patagon"). The complaint seeks to recover compensatory and consequential damages in an amount not less than $4,250,000 for Patagon's breach of a Web Content Agreement pursuant to which the Company and Patagon hosted a co-branded website linked to the Company's internet property StarMedia.com through its "Money Channel." The complaint alleges that Patagon breached the Web Content Agreement by wrongfully and prematurely terminating the agreement. In August 2001, Patagon filed an Answer and Counterclaim (the "Counterclaim") to the complaint in which Patagon seeks to recover unspecified damages on claims for breach of contract and breach of the duty of good faith and fair dealing premised upon the Company's alleged breach of the Web Content Agreement. Also in August 2001, the Company served its Answer and Affirmative Defenses to the Counterclaim in which it denied all of the material allegations of the Counterclaim and asserted affirmative defenses to the claims asserted therein. Discovery is pending in this case.

In September 2001, Justin K. Macedonia, the then General Counsel of the Company, filed a notice of intention to arbitrate against the Company, asserting that the Company was obligated to make tax indemnity payments to him in the amount of $1,700,000. The Company denied any obligation to make such payment and asserted counterclaims against Mr. Macedonia. Mr. Macedonia's employment with the Company terminated in November 2001. The arbitration hearing was concluded in March 2002. In May 2002 the arbitrator issued a final judgment denying Mr. Macedonia's claims, as well as the Company's counterclaims.

In December 2000, a consulting company filed suit against the Company in the New York Supreme Court claiming unpaid fees of approximately $2,300,000. In October 2001, pursuant to a Settlement Agreement, the Company and the consulting company agreed to settle the lawsuit. The Company agreed to pay the consulting company an amount within the range that the Company had previously reserved for such lawsuit in its financial statements. The suit was settled for an amount not material to the Company. The Company has paid such amount and such lawsuit has been dismissed with prejudice.

The Company is subject to legal proceedings and claims in the ordinary course of business from time to time, including claims of alleged infringement of trademarks, copyrights and other intellectual property rights, and a variety of claims arising in connection with our e-mail, message boards and other communications and community features, such as claims alleging defamation and invasion of privacy.

The Company intends to vigorously defend the aforementioned claims that are threatened or pending against it but believes that an adverse outcome with respect to one or more of these matters could have a material adverse effect on the financial condition of the Company.

12. SUBSEQUENT EVENT

On July 3, 2002 the Company sold substantially all of the assets associated with starmedia.com, the Company's Spanish- and Portuguese-language portal, and LatinRed, the Company's Spanish language online community, to eresMas Interactive S.A. ("EresMas") for $8,000,000 in cash. In addition, in order to facilitate the transfer of these assets, the Company agreed to provide transitional services to EresMas under a Transition Licensing Agreement. The Company will recognize a loss of approximately $500,000 from the aforementioned sale. The assets sold comprised substantially of fixed assets and intangible assets. As part of the terms of the sale to Eresmas, the Company has agreed to cease using the "StarMedia" brand commercially and, subject to shareholder approval, to amend its certificate of incorporation to change its name. Henceforth, the Company will operate commercially under the name "CycleLogic."

For the three months ended March 31, 2002, we received net cash of $12.1 million from investing activities, which includes $13.0 million in cash from sale of investment in KD Sistemas, partially offset by $308,000 for purchase of fixed assets, and $587,000 in purchase of other assets. For the three months ended March 31, 2001, we used $7.9 million in investing activities, including $7.2 million in purchase of fixed assets, $2.5 million in advances to officers, partially offset by $1.9 million in cash provided by release of letters of credit.

Net cash used in financing activities was $6,000 and $709,000 for the three months ended March 31, 2002 and 2001, respectively. Net cash used by financing activities during the three months ended March 31, 2002 was for acquisition of treasury shares. Net cash used by financing activities during the three months ended March 31, 2001 consisted primarily of repayment of long-term debt.

Our principal commitments consist of obligations outstanding under operating leases.

We have experienced a substantial decrease in our capital expenditures this past year and operating lease arrangements have been reduced significantly.

While we have reduced operating expenses significantly, through a reduction of our work force and other operating costs, our current cash and cash equivalents may not be sufficient to meet our anticipated cash needs for working capital and capital expenditures for the next 12 months. If working capital is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or debt securities or establish an additional credit facility. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. The incurrence of additional indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. While management believes that additional financing or proceeds from the sale of the Company's Internet media services business will be available, there can be no assurance that the Company will obtain such additional capital or that such additional financing will be sufficient for the Company's continued existence. Furthermore, there can be no assurances that the Company will be able to generate sufficient revenues from the operation of the mobile solutions business to meet the Company's obligations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

CRITICAL ACCOUNTING ESTIMATES

The Company's discussion and analysis of its financial condition and results of operations are based on the Company's condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue, bad debts, intangible assets, restructuring, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue is recognized when the earnings process is complete, as evidenced by an agreement between the customer and the Company, when delivery has occurred or services have been rendered and when collection is probable. The recognition of revenue in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of revenue. We recognize revenue when earned as services are provided throughout the life of each contract with a customer. The majority of our revenues are invoiced on a monthly basis. Estimates related to the recognition of revenue include the recognition of barter revenue

and the allocation of revenue across the various deliverables of multiple element revenue arrangements. We record deferred revenue for billings in excess of revenues recognized.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company uses the direct write-off method to record bad debt expense. The Company performs regular analyses on its accounts receivable balances and determines what accounts receivable to write-off after information is received and indications exist that the specific account receivable is no longer collectible. Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment's current carrying value, thereby possibly requiring an impairment charge in the future.

The Company has significant tangible and intangible assets on its balance sheet, primarily fixed assets and goodwill. The assignment of useful lives to the fixed assets and the valuation and classification of intangible assets involves significant judgments and the use of estimates. The testing of these tangible and intangibles under established accounting guidelines for impairment also requires significant use of judgment and assumptions. The Company's assets are tested and reviewed for impairment on an ongoing basis under the established accounting guidelines. Changes in business conditions or changes in the decisions of management as to how assets will be deployed in the Company's operations could potentially require future adjustments to asset valuations.

The Company periodically records the estimated impact of various conditions, situations or circumstances involving uncertain outcomes. The Company accounts for these contingencies as prescribed by SFAS No. 5 "Accounting for Contingencies." The Company uses its best judgment to determine the estimate of these contingencies. The Company adjusts these reserves to account for ongoing issues and changes in circumstances.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

COLLECTION RISK

Our accounts receivable are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks.

INTEREST RATE RISK

Our investments are classified as cash and cash equivalents with original maturities of three months or less. Therefore, changes in the market's interest rates do not affect the value of the investments as recorded by us.

FOREIGN CURRENCY EXCHANGE RISK

We do not hedge our exposure to foreign currency exchange risk. We are subject to exchange rate fluctuations, which may be a significant risk, because of our operations in Latin America.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

District Court for the Southern District of New York. A list of the eleven lawsuits before consolidation follows:

Case Name		Date Filed
Kramon v. StarMedia Network, et al.		November 20, 2001
Stourbridge Ltd., et al. v. StarMedia Network, et al.		November 20, 2001
Rennel Trading Corp. v. StarMedia Network, et al.		November 21, 2001
Ehrenreich v. StarMedia Network, et al.		November 27, 2001
Howe v. StarMedia Network, et al.		November 27, 2001
Mayper v. StarMedia Network, et al.		November 28, 2001
Dorn v. StarMedia Network, et al.		December 3, 2001
Hindo v. StarMedia Network, et al.		December 12, 2001
Mather v. StarMedia Network, et al.		December 19, 2001
Nulf v. StarMedia Network, et al.		December 19, 2001
Vasko v. StarMedia Network, et al.		January 7, 2002

In April 2002, AT&T Corp filed a claim in the United States District Court for the Southern District of New York seeking payment from the Company for telecommunications services rendered to The Company in the amount of approximately $337,000, and in June 2002 AT&T amended that complaint to increase the amounts claimed to approximately $1,400,000. In addition, for over a year the Company has engaged in periodic discussions with AT&T regarding the Company's alleged commitments to purchase a variety of services from AT&T, and in April 2002 had received correspondence from AT&T alleging that approximately a total of $1,100,000 was payable by the Company. The Company denies that it owes most of the amounts alleged to be payable by AT&T. The parties have commenced settlement discussions.

In May 2002 the Company was notified that Digital Impact has presented a demand for arbitration seeking payment of approximately $594,000 allegedly owned to Digital Impact by the Company in connection with the Company's termination of an agreement with Digital Impact and the Company.

recover compensatory and consequential damages in an amount not less than $4,250,000 for Patagon's breach of a Web Content Agreement pursuant to which the Company and Patagon hosted a co-branded website linked to the Company's internet property StarMedia.com through its "Money Channel." The complaint alleges that Patagon breached the Web Content Agreement by wrongfully and prematurely terminating the agreement. In August 2001, Patagon filed an Answer and Counterclaim (the "Counterclaim") to the complaint in which Patagon seeks to recover unspecified damages on claims for breach of contract and breach of the duty of good faith and fair dealing premised upon the Company's alleged breach of the Web Content Agreement. Also in August 2001, the Company served its Answer and Affirmative Defenses to the Counterclaim in which it denied all of the material allegations of the Counterclaim and asserted affirmative defenses to the claims asserted therein. Discovery is pending in this case.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a): The following exhibits are filed with this report:

Exhibit Number		Description
99.1		Certification of CEO/CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b): Reports on Form 8-K:

A Form 8-K was filed on January 8, 2002, reporting sale Cade?, a popular Brazilian search engine and web directory acquired in 1999, to Yahoo! Brasil, a property of Yahoo! Inc. (Nasdaq:YHOO), a global Internet communications, commerce and media company. The financial terms of the transaction were not disclosed.

A Form 8-K was filed on January 25, 2002, reporting the status of the investigation by the Company's Special Committee and delisting by The Nasdaq National Market. No financial statements were filed with this Current Report.

ITEM 7. SIGNATURES

Pursuant to the requirements 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.

Date: February 12, 2003

		STARMEDIA NETWORK, INC.
		By:	/s/ ANA M. LOZANO-STICKLEY Ana M. Lozano-Stickley Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

CERTIFICATION PURSUANT TO RULE 13A-14
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jose Manuel Tost, certify that:

1.: I have reviewed this amended quarterly report on Form 10-Q/A of StarMedia Network, Inc.;
2.: Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and
3.: Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

Date: February 12, 2003

/s/ JOSE MANUEL TOST

    Jose Manuel Tost
    President
    StarMedia Network, Inc.

CERTIFICATION PURSUANT TO RULE 13A-14
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ana M. Lozano-Stickley, certify that:

1.: I have reviewed this amended quarterly report on Form 10-Q/A of StarMedia Network, Inc.;
2.: Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and
3.: Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

Date: February 12, 2003

/s/ ANA M. LOZANO-STICKLEY

    Ana M. Lozano-Stickley
    Chief Financial Officer
    StarMedia Network, Inc.

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STARMEDIA NETWORK, INC. AND SUBSIDIARIES INDEX
EXPLANATORY NOTE
PART I FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STARMEDIA NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
STARMEDIA NETWORK, INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
STARMEDIA NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
STARMEDIA NETWORK, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR MARCH 31, 2002

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

ITEM 7. SIGNATURES