jobs, an increase in accounts receivable of $8.5 million due to the increase in revenues offset by net income of $4.8 million, an increase in deferred revenues of $4.5 million due to timing differences between project billings and revenue recognition milestones resulting from specific customer contracts and a non-cash item representing depreciation and amortization expense of $2.7 million primarily related to the network operations center and satellite earth station equipment. Included in our operating cash flows was a $4.0 million receipt related to a settlement reached in July 2004 with a major customer.

Net cash used in investing activities during fiscal year ended June 30, 2005 was $0.6 million, which related to the purchase of $2.9 million of fixed assets primarily for our network operations center in order to support our existing service base and develop new service offerings, offset by a decrease in restricted cash of $1.9 million based on certificates of deposit issued as collateral for specific projects and proceeds received of $0.3 million from the sale of available-for-sale securities.

Net cash provided by financing activities during fiscal year ended June 30, 2005 was $2.3 million which related to $1.3 million of proceeds from the exercise of warrants, $0.9 million of proceeds from the exercise of stock options and $0.2 million of proceeds from the sale of common stock in connection with the employee stock purchase plan.

We have a credit agreement in place which provides for a working capital credit facility of up to $16.5 million, which expires in October 2005. We may be advanced up to 80% of eligible accounts receivable and 100% of unrestricted cash and cash equivalents at the bank. The line of credit bears interest at 7.5% per annum or the prime rate plus 1.5% per annum, and is collateralized by a first security interest on all of our personal property. The credit agreement allows us to borrow and apply letters of credit against the availability under the line of credit. In addition, the credit agreement contains certain financial and other covenants, deposit requirements, monthly reporting provisions and other requirements, as defined in the credit agreement, with which we were in compliance at June 30, 2005. As of June 30, 2005, no borrowings were outstanding under this credit facility, however, there were standby letters of credit of approximately $14.1 million, which were applied against and reduced the amounts available under this credit facility.

We lease satellite space segment services and other equipment under various operating lease agreements, which expire in various years through fiscal 2009. Future minimum lease payments due on these leases through June 30, 2006 are approximately $8.8 million.

We expect that our cash and working capital requirements for operating activities will increase as we continue to implement our business strategy. Management anticipates additional working capital requirements for work in progress for orders as obtained and that we may experience negative cash flows due to quarter to quarter operating performance.

GNSC has had, and we expect it will continue to have, working capital and additional capital expenditure requirements, which have, and may continue to put increased pressure on our capital resources.

Our future capital requirements will depend upon many factors, including the success of our marketing efforts in the ground segment systems, networks and data communications services business, the nature and timing of customer orders and the level of capital requirements related to the expansion of our service offerings. Based on current plans, we believe that our existing capital resources will be sufficient to meet working capital requirements at least through June 30, 2006. However, we cannot assure you that there will be no unforeseen events or circumstances that would consume available resources significantly before that time. For example, future events occurring in response to the hostilities in Iraq and Afghanistan, or in connection with any armed conflict, including, without limitation, future terrorist attacks against the United States or its allies or military or trade or travel disruptions impacting our ability to sell and market our products and services in the United States and internationally may impact our results of operations. In particular, we currently have two significant contracts with the Ministry of Communication of the Islamic Transitional State of Afghanistan. Unexpected events negatively impacting international commerce, including additional conflicts in the Middle East, could defer our ability to close contracts with international customers. Additional funds may not be available when needed and, even if available, additional funds may be raised through financing arrangements and/or the issuance of preferred or common stock or convertible securities on terms and prices significantly more favorable than those of

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the currently outstanding common stock, which could have the effect of diluting or adversely affecting the holdings or rights of our existing stockholders. If adequate funds are unavailable, we may be required to delay, scale back or eliminate some of our operating activities, including, without limitation, the timing and extent of our marketing programs, capital expenditures and research and development activities and we may be required to reduce headcount. We cannot assure you that additional financing will be available to us on acceptable terms, or at all.

Contractual Obligations and Commercial Commitments

At June 30, 2005, we had contractual obligations and commercial commitments as follows (in thousands):

								Payments Due by Period
				Total				Less than 1 year				1-3 years				4-5 years				After 5 years
Contractual Obligations
Operating leases				$	16,732			$	8,839			$	7,230			$	663			$	—
Total contractual cash obligations				$	16,732			$	8,839			$	7,230			$	663			$	—

								Amount of Commitment Expiration Per Period
				Total Amounts Committed				Less than 1 year				1-3 years				4-5 years				Over 5 years
Other Commercial Commitments
Standby letters of credit				$	14,143			$	7,456			$	6,687			$	—			$	—
Total commercial commitments				$	14,143			$	7,456			$	6,687			$	—			$	—

Related Party Transactions

During January 2003, pursuant to a letter agreement, we combined the then outstanding loan and advances receivable from an individual who is a former executive officer and a current employee into a $0.3 million promissory note. Under the terms of the letter agreement we will forgive the outstanding principal and interest amounts due on the promissory note in five annual installments beginning in January 2004 so long as the former executive officer remains an employee, subject to the terms of the letter agreement. In March 2005, the Company forgave the second installment under the promissory note.

During fiscal 2002, we advanced $0.3 million to an officer of the Company. On November 12, 2003, the officer sold approximately 61,000 shares of the Company's common stock at a fair market value to the Company in connection with its stock repurchase program. On November 12, 2003, the officer paid approximately $0.3 million to the Company to satisfy all amounts outstanding on the promissory note, together with accrued interest thereon.

Risk Factors

A limited number of customer contracts account for a significant portion of our revenues, and the inability to replace a key customer contract or the failure of the customer to implement its plans would adversely affect our results of operations, business and financial condition.

We rely on a small number of customer contracts for a large portion of our revenue. Specifically, we have agreements with six customers to provide equipment and services, from which we expect to generate a significant portion of our revenues. We derived 20%, 13% and 13% of our revenues in the year ended June 30, 2005 from the Ministry of Communication of the Islamic Transitional State of Afghanistan, the United Nations and Societatea Nationala Radiocomunicatti S.A. in Romania, respectively. All of these projects are in developing countries or areas currently involved in military conflicts. If any key customer is unable to implement its business plan, the market for these customers' services declines, political or military conditions make performance impossible or if all or any of the customers modifies or terminates its agreement with us, and we are unable to replace these contracts, our results of operations, business and financial condition would be materially harmed.

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Risks associated with operating in international markets could restrict our ability to expand globally and harm our business and prospects.

We market and sell our products and services in the United States and internationally. We anticipate that international sales will continue to account for a significant portion of our total revenues for the foreseeable future with a significant portion of the international revenue coming from developing countries, including countries in areas of conflict like Afghanistan. There are a number of risks inherent in conducting our business internationally, including:

•	general political and economic instability in international markets, including the hostilities in Iraq and Afghanistan, could impede our ability to deliver our products and services to customers and harm our results of operations;

•	difficulties in collecting accounts receivable could adversely affect our results of operations;

•	changes in regulatory requirements could restrict our ability to deliver services to our international customers;

•	export restrictions, tariffs, licenses and other trade barriers could prevent us from adequately equipping our network facilities;

•	differing technology standards across countries may impede our ability to integrate our products and services across international borders;

•	protectionist laws and business practices favoring local competition may give unequal bargaining leverage to key vendors in countries where competition is scarce, significantly increasing our operating costs;

•	increased expenses associated with marketing services in foreign countries could affect our ability to compete;

•	relying on local subcontractors for installation of our products and services could adversely impact the quality of our products and services;

•	difficulties in staffing and managing foreign operations could affect our ability to compete;

•	complex foreign laws and treaties could affect our ability to compete; and

•	potentially adverse taxes could affect our results of operations.

These and other risks could impede our ability to manage our international operations effectively, limit the future growth of our business, increase our costs and require significant management attention.

If GNSC does not execute its business strategy or if the market for its services fails to develop or develops more slowly than we expect, our results of operations will be harmed.

GNSC's future revenues and results of operations are dependent on its execution of its business strategy and development of the market for its current and future services. Despite the settlement agreements which modified and reduced our satellite bandwidth obligations, we cannot assure you that the transponder space will be efficiently and substantially utilized or that an increase in orders will be realized. GNSC has had, and we expect will continue to have, cash requirements, which have and will decrease our cash resources. If GNSC does not efficiently and substantially utilize its transponder space capacity and increase its level of orders, its cash requirements may increase and our results of operations will be harmed. In addition, significant capital expenditures have been required as we have built our VoIP and video broadcast service offerings. If our VoIP and video broadcast service offerings are not accepted, or if the market fails to grow, we cannot assure you that we will be able to realize an appropriate return on these capital expenditures.

In the event of a catastrophic loss affecting our operations in Hauppauge, New York our results of operations would be harmed.

GNSC revenues and results of operations are dependant on the infrastructure of the Network Operations Center and the International Teleport at our headquarters in Hauppauge, New York. A

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catastrophic event to this facility or to the infrastructure of the surrounding area would result in significant delays in restoring a majority of the data communications services capabilities. These capabilities permit us to offer an integrated suite of products and services and the incapacity of our communications infrastructure would negatively impact our ability to sell our ground segment systems and networks. This would result in the loss of revenues and adversely effect our business, results of operations and financial condition.

Our markets are highly competitive and we have many established competitors, and we may lose market share as a result.

The markets in which we operate are highly competitive and this competition could harm our ability to sell our products and services on prices and terms favorable to us. Our primary competitors in the satellite ground segment systems and networks market generally fall into two groups: (1) system integrators, like ITT, Data Path, and Global Communication Services, and (2) equipment manufacturers which also provide integrated systems, like Andrew Corporation, Viasat, Alcatel and ND Satcom AG.

In the end-to-end satellite-based enterprise solutions and broadcast services markets, we compete with other satellite communication companies who provide similar services, like Ascent, Globecast, and Convergent Media Systems. In addition, in managed network services we may compete with other communications service providers like Segovia and AT&T, and satellite owners like Panamsat, Loral Skynet, New Skies Satellites N.V. and Intelsat. We anticipate that our competitors may develop or acquire services that provide functionality that is similar to that provided by our services and that those services may be offered at significantly lower prices or bundled with other services. These competitors may have the financial resources to withstand substantial price competition, may be in a better position to endure difficult economic conditions in international markets and may be able to respond more quickly than we can to new or emerging technologies and changes in customer requirements. Moreover, many of our competitors have more extensive customer bases, broader customer relationships and broader industry alliances than we do that they could use to their advantage in competitive situations.

The markets in which we operate have limited barriers to entry, and we expect that we will face additional competition from existing competitors and new market entrants in the future. Moreover, our current and potential competitors have established or may establish strategic relationships among themselves or with third parties to increase the ability of their products and services to address the needs of our current and prospective customers. The potential strategic relationships of existing and new competitors may rapidly acquire significant market share, which would harm our business and financial condition.

If our products and services are not accepted in developing countries with emerging markets, our revenues will be impaired.

We anticipate that a substantial portion of the growth in the demand for our products and services will come from customers in developing countries due to a lack of basic communications infrastructure in these countries. However, we cannot guarantee an increase in the demand for our products and services in developing countries or that customers in these countries will accept our products and services at all. Our ability to penetrate emerging markets in developing countries is dependent upon various factors including:

•	the speed at which communications infrastructure, including terrestrial microwave, coaxial cable and fiber optic communications systems, which compete with satellite-based services, is built;

•	the effectiveness of our local resellers and sales representatives in marketing and selling our products and services; and

•	the acceptance of our products and services by customers.

If our products and services are not accepted, or the market potential we anticipate does not develop, our revenues will be impaired.

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We have had a history of operating losses and negative cash flow. Our negative cash flows may increase as we pursue our business plan and our losses may reoccur, which may strain our capital resources.

Although recently we have had profitable quarters, we have incurred significant net losses since we began operating in August 1994. We incurred net losses of $1.3 million during the fiscal year ended June 30, 2004, and $19.6 million during the fiscal year ended June 30, 2003. As of June 30, 2005 our accumulated deficit was $70.4 million. Our ability to maintain profitability will depend upon our ability to generate significant revenues through new profitable customer contracts and the expansion of our existing products and services, including our data communications services. We cannot assure you that we will be able to obtain new profitable customer contracts or generate significant additional revenues from those contracts or any new products or services that we introduce. We may not be able to sustain or increase our profits on a quarterly or annual basis in the future and the need to finance the growth of our business, either of which will negatively impact our operating cash flows.

We derive a substantial portion of our revenues from fixed-price projects, under which we assume greater financial risk if we fail to accurately estimate the costs of the projects.

We derive a substantial portion of our revenues from fixed-price projects. We assume greater financial risks on a fixed-price project than on a time-and-expense based project. If we miscalculate the resources or time we need for these fixed-price projects, the costs of completing these projects may exceed our original estimates, which would negatively impact our results of operations.

Since sales of satellite communications equipment are dependent on the growth of communications networks, if market demand for these networks declines, our revenue and profitability are likely to decline.

We derive, and expect to continue to derive, a significant amount of revenues from the sale of satellite ground segment systems and networks. If the long-term growth in demand for communications networks does not continue to return from recent depressed levels, the demand for our satellite ground segment systems and networks may decline or grow more slowly than we expect. As a result, we may not be able to grow our business, our revenues may decline from current levels and our results of operations may be harmed. The demand for communications networks and the products used in these networks is affected by various factors, many of which are beyond our control. For example, the uncertain general economic conditions have affected the overall rate of capital spending by many of our customers. Also, many companies have found it difficult to raise capital to finish building their communications networks and, therefore, have placed fewer orders. The economic slowdown resulted in a softening of demand from our customers. We cannot predict the extent to which demand will increase. Further, increased competition among satellite ground segment systems and networks manufacturers has increased pricing pressures. We have seen improvement in the segments we serve, in particular within the U.S. Government and government related entities marketplace, but a future reduction in opportunities from U.S. Government and government related agencies will negatively impact our results of operations.

We depend upon certain key personnel and may not be able to retain these employees. If we lose the services of these individuals or cannot hire additional qualified personnel, our business will be harmed.

Our success also depends to a substantial degree on our ability to attract, motivate and retain other highly-qualified personnel. There is considerable competition for the services of highly-qualified technical and engineering personnel. We may not be able either to retain our current personnel or hire additional qualified personnel if and when needed.

Our future performance depends on the continued service of our key technical, managerial and marketing personnel; in particular, David Hershberg and Kenneth Miller based upon their individual knowledge of the markets in which we operate. The employment of any of our key personnel could cease at any time.

Satellites upon which we rely may malfunction or be damaged or lost.

In the delivery of our data communications services, we lease space segment from various satellite transponder vendors. The damage or loss of any of the satellites used by us, or the temporary or

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permanent malfunction of any of the satellites upon which we rely, would likely result in the interruption of our satellite-based communications services. This interruption could have a material adverse effect on our business, results of operations and financial condition.

We depend on our suppliers, some of which are our sole or a limited source of supply, and the loss of these suppliers could materially adversely affect our business, results of operations and financial condition.

We currently obtain most of our critical components and services from single or limited sources and generally do not maintain significant inventories or have long-term or exclusive supply contracts with our vendors. We have from time to time experienced delays in receiving products from vendors due to lack of availability, quality control or manufacturing problems, shortages of materials or components or product design difficulties. We may experience delays in the future and replacement services or products may not be available when needed, or at all, or at commercially reasonable rates or prices. If we were to change some of our vendors, we would have to perform additional testing procedures on the service or product supplied by the new vendors, which would prevent or delay the availability of our products and services. Furthermore, our costs could increase significantly if we need to change vendors. If we do not receive timely deliveries of quality products and services, or if there are significant increases in the prices of these products or services, it could have a material adverse effect on our business, results of operations and financial condition.

Our network may experience security breaches, which could disrupt our services.

Our network infrastructure may be vulnerable to computer viruses, break-ins, denial of service attacks and similar disruptive problems caused by our customers or other Internet users. Computer viruses, break-ins, denial of service attacks or other problems caused by third parties could lead to interruptions, delays or cessation in service to our customers. There currently is no existing technology that provides absolute security. We may face liability to customers for such security breaches. Furthermore, these incidents could deter potential customers and adversely affect existing customer relationships.

If the satellite communications industry fails to continue to develop or new technology makes it obsolete, our business and financial condition will be harmed.

Our business is dependent on the continued success and development of satellite communications technology, which competes with terrestrial communications transport technologies like terrestrial microwave, coaxial cable and fiber optic communications systems. Fiber optic communications systems have penetrated areas in which we have traditionally provided services. If the satellite communications industry fails to continue to develop, or if any technological development significantly improves the cost or efficiency of competing terrestrial systems relative to satellite systems, then our business and financial condition would be materially harmed.

We may not be able to keep pace with technological changes, which would make our products and services become non-competitive and obsolete.

The telecommunications industry, including satellite-based communications services, is characterized by rapidly changing technologies, frequent new product and service introductions and evolving industry standards. If we are unable, for technological or other reasons, to develop and introduce new products and services or enhancements to existing products and services in a timely manner or in response to changing market conditions or customer requirements, our products and services would become non-competitive and obsolete, which would harm our business, results of operations and financial condition.

We may be unable to raise additional funds to meet our capital requirements in the future.

We believe that our available cash resources will be sufficient to meet our working capital and capital expenditure requirements through at least June 30, 2006. However, our future liquidity and capital requirements are difficult to predict, as they depend on numerous factors, including the success of our existing product and service offerings, as well as competing technological and market developments. We

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may need to raise additional funds in order to meet additional working capital requirements and to support additional capital expenditures. Should this need arise, additional funds may not be available when needed and, even if additional funds are available, we may not find the terms favorable or commercially reasonable. If adequate funds are unavailable, we may be required to delay, reduce or eliminate some of our operating activities, including marketing programs and research and development programs. If we raise additional funds by issuing equity securities, our existing stockholders will own a smaller percentage of our capital stock and new investors may pay less on average for their securities than, and could have rights superior to, existing stockholders.

Unauthorized use of our intellectual property by third parties may damage our business.

We regard our trademarks, trade secrets and other intellectual property as beneficial to our success. Unauthorized use of our intellectual property by third parties may damage our business. We rely on trademark, trade secret and patent protection and contracts, including confidentiality and license agreements with our employees, customers, strategic collaborators, consultants and others, to protect our intellectual property rights. Despite our precautions, it may be possible for third parties to obtain and use our intellectual property without our authorization.

We currently have been granted three patents in the United States, one for remote access to the Internet using satellites, one for satellite communication with automatic frequency control, and one for a monitor and control system for satellite communications networks and the like. We have two other patents pending in the United States, one for implementing facsimile and data communications using Internet protocols and another for a distributed satellite-based cellular network. We currently have one Patent Cooperation Treaty patent application pending for implementing facsimile and data communications using Internet protocols. We also intend to seek further patents on our technology, if appropriate. We cannot assure you that patents will be issued for any of our pending or future patent applications or that any claims allowed from such applications will be of sufficient scope, or be issued in all countries where our products and services can be sold, to provide meaningful protection or any commercial advantage to us. Also, our competitors may be able to design around our patents. The laws of some foreign countries in which our products and services are or may be developed, manufactured or sold may not protect our products and services or intellectual property rights to the same extent as do the laws of the United States and thus make the possibility of piracy of our technology and products and services more likely.

We have filed applications for trademark registration of Globecomm Systems Inc., Globecomm and GSI in the United States and various other countries, and have been granted registrations for some of these terms in the United States, Europe and Russia. We have various other trademarks and service marks registered or pending for registration in the United States and in other countries and may seek registration of other trademarks and service marks in the future. We cannot assure you that registrations will be granted from any of our pending or future applications, or that any registrations that are granted will prevent others from using similar trademarks in connection with related goods and services.

Defending against intellectual property infringement claims could be time consuming and expensive, and if we are not successful, could cause substantial expenses and disrupt our business.

We cannot be sure that the products, services, technologies and advertising we employ in our business do not or will not infringe valid patents, trademarks, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. Prosecuting infringers and defending against intellectual property infringement claims could be time consuming and expensive, and regardless of whether we are or are not successful, could cause substantial expenses and disrupt our business. We may incur substantial expenses in defending against these third party claims, regardless of their merit. Successful infringement claims against us may result in substantial monetary liability and/or may materially disrupt the conduct of, or necessitate the cessation of, segments of our business.

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Risks Related to the Securities Markets and Ownership of Our Common Stock

Our stock price is volatile.

From July 1, 2004 through June 30, 2005, our stock price ranged from a low of $4.81 per share to a high of $7.58 per share. The market price of our common stock, like that of the securities of many telecommunications and high technology industry companies, could be subject to significant fluctuations and is likely to remain volatile based on many factors, including the following:

•	quarterly variations in operating results;

•	announcements of new technology, products or services by us or any of our competitors;

•	changes in financial estimates or recommendations by securities analysts;

•	general market conditions; or

•	domestic and international economic factors unrelated to our performance.

Additionally, numerous factors relating to our business may cause fluctuations or declines in our stock price.

The stock markets in general and the markets for telecommunications stocks in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.

Because our common stock is thinly traded, it may be difficult to sell shares of our common stock into the markets without experiencing significant price volatility.

Our common stock is currently traded on the NASDAQ National Market. Because of the relatively small number of shares that are traded, it may be difficult for an investor to find a purchaser for shares of our common stock without experiencing significant price volatility. We cannot guarantee that an active trading market will develop, that our common stock will have a higher trading volume than it has historically had or that it will maintain its current market price. This illiquidity could have a material adverse effect on the market price of our stock.

A third party could be prevented from acquiring shares of our stock at a premium to the market price because of our anti-takeover provisions.

Various provisions with respect to votes in the election of directors, special meetings of stockholders, and advance notice requirements for stockholder proposals and director nominations of our amended and restated certificate of incorporation, bylaws and Section 203 of the General Corporation Law of the State of Delaware could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders. In addition, we have a poison pill in place and employment provisions with our senior executives that have change of control provisions that could make an acquisition of us by a third party more difficult.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on our future earnings, capital requirements, financial condition, future prospects and other factors as the board of directors might deem relevant. If we do not pay dividends our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

Risks Related to Government Approvals

We are subject to many government regulations, and failure to comply with them will harm our business.

Operations and Use of Satellites

We are subject to various federal laws and regulations, which may have negative effects on our business. We operate FCC licensed earth stations in Hauppauge, New York, subject to the Communications Act of 1934, as amended (the "FCC Act"), and the rules and regulations of FCC. Pursuant to the

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FCC Act and rules, we have obtained and are required to maintain radio transmission licenses from the FCC for both domestic and foreign operations of our earth stations. We have also obtained and are required to maintain authorization issued under Section 214 of the FCC Act to act as a telecommunications carrier, which authorization also extends to GNSC. These licenses should be renewed by the FCC in the normal course as long as we remain in compliance with FCC rules and regulations. However, we cannot guarantee that the FCC will grant additional licenses when our existing licenses expire, nor are we assured that the FCC will not adopt new or modified technical requirements that will require us to incur expenditures to modify or upgrade our equipment as a condition of retaining our licenses. We are also required to comply with FCC regulations regarding the exposure of humans to radio frequency radiation from our earth stations. These regulations, as well as local land use regulations, restrict our freedom to choose where to locate our earth stations. In addition, prior to a third party acquisition of us, we would need to seek approval from the FCC to transfer the radio transmission licenses we have obtained to the third party upon the consummation of the acquisition. However, we cannot assure you that the FCC will permit the transfer of these licenses. These approvals may make it more difficult for a third party to acquire us.

Foreign Regulations

Regulatory schemes in countries in which we may seek to provide our satellite-delivered data communications services may impose impediments on our operations. Some countries in which we intend to operate have telecommunications laws and regulations that do not currently contemplate technical advances in telecommunications technology like Internet/intranet transmission by satellite. We cannot assure you that the present regulatory environment in any of those countries will not be changed in a manner, which may have a material adverse impact on our business. Either we or our local partners typically must obtain authorization from each country in which we provide our satellite-delivered data communications services. The regulatory schemes in each country are different, and thus there may be instances of noncompliance of which we are not aware. We cannot assure you that our licenses and approvals are or will remain sufficient in the view of foreign regulatory authorities, or that necessary licenses and approvals will be granted on a timely basis in all jurisdictions in which we wish to offer our products and services or that restrictions applicable thereto will not be unduly burdensome.

Regulation of the Internet

Due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted at the local, national or international levels with respect to the Internet, covering issues including user privacy and expression, pricing of products and services, taxation, advertising, intellectual property rights, information security or the convergence of traditional communication services with Internet communications. It is anticipated that a substantial portion of our Internet operations will be carried out in countries that may impose greater regulation of the content of information coming into the country than that which is generally applicable in the United States, including but not limited to privacy regulations in numerous European countries and content restrictions in countries such as the People's Republic of China. To the extent that we provide content as a part of our Internet services, it will be subject to laws regulating content. Moreover, the adoption of laws or regulations may decrease the growth of the Internet, which could in turn decrease the demand for our Internet services or increase our cost of doing business or in some other manner have a material adverse effect on our business, operating results and financial condition. In addition, the applicability of existing laws governing issues including property ownership, copyrights and other intellectual property issues, taxation, libel, court jurisdiction and personal privacy to the Internet is uncertain. The vast majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues of the Internet and related technologies. Changes to these laws intended to address these issues, including some recently proposed changes, could create uncertainty in the marketplace which could reduce demand for our products and services, could increase our cost of doing business as a result of costs of litigation or increased product development costs, or could in some other manner have a material adverse effect on our business, financial condition and results of operations.

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Telecommunications Taxation, Support Requirements, and Access Charges

All telecommunications carriers providing domestic services in the United States are required to contribute a portion of their gross revenues for the support of universal telecommunications services. Also, some telecommunications services are subject to special taxation and to contribution requirements to support services to special groups, like persons with disabilities. Our services may be subject to new or increased taxes and contribution requirements that could affect our profitability, particularly if we are not able to pass them through to customers for either competitive or regulatory reasons.

Internet services are currently exempt from charges that long distance telephone companies pay for access to the networks of local telephone companies in the United States. Efforts have been made from time to time, and may be made again in the future, to eliminate this exemption. If these access charges are imposed on telephone lines used to reach Internet service providers and/or if flat rate telephone services for Internet access are eliminated or curtailed, the cost to customers who access our satellite facilities using telephone company-provided facilities could increase to an extent that could discourage the demand for our services. Likewise, the demand for our services in other countries may be affected by the availability and cost of local telephone or other telecommunications facilities to reach our facilities.

Export of Telecommunications Equipment

The sale of our ground segment systems, networks, and communications services outside the United States is subject to compliance with the regulations of the United States Export Administration and, in certain circumstances, with International Traffic in Arms regulations. The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position. In addition, in order to ship our products into and implement our services in some countries, the products must satisfy the technical requirements of that particular country. If we were unable to comply with such requirements with respect to a significant quantity of our products, our sales in those countries could be restricted, which could have a material adverse effect on our business, results of operations and financial condition.

Foreign Ownership

We may, in the future, be required to seek FCC approval if foreign ownership of our stock exceeds the specified criteria. Failure to comply with these policies could result in an order to divest the offending foreign ownership, fines, denial of license renewal and/or license revocation proceedings against the licensee by the FCC.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are subject to a variety of risks, including foreign currency exchange rate fluctuations relating to certain purchases from foreign vendors and our wholly-owned subsidiary, Globecomm Systems Europe Limited, which primarily deals in British Pounds Sterling. In the normal course of business, we assess these risks and have established policies and procedures to manage our exposure to fluctuations in foreign currency values.

Our objective in managing our exposure to foreign currency exchange rate fluctuations is to reduce the impact of adverse fluctuations in earnings and cash flows associated with foreign currency exchange rates. Accordingly, we may utilize from time to time foreign currency forward contracts to hedge our exposure on firm commitments denominated in foreign currency. At June 30, 2005 and 2004 we had no outstanding foreign exchange contracts.

Our results of operations and cash flows are subject to fluctuations due to changes in interest rates primarily from our investment of available cash balances in money market funds with portfolios of investment grade corporate and government securities. Under our current positions, we do not use interest rate derivative instruments to manage exposure to interest rate changes.

Item 8.    Financial Statements and Supplementary Data

The information required by this item is incorporated by reference to the Consolidated Financial Statements listed in Item 15(a) of Part IV of this Annual Report on Form 10-K.

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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.    Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2005. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on its assessment, management believes that, as of June 30, 2005, our internal control over financial reporting is effective.

Our independent auditors have issued an attestation report on our assessment of the Company's internal control over financial reporting. This report appears on page F-2.

Item 9B.    Other Information

None

32

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PART III

Item 10.    Directors and Executive Officers of the Registrant

Certain information in response to this item is incorporated herein by reference to "Election of Directors" and "Executive Officers" in Globecomm Systems Inc.'s Proxy Statement to be filed with the Securities and Exchange Commission (the "SEC"). Information on compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to "Section 16(a) Beneficial Ownership Reporting Compliance" in the Registrant's Proxy Statement to be filed with the SEC.

Item 11.    Executive Compensation

Information in response to this item is incorporated herein by reference to "Executive Compensation and Other Information" in the Registrant's Proxy Statement to be filed with the SEC.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

Information in response to this item is incorporated herein by reference to "Security Ownership of Certain Beneficial Owners and Management" in the Registrant's Proxy Statement to be filed with the SEC.

Item 13.    Certain Relationships and Related Transactions

Information in response to this item is incorporated herein by reference to "Certain Transactions" in the Registrant's Proxy Statement to be filed with the SEC.

Item 14.    Principal Accounting Fees and Services

Information in response to this item is incorporated herein by reference to "Report of the Audit Committee of the Board of Directors" in the Registrant's Proxy Statement to be filed with the SEC.

33

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PART IV

Item 15.    Exhibits, Financial Statement Schedules

(A) (1)   Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm					F-1
Consolidated Balance Sheets as of June 30, 2005 and 2004					F-3
Consolidated Statements of Operations for the years ended June 30, 2005, 2004 and 2003					F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended June 30, 2005, 2004 and 2003					F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2005, 2004 and 2003					F-6
Notes to Consolidated Financial Statements					F-7

       (2)   Index to Consolidated Financial Statement Schedule

Schedule II — Valuation and Qualifying Accounts					S-1

All other schedules for which provision is made in the applicable accounting regulation from the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

34

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(3)    Index of Exhibits

Exhibit No.
3.1				Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
3.2				Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
4.2				See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws of the Registrant defining rights of holders of Common Stock of the Registrant (incorporated by reference to Exhibit 4.2 of the Registrant's Registration Statement on Form S-1, File No. 333-22425 (the "Registration Statement")).
10.1				Employment Agreement dated as of October 9, 2001 by and between the Registrant and David E. Hershberg (incorporated by reference to Exhibit 10.9 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.2				Employment Agreement dated as of October 9, 2001 by and between the Registrant and Kenneth A. Miller (incorporated by reference to Exhibit 10.10 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.3				The Amended and Restated 1997 Stock Incentive Plan (incorporated by reference to Exhibit 99 of the Registrant's Registration Statement on Form S-8 Registration, File No. 333-112351).
10.4				1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.8 of the Registrant's Registration Statement on Form S-8, File No. 333-70527).
10.5				Rights Agreement, dated as of December 3, 1998, between the Registrant and American Stock Transfer and Trust Company, which includes the form of Certificate of Designation for the Series A Junior Participating Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Series A Preferred Shares as Exhibit C (incorporated by reference to Exhibit 4 of Registrant's Current Report on Form 8-K, dated December 3, 1998).
10.6				Negotiable Promissory Note, dated April 1, 2001, between the Registrant and Donald Woodring (incorporated by reference to Exhibit 10.19 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2001).
10.7				Employment Agreement, dated as of October 9, 2001, by and between Stephen C. Yablonski and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.8				Employment Agreement, dated as of October 9, 2001, by and between Andrew C. Melfi and the Registrant (incorporated by reference to Exhibit 10.21 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.9				Employment Agreement, dated as of October 9, 2001, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.22 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).

35

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Exhibit No.
10.10				Employment Agreement, dated as of October 9, 2001, by and between Paul J. Johnson and the Registrant (incorporated by reference to Exhibit 10.23 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.11				Employment Agreement, dated as of October 9, 2001, by and between Paul Eterno and the Registrant (incorporated by reference to Exhibit 10.24 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.12				Promissory Note Secured By Stock Pledge Agreement, dated September 4, 2001, by and between Kenneth A. Miller and the Registrant (incorporated by reference to Exhibit 10.26 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.13*				Settlement Agreement, dated as of October 1, 2002, by and between Loral Skynet(, a division of Loral SpaceCom Corporation and the Registrant (incorporated by reference to Exhibit 10.28 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2002).
10.14				Separation Agreement and General Release, dated as of January 22, 2003, by and between G. Patrick Flemming and the Registrant (incorporated by reference to Exhibit 10.29 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended December 31, 2002).
10.15				Letter Agreement, dated as of January 31, 2003, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.30 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended December 31, 2002).
10.16				Loan and Security Agreement, dated as of September 15, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.31 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2003).
10.17				Loan Modification Agreement, dated as of October 8, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.17 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.18				Second Loan Modification Agreement, dated as of March 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.18 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.19				Third Loan Modification Agreement, dated as of June 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.19 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.20				Fourth Loan Modification Agreement, dated as of September 24, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.21				Fifth Loan Modification Agreement, dated as of October 29, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.1 of the Registrant's Registration Statement on Form 8-K, File No. 000-22839).
10.22				Form of Securities Purchase Agreement, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant's Registration Statement on Form S-3, File No. 333-112024.

36

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Exhibit No.
10.23				Form of Warrant, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant's Registration Statement on Form S-3, File No. 333-112024).
14				Registrant's Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
21				Subsidiaries of the Registrant (filed herewith).
23				Consent of Independent Registered Public Accounting Firm (filed herewith).
31.1				Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended (filed herewith).
31.2				Chief Financial Officer Certification required by Rules 13a- 14 and 15d- 14 under the Securities Exchange Act of 1934, as amended (filed herewith).
32				Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002 (filed herewith).

	* Confidential treatment granted for portions of this agreement.

(B)    Exhibits

The response to this portion of Item 15 is submitted as a separate section of this report.

(C)    Financial Statement Schedules

The response to this portion of Item 15 is submitted as a separate section of this report.

37

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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.

GLOBECOMM SYSTEMS INC

Date: September 13, 2005

By:

/s/ DAVID E. HERSHBERG

David E. Hershberg, Chairman of the Board and Chief Executive Officer

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 and in the capacities and on the dates indicated.

SIGNATURE		TITLE		DATE
/s/ DAVID E. HERSHBERG		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		9/13/05
David E. Hershberg
/s/ ANDREW C. MELFI		Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)		9/13/05
Andrew C. Melfi
/s/ KENNETH A. MILLER		President and Director		9/13/05
Kenneth A. Miller
/s/ RICHARD E. CARUSO		Director		9/13/05
Richard E. Caruso
/s/ HARRY L. HUTCHERSON Jr.		Director		9/13/05
Harry L. Hutcherson Jr.
/s/ BRIAN T. MALONEY		Director		9/13/05
Brian T. Maloney
/s/ JACK A. SHAW		Director		9/13/05
Jack A. Shaw
/s/ A. ROBERT TOWBIN		Director		9/13/05
A. Robert Towbin
/s/ C.J. WAYLAN		Director		9/13/05
C.J. Waylan

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Globecomm Systems Inc.

We have audited the accompanying consolidated balance sheets of Globecomm Systems Inc. (the "Company") as of June 30, 2005 and 2004 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended June 30, 2005. Our audits also included the financial statement schedule listed in the index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Globecomm Systems Inc. at June 30, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Globecomm Systems Inc.'s internal control over financial reporting as of June 30, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 9, 2005 expressed an unqualified opinion thereon.

/s/   ERNST & YOUNG LLP

New York, New York
September 9, 2005

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Globecomm Systems Inc.

We have audited management's assessment, included in the accompanying Management's Report on Internal Controls that Globecomm Systems Inc. maintained effective internal control over financial reporting as of June 30, 2005, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Globecomm Systems Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Globecomm Systems Inc. maintained effective internal control over financial reporting as of June 30, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Globecomm Systems Inc. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2005, based on Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of consolidated balance sheets of Globecomm Systems Inc. (the "Company") as of June 30, 2005 and 2004 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended June 30, 2005 and our report dated September 9, 2005 expressed an unqualified opinion.

/s/   ERNST & YOUNG LLP

New York, New York
September 9, 2005

F-2

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GLOBECOMM SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

				June 30, 2005				June 30, 2004
Assets
Current assets:
Cash and cash equivalents				$	25,609			$	28,252
Restricted cash					—				1,903
Accounts receivable, net					22,700				14,318
Inventories					13,317				3,904
Prepaid expenses and other current assets					858				1,274
Deferred income taxes					38				83
Total current assets					62,522				49,734
Fixed assets, net					15,619				15,441
Goodwill					7,204				7,204
Other assets					1,033				1,096
Total assets				$	86,378			$	73,475
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable				$	15,550			$	15,453
Deferred revenues					5,563				1,083
Accrued payroll and related fringe benefits					1,671				1,154
Other accrued expenses					2,471				1,676
Deferred liabilities					316				316
Total current liabilities					25,571				19,682
Deferred liabilities, less current portion					670				987
Commitments and contingencies
Stockholders' equity:
Series A Junior Participating, shares authorized, shares issued and outstanding: none in 2005 and 2004					—				—
Common stock, $.001 par value, shares authorized: 50,000,000 at June 30, 2005 and 22,000,000 and June 30, 2004; shares issued: 15,103,587 in 2005 and 14,628,574 in 2004					15				15
Additional paid-in capital					133,003				130,503
Accumulated deficit					(70,384	)			(75,198	)
Accumulated other comprehensive income					284				267
Treasury stock, at cost, 465,351 shares in 2005 and 2004					(2,781	)			(2,781	)
Total stockholders' equity					60,137				52,806
Total liabilities and stockholders' equity				$	86,378			$	73,475

See accompanying notes.

F-3

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GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

				Years Ended June 30,
				2005				2004				2003
Revenues from ground segment systems, networks and enterprise solutions				$	90,656			$	73,305			$	40,125
Revenues from data communications services					18,928				13,931				13,903
Total revenues					109,584				87,236				54,028
Costs and operating expenses:
Costs from ground segment systems, networks and enterprise solutions					75,357				63,282				39,447
Costs from data communications services					15,527				12,992				17,796
Selling and marketing					5,821				4,808				6,042
Research and development					1,021				1,328				800
General and administrative					7,596				6,529				9,423
Total costs and operating expenses					105,322				88,939				73,508
Income (loss) from operations					4,262				(1,703	)			(19,480	)
Other income (expense):
Interest income					444				271				422
Interest expense					—				—				(539	)
Gain on sale of available-for-sale securities					132				91				—
Gain on sale of investment					40				—				—
Income (loss) before income taxes					4,878				(1,341	)			(19,597	)
Provision for income taxes					64				—				—
Net income (loss)				$	4,814			$	(1,341	)		$	(19,597	)
Basic net income (loss) per common share				$	0.33			$	(0.10	)		$	(1.56	)
Diluted net income (loss) per common share				$	0.32			$	(0.10	)		$	(1.56	)
Weighted-average shares used in the calculation of basic net income (loss) per common share					14,422				13,346				12,565
Weighted-average shares used in the calculation of diluted net income (loss) per common share					14,966				13,346				12,565

See accompanying notes.

F-4

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GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2005, 2004 AND 2003
(In thousands)

				Common Stock								Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Treasury Stock								Total Stockholders' Equity
				Shares				Amount																Shares				Amount
Balance at June 30, 2002					12,933			$	13			$	123,598			$	(54,260	)		$	(44	)			350			$	(2,267	)		$	67,040
Issuance of common stock in connection with employee stock purchase plan					47				—				141				—				—				—				—				141
Purchases of treasury stock					—				—				—				—				—				54				(181	)			(181	)
Comprehensive loss:
Net loss					—				—				—				(19,597	)			—				—				—				(19,597	)
Gain from foreign currency translation					—				—				—				—				96				—				—				96
Loss from available-for-sale securities					—				—				—				—				(62	)			—				—				(62	)
Total comprehensive loss					—				—				—				—				—				—				—				(19,563	)
Balance at June 30, 2003					12,980				13				123,739				(73,857	)			(10	)			404				(2,448	)			47,437
Proceeds from exercise of stock options					111				—				464				—				—				—				—				464
Issuance of common stock in connection with employee stock purchase plan					38				—				123				—				—				—				—				123
Purchases of treasury stock					—				—				—				—				—				61				(333	)			(333	)
Issuance of stock options for services					—				—				12				—				—				—				—				12
Issuance of common stock and warrants in connection with private placement, net of issuance costs of $583					1,500				2				6,165				—				—				—				—				6,167
Comprehensive loss:
Net loss					—				—				—				(1,341	)			—				—				—				(1,341	)
Gain from foreign currency translation					—				—				—				—				81				—				—				81
Gain from availabe-for-sale securities					—				—				—				—				196				—				—				196
Total comprehensive loss					—				—				—				—				—				—				—				(1,064	)
Balance at June 30, 2004					14,629				15				130,503				(75,198	)			267				465				(2,781	)			52,806
Proceeds from exercise of stock options					200				—				863				—				—				—				—				863
Issuance of common stock in connection with employee stock purchase plan					38				—				178				—				—				—				—				178
Issuance of stock options for services					—				—				6				—				—				—				—				6
Stock option acceleration					—				—				147				—				—				—				—				147
Proceeds from exercise of warrants					237				—				1,306				—				—				—				—				1,306
Comprehensive income:
Net income					—				—				—				4,814				—				—				—				4,814
Gain from foreign currency translation					—				—				—				—				17				—				—				17
Total comprehensive income					—				—				—				—				—				—				—				4,831
Balance at June 30, 2005					15,104			$	15			$	133,003			$	(70,384	)		$	284				465			$	(2,781	)		$	60,137

See accompanying notes.

F-5

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GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

				Years Ended June 30,
				2005				2004				2003
OPERATING ACTIVITIES:
Net income (loss)				$	4,814			$	(1,341	)		$	(19,597	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization					2,695				3,097				3,532
Change in deferred liabilities					(317	)			(523	)			(1,834	)
Gain on termination of capital lease					—				—				(959	)
Provision (benefit) for doubtful accounts					104				(966	)			683
Deferred income taxes					45				42				13
Stock compensation expense					153				12				—
Gain on sale of available-for-sale securities					(132	)			(91	)			—
Gain on sale of investment					(40	)			—				—
Changes in operating assets and liabilities:
Accounts receivable					(8,464	)			(5,412	)			6,533
Inventories					(9,550	)			7,465				(2,338	)
Prepaid expenses and other current assets					416				671				(896	)
Other assets					63				564				(1,617	)
Accounts payable					63				4,656				(2,394	)
Deferred revenues					4,482				(6,585	)			4,125
Accrued payroll and related fringe benefits					518				37				155
Other accrued expenses					793				(13	)			(120	)
Net cash (used in) provided by operating activities					(4,357	)			1,613				(14,714	)
INVESTING ACTIVITIES:
Purchases of fixed assets					(2,872	)			(1,267	)			(1,732	)
Repayment of promissory note from a related party					—				300				40
Restricted cash					1,903				(1,295	)			(20	)
Proceeds from the sale of available-for-sale securities					330				391				—
Net cash used in investing activities					(639	)			(1,871	)			(1,712	)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options					863				464				—
Proceeds from exercise of warrants					1,306				—				—
Proceeds from private placement					—				6,167				—
Proceeds from sale of common stock in connection with employee stock purchase plan					178				123				141
Purchases of treasury stock					—				(333	)			(181	)
Payments under capital leases					—				—				(270	)
Net cash provided by (used in) financing activities					2,347				6,421				(310	)
Effect of foreign currency translation on cash					6				73				44
Net (decrease) increase in cash and cash equivalents					(2,643	)			6,236				(16,692	)
Cash and cash equivalents at beginning of year					28,252				22,016				38,708
Cash and cash equivalents at end of year				$	25,609			$	28,252			$	22,016
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest				$	—			$	—			$	539

See accompanying notes.

F-6

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005

1.    Organization and Description of Business

Globecomm Systems Inc. ("Globecomm") was incorporated in the State of Delaware on August 17, 1994. The Company's core business provides end-to-end, value-added satellite-based communications solutions. This business supplies ground segment systems and networks for satellite-based communications including hardware and software to support a wide range of satellite systems. The Company's wholly-owned subsidiary, Globecomm Network Services Corporation ("GNSC"), formerly named NetSat Express, Inc. provides satellite communication services capabilities.

2.    Significant Accounting Policies

    Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, GNSC and Globecomm Systems Europe Limited (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

    Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

    Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104 ("SAB 104"), Revenue Recognition, for its production-type contracts that are sold separately as standard satellite ground segment systems when persuasive evidence of an arrangement exists, the selling price is fixed or determinable, collectibility is reasonably assured, delivery has occurred and the contractual performance specifications have been met. The Company's standard satellite ground segment systems produced in connection with these contracts are typically short-term (less than twelve months in term) and manufactured using a standard modular production process. Such systems require less engineering, drafting and design efforts than the Company's long-term complex production-type projects. Revenue is recognized on the Company's standard satellite ground segment systems upon shipment and acceptance of factory performance testing which is when title transfers to the customer. The amount of revenues recorded on each standard production-type contract is reduced by the customers' contractual holdback amount, which typically requires 10% to 30% of the contract value to be retained by the customer until installation and final acceptance is complete. The customer generally becomes obligated to pay 70% to 90% of the contract value upon shipment and acceptance of factory performance testing. Installation is not deemed to be essential to the functionality of the system since installation does not require significant changes to the features or capabilities of the system, does not require complex software integration and interfacing and the Company has not experienced any difficulties installing such equipment. In addition, the customer or other third party vendors can install the system. The estimated relative fair value of the installation services is determined by management, which is typically less than the customer's contractual holdback percentage. If the holdback is less than the fair value of installation, the Company will defer recognition of revenues, determined on a contract-by-contract basis equal to the fair value of the installation services. Payments received in advance by customers are deferred until shipment and are presented as deferred revenues in the accompanying consolidated balance sheets.

F-7

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

2.    Significant Accounting Policies (continued)

The Company recognizes revenue using the percentage-of-completion method of accounting upon the achievement of certain contractual milestones in accordance with Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, for its non-standard, complex production-type contracts for the production of satellite ground segment systems and equipment that are generally integrated into the customers' satellite ground segment network. The equipment and systems produced in connection with these contracts are typically long-term (in excess of twelve months in term) and require significant customer-specific engineering, drafting and design effort in order to effectively integrate all of the customizable earth station equipment into the customers' ground segment network. These contracts generally have larger contract values, greater economic risks and substantive specific contractual performance requirements due to the engineering and design complexity of such systems and related equipment. Progress payments received in advance by customers are netted against the inventory balances in the accompanying consolidated balance sheets.

Contract costs generally include purchased material, direct labor, overhead and other direct costs. Anticipated contracted losses are recognized, as they become known.

Revenues from data communications services are derived primarily from Internet-based services. Service revenues from Internet access are recognized ratably over the period in which services are provided. Payments received in advance of providing Internet access services are deferred until the period such services are provided and are presented as deferred revenues in the accompanying consolidated balance sheets.

    Costs from Ground Segment Systems, Networks and Enterprise Solutions

Costs from ground segment systems, networks and enterprise solutions consist primarily of the costs of purchased materials (including shipping and handling costs), direct labor and related overhead expenses, project-related travel and living costs and subcontractor salaries.

    Costs from Data Communications Services

Costs from data communications services relating to Internet-based services consist primarily of satellite space segment charges, Internet connectivity fees, voice termination costs and network operations expenses. Satellite space segment charges consist of the costs associated with obtaining satellite bandwidth (the measure of capacity) used in the transmission of services to and from the satellite leased from operators. Network operations expenses consist primarily of costs associated with the operation of the Network Operation Center (the "NOC"), on a twenty-four hour a day, seven-day a week basis, including personnel and related costs and depreciation.

    Research and Development

Research and development expenditures are expensed as incurred.

    Inventories

Inventories, which consist primarily of work-in-progress from costs incurred in connection with specific customer contracts, are stated at the lower of cost (using the first-in, first-out method of accounting) or market value. Progress payments received under long-term contracts are netted against inventories.

    Cash Equivalents

The Company classifies highly liquid financial instruments with a maturity, at the purchase date, of three months or less as cash equivalents.

F-8

---

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

2.    Significant Accounting Policies (continued)

    Restricted Cash

Restricted cash includes certificates of deposit used as cash collateral for bid proposals and contract performance guarantees.

    Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized and repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from three to twenty-five years. Amortization of satellite space segment transponders held under capital lease is calculated using the straight-line method over the estimated useful life of the satellite transponder. Amortization of leasehold improvements and leased equipment is calculated using the straight-line method over the shorter of the lease term or estimated useful life of the asset.

    Fair Value of Financial Instruments

The recorded amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values principally because of the short-term nature of these items.

    Stock-Based Compensation

The Company accounts for stock option grants using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and complies with the disclosure provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"), as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure ("SFAS No. 148").

Pro-forma information regarding net income (loss) and net income (loss) per common share is required by SFAS No. 123 and SFAS No. 148, which also requires that the information be determined as if the Company has accounted for its stock options granted subsequent to July 1, 1995 under the fair value method. The fair value of options granted under the Company's 1997 Plan was estimated at date of grant using a Black-Scholes option pricing model with the following assumptions for the years ended June 30, 2005, 2004 and 2003: risk-free interest rate of 3.6% (2005), 3.2% (2004) and 3.0% (2003), volatility factor of the expected market price of the Company's common stock of .41 (2005), .79 (2004) and .79 (2003), a weighted-average expected life of the option of five years and no dividend yields.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options under the Black-Scholes option valuation model.

F-9

---

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

2.    Significant Accounting Policies (continued)

For purposes of pro-forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro-forma information is as follows:

				Years Ended June 30,
				2005				2004				2003
				(in thousands, except per share data)
Reported net income (loss)				$	4,814			$	(1,341	)		$	(19,597	)
Stock compensation expense included in reported net income (loss)					153				12				—
Pro-forma stock compensation expense					(2,909	)			(2,216	)			(2,707	)
Pro-forma net income (loss)				$	2,058			$	(3,545	)		$	(22,304	)
Reported basic net income (loss) per common share				$	0.33			$	(0.10	)		$	(1.56	)
Reported diluted net income (loss) per common share				$	0.32			$	(0.10	)		$	(1.56	)
Pro-forma basic and diluted net income (loss) per common share				$	0.14			$	(0.27	)		$	(1.78	)

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based Payment, which is a revision of SFAS 123 ("SFAS 123R"). SFAS 123R eliminates the ability to account for share-based compensation under the intrinsic value method permitted by APB 25. This will require the Company to adopt the fair value model for recognizing compensation expense for employee stock options, and would have the effect of reducing the Company's reported net income and net income per share. SFAS 123R is required to be adopted by the Company as of July 1, 2005. In May 2005, in response to FAS 123R, the Board of Directors of the Company, upon recommendation of its Compensation Committee, approved an acceleration of all unvested options granted to employees and directors under the Company's Amended and Restated 1997 Stock Incentive Plan. As a result of the acceleration, options to acquire 863,165 shares of the Company's common stock became immediately exercisable. In order to prevent unintended personal benefit to directors and executive officers, the Board of Directors, upon recommendation of its Compensation Committee, imposed restrictions on any shares received through the exercise of accelerated options held by those individuals. These restrictions prevent their sale of stock obtained through exercise of an accelerated option prior to the earlier of the original vesting date or the individual's termination of employment. The restrictions apply to 306,220 options. A one-time non-cash compensation charge of approximately $147,000 was recorded in the fourth quarter of 2005 as a result of the acceleration.

    Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price of businesses over the fair value of the identifiable net assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other indefinite life intangible assets are no longer amortized, but instead tested for impairment at least annually. The impairment test for goodwill uses a two-step approach, which is performed at the reporting unit level. Step one compares the fair value of the reporting unit (calculated using a discounted cash flow method) to its carrying value. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit's goodwill to its implied fair value (i.e., fair value of the reporting unit less the fair value of the unit's assets and liabilities, including identifiable intangible assets). If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment.

F-10

---

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

2.    Significant Accounting Policies (continued)

The net carrying value of goodwill is approximately $7,204,000 at June 30, 2005 and 2004, which relates to the data communications services reporting unit. The Company performed the goodwill impairment test annually in the fourth quarter. No impairment was noted at June 30, 2005.

    Long-Lived Assets

For other than goodwill and indefinite life intangibles, when impairment indicators are present, the Company reviews the carrying value of its assets in determining the ultimate recoverability of their unamortized values using future undiscounted cash flows expected to be generated by the assets in accordance with the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. If such assets are considered impaired, the impairment recognized is measured by the amount by which the carrying amount of the asset exceeds the future discounted cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell.

The Company evaluates the periods of amortization in determining whether later events and circumstances warrant revised estimates of useful lives. If estimates are changed, the unamortized cost will be allocated to the increased or decreased number of remaining periods in the revised lives.

    Comprehensive Loss

Comprehensive income (loss) for the years ended June 30, 2005, 2004 and 2003 of approximately $4,831,000, ($1,064,000) and ($19,563,000), respectively, includes a foreign currency translation gain of approximately $17,000, $81,000 and $96,000, respectively, and an unrealized gain (loss) on available-for-sale securities of approximately $0, $196,000, and ($62,000), respectively.

    Product Warranties

The Company offers warranties on its contracts, the specific terms and conditions of which vary depending upon the contract and work performed. Generally, a basic limited warranty, including parts and labor, is provided to customers for one year. The Company can recoup certain of these costs through product warranties it holds with its original equipment manufacturers, which typically are one year in term. Historically, warranty expense has been minimal, however, management periodically assesses the need for any additional warranty reserve.

    Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

3.    Accounts Receivable

Accounts receivable include amounts billed but not paid by customers pursuant to retainage provisions in connection with ground segment systems, networks and enterprise solutions contracts. At June 30, 2005 and 2004, there was approximately $460,000 and $0, respectively, billed but not paid by customers under retainage provisions in connection with long-term contracts. Such balances are included in accounts receivable in the accompanying consolidated balance sheets. Based on the Company's experience with similar contracts in recent years, billed receivables relating to long-term contracts are expected to be collected within one year.

F-11

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

4.    Inventories

Inventories consist of the following:

				June 30, 2005				June 30, 2004
				(In thousands)
Raw materials and component parts				$	111			$	163
Work-in-progress					15,916				7,362
					16,027				7,525
Less progress payments					2,710				3,621
				$	13,317			$	3,904

5.    Fixed Assets

Fixed assets consist of the following:

				June 30, 2005				June 30, 2004
				(In thousands)
Land				$	1,750			$	1,750
Building and improvements					6,310				6,081
Computer equipment					3,260				3,116
Machinery and equipment					2,630				2,548
Network Operations Center					9,779				7,703
Satellite earth station equipment					8,180				7,869
Furniture and fixtures					1,361				1,344
					33,270				30,411
Less accumulated depreciation and amortization					17,651				14,970
				$	15,619			$	15,441

6.    Common Stock

    Warrants Issued to Consultants

During November 1996, the Company issued a ten-year warrant to five consultants for services to purchase an aggregate of 64,125 shares of common stock at a price per share of $8.07, equal to the fair market value of the shares at the date of issuance. At June 30, 2005, warrants to purchase 55,825 shares of the Company's common stock noted above are outstanding and exercisable.

    Treasury Stock

In June 2005, the Company terminated its stock repurchase program. Pursuant to this plan, the Company repurchased approximately 61,000 and 54,100 shares in fiscal 2004 and 2003 at an aggregate cost of approximately $333,000 and $181,000, respectively. Included in the fiscal 2004 repurchases were 61,000 shares acquired from the Company's President at a fair market price of $5.41 per share (see Note 10). The repurchase program allowed for purchases to be made intermittently, through open market and privately negotiated transactions. Timing, price, quantity and manner of purchases are at the discretion of the Company's management, depending on market conditions and other factors, subject to compliance with the applicable securities laws.

F-12

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

6.    Common Stock (continued)

    Private Placement

On December 31, 2003, the Company completed a private placement transaction of equity securities and issued 1,500,000 shares of common stock at a price of $4.50 per share for an aggregate price of $6,750,000 and issued warrants to purchase up to 750,000 shares of common stock at an exercise price of $5.50 per share. The warrants became exercisable on July 1, 2004 and will expire on December 31, 2008. The Company incurred total expenses of approximately $583,000, of which approximately $456,000 represented placement agent commissions and approximately $127,000 represented other expenses. After deducting total expenses, the net proceeds received by the Company in January 2004 were approximately $6,167,000. At June 30, 2005, warrants to purchase 512,500 shares of the Company's common stock noted above are outstanding and exercisable.

7.    Stock Option and Stock Purchase Plans

On February 26, 1997, the Company's Board of Directors authorized, and the stockholders subsequently approved, the 1997 Stock Incentive Plan ("1997 Plan"), which authorized the granting to employees, directors and consultants of the Company options to purchase an aggregate of 2,280,000 shares of the Company's common stock. In November 2000 and 2001, the Company's stockholders approved amendments to the 1997 Plan whereby the number of shares authorized for issuance under the 1997 Plan increased by 800,000 shares in fiscal 2001 and 2002. In November 2004, the Company's stockholders approved amendments to the 1997 Plan whereby the number of shares authorized for issuance under the 1997 Plan increased by 1,000,000 shares.

Options granted under the 1997 Plan may be either incentive or non-qualified stock options. The exercise price of an option shall be determined by the Company's Board of Directors or compensation committee of the board at the time of grant, however, in the case of an incentive stock option the exercise price may not be less than 100% of the fair market value of such stock at the time of the grant, or less than 110% of such fair market value in the case of options granted to a 10% owner of the Company's stock.

Employee options generally vest annually in equal installments over a four-year period and expire on the tenth anniversary of the date of grant. Director options granted upon initial election to the Board of Directors generally vest one third on the grant date and an additional one third on each of the next two succeeding anniversaries of the date of grant. Each additional annual grant vests immediately. All Director options expire the earlier of ten years from the date of grant or one year from concluding service as a director of the Company. In May 2005 (as discussed in Note 2), in response to FAS 123R, the Board of Directors of the Company approved an acceleration of all unvested options granted to employees and directors under the 1997 Plan.

The 1997 Plan provides for an automatic increase to the number of options authorized for grant by an amount equal to 1% of the shares of common stock outstanding on the last trading day of each calendar year. During fiscal 2005, 2004 and 2003, the Company increased the number of options authorized for grant under the 1997 Plan pursuant to the automatic 1% provision by 144,390, 140,763, and 125,644, respectively. At June 30, 2005, the number of remaining options available for grant under the 1997 Plan was 1,314,524.

On September 23, 1998, the Board of Directors adopted, and the stockholders subsequently approved, the 1999 Employee Stock Purchase Plan ("1999 Plan"). Pursuant to the 1999 Plan, 400,000 shares of the Company's common stock will be reserved for issuance. The 1999 Plan is intended to provide eligible employees of the Company, and its participating affiliates, the opportunity to acquire an interest in the Company at the lesser of 85% of fair market value at date of grant or date of purchase through participation in the payroll-deduction based employee stock purchase plan. During the years ended June 30, 2005, 2004 and 2003, the Company issued 37,961, 37,684 and 47,046 shares of its common stock to

F-13

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)  

7.    Stock Option and Stock Purchase Plans (continued)

participating employees in connection with the 1999 Plan. At June 30, 2005, the number of remaining shares available for issuance under the 1999 Plan was 121,321. The Board of Directors suspended the 1999 Plan effective July 1, 2005 to provide the Company time to evaluate the impact of SFAS 123R on the Company's operating results.

The following table summarizes activity in the Company's stock option plan (in thousands, except per share amounts):

				Years Ended June 30,
				2005								2004								2003
				Shares Under Option				Weighted- Average Exercise Price				Shares Under Option				Weighted- Average Exercise Price				Shares Under Option				Weighted- Average Exercise Price
Balance, beginning of year					3,359			$	7.05				3,127			$	7.51				2,914			$	8.07
Grants					206				6.34				470				3.55				449				3.70
Exercised					(200	)			4.31				(111	)			4.19				—				—
Canceled					(107	)			7.20				(127	)			8.09				(236	)			7.11
Balance, end of year					3,258				7.16				3,359				7.05				3,127				7.51
Exercisable, end of year					3,258			$	7.16				2,149			$	8.51				1,821			$	8.69
Weighted-average fair value of options granted during the year								$	4.16							$	2.35							$	2.40

The following table summarizes information about stock options outstanding at June 30, 2005 (in thousands, except per share amounts):

				Options Outstanding and Exercisable
Range of Exercise     Price				Number Outstanding				Weighted- Average Remaining Contractual Life (Years)				Weighted- Average Exercise Price
$  1.47 - $  1.47					2				8.5			$	1.47
$  3.10 - $  4.42					1,064				7.4			$	3.80
$  4.68 - $  7.02					833				5.5			$	5.74
$  7.09 - $10.63					909				3.9			$	7.90
$10.69 - $15.75					280				3.8			$	12.85
$17.13 - $25.25					152				4.4			$	21.22
$28.00 - $28.00					18				4.6			$	28.00
					3,258				5.5			$	7.16

The Company has reserved approximately 5,949,000 shares of its common stock for issuance upon exercise of all available and outstanding options and warrants at June 30, 2005.

F-14

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

8.    Basic and Diluted Net Income (Loss) Per Common Share

The Company computes net income (loss) per share in accordance with the provisions of SFAS No. 128, Earnings Per Share. Basic and diluted net income (loss) per common share is computed by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding for the period. The weighted-average shares include the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method). The incremental common shares for stock options and warrants are excluded from the calculation of diluted net income (loss) per share, if their effect is anti-dilutive. Diluted net income (loss) per share for the years ended June 30, 2005, 2004 and 2003, excludes the effect of approximately 2,577,000, 4,972,000, and 3,991,000 stock options and warrants in the calculation of the incremental common shares, respectively, as their effect would have been anti-dilutive.

9.    Retirement Plan

The Company maintains a 401(k) plan, which covers substantially all employees of the Company. Participants may elect to contribute from 1% to 75% of their pre-tax compensation, subject to elective deferral limitations under Section 403 of the Internal Revenue Code. The plan allows for a matching contribution equal to the discretionary percentage of a participating employee not to exceed 4% of their compensation by the Company. The Company contributed approximately $236,000, $0 and $460,000 to the 401(k) plan during the years ended June 30, 2005, 2004 and 2003, respectively. The Board of Directors did not authorize a matching contribution for the year ended June 30, 2004 as part of the Company's cost cutting initiatives. Effective January 1, 2005, the Board of Directors reinstated the matching contribution. As of June 30, 2005, the Company has accrued $236,000 included in accrued payroll and related fringe benefits in the accompanying balance sheet. In addition, the plan also provides for discretionary profit sharing contributions by the Company. There were no discretionary profit sharing contributions made by the Company during the years ended June 30, 2005, 2004 and 2003.

10.    Related Party Transactions

During fiscal 2001, the Company advanced $200,000 to a former executive officer of the Company. The Company received a promissory note payable on December 31, 2002 for this advance, which bore interest at an annual rate of 5.0% payable quarterly. During fiscal 2002, the Company increased the $200,000 loan to $300,000 and amended the promissory note accordingly. During fiscal 2003, this former executive officer resigned from the board of directors and pursuant to a letter agreement (the "agreement") the Company consolidated the then outstanding loan and advances receivable from this former executive officer and current employee of the Company into a $321,000 promissory note. Under the terms of the letter agreement the Company will forgive the outstanding principal and interest amounts due on the promissory note in five annual installments beginning in January 2004 so long as the former executive officer remains an employee of the Company, subject to the terms of the agreement. At June 30, 2005 and 2004, the annual installment to be forgiven within one year along with accrued interest outstanding under this promissory note was included in other current assets in the accompanying consolidated balance sheet. At June 30, 2005 and 2004, the remaining principal amounts of approximately $195,000 and $261,000, respectively, are included in other assets in the accompanying consolidated balance sheet.

During fiscal 2002, the Company advanced $300,000 to an officer of the Company. The Company received a promissory note payable on September 30, 2004, which bears interest at an annual rate of 5.0% payable quarterly, and is secured by a stock pledge agreement. On November 12, 2003, the officer sold approximately 61,000 shares of the Company's common stock at a fair market price of $5.41 per share to the Company in connection with its stock repurchase program. On November 12, 2003, the officer paid approximately $333,000 to the Company to satisfy all amounts outstanding on the promissory note, together with accrued interest thereon.

F-15

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

10.    Related Party Transactions (continued)

During fiscal 2001, the Company advanced $40,000 to an officer of the Company. The Company received a promissory note payable on December 31, 2002 for this advance, which bore interest at an annual rate of 5.0% payable quarterly. During fiscal 2003, the officer repaid the principal and accrued interest outstanding in full and satisfied the promissory note.

11.    Income Taxes

The Company computes income taxes using the liability method. Accordingly, deferred tax assets and liabilities are recognized for estimated future tax consequences attributable to the differences between the carrying amount of the assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities are determined by using enacted tax laws and rates in effect when the differences are expected to reverse. Net deferred tax assets are recorded when it is more likely than not that such tax benefits will be realized.

During fiscal 2005 and 2004, the Company recorded a tax provision of approximately $180,000 and $45,000 of which $116,000 and $45,000 was recorded in general and administrative expenses.

Significant components of the Company's deferred tax assets (liabilities) are as follows:

				June 30, 2005				June 30, 2004
				(In thousands)
Deferred tax assets:
Net operating loss carryforwards				$	28,709			$	30,491
Accruals and reserves					1,273				1,964
Write-down of investments					426				1,034
State investment tax credit carryforwards					38				83
AMT tax credit					82				—
Capital loss carryforwards					920				380
Projects in progress					279				—
					31,727				33,952
Valuation allowance for deferred tax assets					(30,743	)			(32,813	)
					984				1,139
Deferred tax liabilities:
Depreciation and amortization					(946	)			(984	)
Projects in progress					—				(72	)
					(946	)			(1,056	)
Net deferred tax assets				$	38			$	83

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of any net operating loss carryforwards. Due to the uncertainty regarding the Company's ability to utilize its net operating losses in the future, the Company has provided a valuation allowance against its operating losses and temporary differences except for approximately $38,000 representing state investment tax credit carryforwards that will be utilized to offset state capital taxes on the Company's state tax return.

For the years ended June 30, 2005, 2004 and 2003, the valuation allowance (decreased) increased approximately $(2,070,000), $5,239,000 and $4,417,000, respectively. Approximately $3,886,000 of the deferred tax asset, if recognized, will be allocated directly to stockholders' equity relating to non-qualified dispositions of stock option exercises.

F-16

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

11.    Income Taxes (continued)

At June 30, 2005, the Company has federal net operating loss carryforwards of approximately $71,400,000. The net operating carryforwards will expire at various dates beginning in 2010 through 2024, if not utilized. Utilization of the net operating loss carryforwards may be subject to an annual limitation pursuant to the ownership change limitations provided by the Internal Revenue Code and similar state provisions.

At June 30, 2005, the Company also had federal alternative minimum tax credit carryforwards of approximately $82,000, which may be carried forward indefinitely. At June 30, 2005, the Company also had foreign net operating loss carryforwards of approximately $870,000 that may be carried forward indefinitely.

The reconciliations of tax provision (benefit) computed at the U.S. federal statutory tax rates to the effective income tax rates on pre-tax losses are as follows:

				Years Ended June 30,
				2005				2004				2003
Tax at U.S. Federal statutory rate					34	%			(34	)%			(34	)%
Foreign Income at varying rates					7				—				—
Change in valuation allowance					(40	)			34				34
					1	%			—	%			—	%

12.    Segment Information

The Company operates through two business segments. Its ground segment systems, networks and enterprise solutions segment, through Globecomm Systems Inc. and Globecomm Systems Europe Limited, is engaged in the design, assembly and installation of ground segment systems and networks. Its data communications services segment, through GNSC, provides satellite communication services capabilities.

The Company's reportable segments are business units that offer different products and services. The reportable segments are each managed separately because they provide distinct products and services.

F-17

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

12.    Segment Information (continued)

The following is the Company's business segment information as of and for the years ended June 30, 2005, 2004 and 2003:

				Years Ended June 30,
				2005				2004				2003
				(In thousands)
Revenues:
Ground segment systems, networks and enterprise solutions				$	91,613			$	75,908			$	43,334
Data communications services					21,875				16,196				15,906
Intercompany eliminations					(3,904	)			(4,868	)			(5,212	)
Total revenues				$	109,584			$	87,236			$	54,028
Income (loss) from operations:
Ground segment systems, networks and enterprise solutions				$	4,229			$	(870	)		$	(12,548	)
Data communications services					(296	)			(849	)			(6,946	)
Interest income					444				271				422
Interest expense					—				—				(539	)
Gain on sale of investment					40				—				—
Gain on sale of available-for-sale securities					132				91				—
Intercompany eliminations					329				16				14
Income (loss) before income taxes				$	4,878			$	(1,341	)		$	(19,597	)
Depreciation and amortization:
Ground segment systems, networks and enterprise solutions				$	1,153			$	1,402			$	1,595
Data communications services					1,871				1,711				1,951
Intercompany eliminations					(329	)			(16	)			(14	)
Total depreciation and amortization				$	2,695			$	3,097			$	3,532
Expenditures for long-lived assets:
Ground segment systems, networks and enterprise solutions				$	456			$	354			$	187
Data communications services					2,458				915				1,585
Intercompany eliminations					(42	)			(2	)			(40	)
Total expenditures for long-lived assets				$	2,872			$	1,267			$	1,732

F-18

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

12.    Segment Information (continued)

				June 30, 2005				June 30, 2004				June 30, 2003
				(In thousands)
Assets:
Ground segment systems, networks and enterprise solutions				$	139,117			$	125,534			$	118,180
Data communications services					13,712				11,501				10,405
Intercompany eliminations					(66,451	)			(63,560	)			(58,241	)
Total assets				$	86,378			$	73,475			$	70,344

At June 30, 2005, 2004 and 2003, the Company had total assets of approximately $1,137,000, $2,547,000 and $3,177,000, and long-lived assets of approximately $80,000, $100,000 and $56,000, respectively, located in the United Kingdom, associated with its wholly-owned subsidiary, Globecomm Systems Europe Limited.

13.    Significant Customers and Concentrations of Credit Risk

The Company designs, assembles and installs satellite ground segment systems, networks and enterprise solutions for customers in diversified geographic locations. Credit risk with respect to accounts receivable is concentrated due to the limited number of customers. The timing of cash realization is determined based upon the contract or service agreements with the customers. The Company performs ongoing credit evaluations of its customers' financial condition and in most cases requires a letter of credit or cash in advance for foreign customers. The Company evaluates the collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their credit worthiness. The Company's estimate of its allowance for doubtful accounts is periodically adjusted when the Company becomes aware of a specific customer's inability to meet its financial obligations, or as a result of changes in the overall aging of accounts receivable. Allowances related to accounts receivable at June 30, 2005, 2004 and 2003, are approximately $815,000, $2,618,000 and $4,805,000, respectively. The decrease in the allowance of approximately $1,803,000 from June 30, 2004 to 2005 is primarily the result of a bad debt recovery of approximately $1,500,000 based on a settlement reached with a customer in July 2005; this recovery was recorded as a reduction to general and administrative expenses for the year ended June 30, 2005. The decrease in the allowance of approximately $2,187,000 from June 30, 2003 to 2004 is primarily the result of settlement agreement reached with a former customer in the Middle East. Based on this settlement the Company recorded a bad debt recovery, included as a reduction to general and administrative expenses for the year ended June 30, 2004, of approximately $1,000,000 and a write off the remaining accounts receivable allowance balance of approximately $1,200,000.

Three customers accounted for 20%, 13% and 13%, respectively, and one major customer accounted for approximately 11% of the Company's consolidated revenues for the years ended June 30, 2005 and 2004, respectively. No major customer accounted for more than 10% of the Company's consolidated revenues for the year ended June 30, 2003.

F-19

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

13.    Significant Customers and Concentrations of Credit Risk (continued)

Revenues earned from ground segment systems, networks and enterprise solutions are attributed to the geographic location in which the equipment is shipped. Revenues earned from data communications services are attributed to the geographic location in which the services are being provided. Revenues from foreign sales as a percentage of total consolidated revenues are as follows:

				Years Ended June 30,
				2005				2004				2003
Africa					8	%			9	%			7	%
North and South America					4	%			3	%			13	%
Asia					4	%			13	%			16	%
Europe					25	%			18	%			14	%
Middle East					32	%			19	%			12	%
Australia					—				—				1	%
					73	%			62	%			63	%

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade receivables. The Company places its cash and cash equivalents with high quality financial institutions. Substantially all cash and cash equivalents are held in one financial institutions at June 30, 2005 and 2004. Cash equivalents are comprised of short-term debt instruments and certificates of deposit of direct or guaranteed obligations of the United States, which are held to maturity and approximate fair market value. At times, cash may be in excess of Federal Deposit Insurance Company insurance limits.

14.    Commitments and Contingencies

Line of Credit

At June 30, 2005, the Company maintained a $16,500,000 working capital line of credit with a bank, which bore interest at 7.5% or the prime rate plus 1.5% per annum, and is collateralized by a first security interest on all personal property of the Company. The credit facility, which expires in October 2005, contains certain financial covenants, with which the Company was in compliance at June 30, 2005. As of June 30, 2005, no amounts were outstanding under this credit facility, however, there were outstanding standby letters of credit, bid proposals and performance guarantees of approximately $14,143,000, which were applied against and reduced the amounts available under the working capital line of credit. The Company will be advanced up to 80% of eligible domestic accounts receivable, 90% of eligible foreign accounts receivable under the line of credit, and 100% of the unrestricted cash held at the bank as defined in the agreement.

The Company provides cash collateral for certain letters of credit. As of June 30, 2005 and 2004, the Company had cash collateral related to performance guarantees of approximately $0 and $1,903,000, respectively. These amounts are included in restricted cash in the accompanying consolidated balance sheets.

Lease Transactions

In April 2001, the Company renegotiated a 15-year satellite space segment transponder lease entered into by GNSC during fiscal 2000, which changed the terms and economics of the agreement and resulted in a change in accounting for such lease from capital to operating. Accordingly, the change in accounting reduced the Company's capital lease obligations by approximately $84,261,000 with a corresponding reduction in net fixed assets of approximately $80,620,000, resulting in a deferred liability of approximately $3,641,000.

F-20

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

14.    Commitments and Contingencies (continued)

In June 2002, GNSC amended the lease to reduce the short-term cash commitment under such agreement in exchange for a twelve-month extension of the lease term. As a result of this modification, the Company will record the remaining lease commitment on a straight-line basis over the remaining term of the transponder lease. Accordingly, during 2002, the Company recorded a deferred liability of $319,000, to reflect the straight-lining of such lease payments.

In October 2002, the Company reached an agreement related to the lease, which further modified and reduced the Company's satellite bandwidth obligations. Under the terms of this agreement, the Company paid $7,574,000, which included a one-time termination fee of $3,586,000, and $3,988,000, which primarily related to outstanding invoices and an additional security deposit, assigned $31,573,000 of future contract revenues to the vendor and reduced the Company's future space segment obligations by $52,209,000. Accordingly, the Company recorded a charge to costs from data communications services of $782,000 in the second quarter of fiscal 2003, representing the difference between the $3,586,000 termination fee and the corresponding reduction in the deferred liability of $2,804,920.

At June 30, 2005, the remaining balance in deferred liabilities relating to this lease was $986,000, which will be amortized into income through December 2008.

Lease Commitments

The Company currently leases satellite space segment services, office space, teleport services and other equipment under various operating leases, which expire in various years through 2009. As leases expire, it can be expected that in the normal course of business they will be renewed or replaced.

Future minimum lease payments under non-cancelable operating leases for satellite space segment services, Internet access services, teleport services, office space and other equipment with terms of one year or more consist of the following at June 30, 2005 (in thousands):

2006				$	8,839
2007					4,898
2008					2,332
2009					663
				$	16,732

Rent expense for satellite space segment services, Internet access services, teleport services, office space and other equipment was approximately $7,138,000, $5,343,000 and $8,256,000 for the years ended June 30, 2005, 2004 and 2003, respectively.

Employment Agreements

During October 2001, the Company entered into three-year employment agreements with six officers and one former officer for an aggregate amount of approximately $1,214,000 per year. The Company will have certain obligations to these individuals if they are terminated. Each employment agreement renews automatically for additional terms of one year, unless either party provides written notice to the other party of its intention to terminate the agreement. During fiscal 2005, the Board of Directors approved increases bringing the aggregate amount to approximately $1,542,000 per year.

During January 2002, the Company entered into a three-year employment agreement with an officer for an amount of $275,000 per year. The Company had certain obligations to this officer if terminated. The employment agreement provided that it renewed automatically for additional terms of one year, unless either party provided written notice to the other party of its intention to terminate the agreement. In

F-21

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GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

14.    Commitments and Contingencies (continued)

January 2003, the Company entered into a separation agreement and general release whereby the employment relationship with this officer was terminated. In accordance with the terms of this agreement, the Company agreed to pay the officer severance of $450,000, consisting of a lump sum payment of $250,000 and an additional $200,000 to be paid in monthly installments for thirty-six months beginning in July 2003, based on certain conditions defined in the agreement. During each of the years ended June 30, 2005 and 2004, payments of approximately $67,000 were made.

F-22

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GLOBECOMM SYSTEMS INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

								Additions
Description				Balance at Beginning of Period				Charged to Costs and Expenses				Charged to Other Accounts				Deductions				Balance at End of Period
Year ended June 30, 2005:
Reserves and allowances deducted from asset accounts:
Reserve for estimated doubtful accounts receivable				$	2,618,000			$	100,000	(a)		$	—			$	(1,903,000)	(c)		$	815,000
Valuation allowance on deferred tax assets					32,813,000				—				—			$	(2,070,000)	(b)			30,743,000
				$	35,431,000			$	100,000			$	—			$	(3,973,000	)		$	31,558,000
Year ended June 30, 2004:
Reserves and allowances deducted from asset accounts:
Reserve for estimated doubtful accounts receivable				$	4,805,000			$	(966,000)	(a)		$	—			$	(1,221,000)	(c)		$	2,618,000
Valuation allowance on deferred tax assets					27,574,000				—				5,239,000	(b)			—				32,813,000
				$	32,379,000			$	(966,000	)		$	5,239,000			$	(1,221,000	)		$	35,431,000
Year ended June 30, 2003:
Reserves and allowances deducted from asset accounts:
Reserve for estimated doubtful accounts receivable				$	4,683,000			$	683,000			$	—			$	(561,000)	(c)		$	4,805,000
Valuation allowance on deferred tax assets					23,157,000				—				4,417,000	(b)			—				27,574,000
				$	27,840,000			$	683,000			$	4,417,000			$	(561,000	)		$	32,379,000

(a)	Includes recovery of accounts receivable balances (net of charges).

(b)	(Reduction) increase in valuation allowance for net deferred tax assets.

(c)	Reduction in allowance due to write-off of accounts receivable balances (net of recovery).

S-1

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Index of Exhibits

Exhibit No.
3.1				Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
3.2				Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
4.2				See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws of the Registrant defining rights of holders of Common Stock of the Registrant (incorporated by reference to Exhibit 4.2 of the Registrant's Registration Statement on Form S-1, File No. 333-22425 (the "Registration Statement")).
10.1				Employment Agreement dated as of October 9, 2001 by and between the Registrant and David E. Hershberg (incorporated by reference to Exhibit 10.9 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.2				Employment Agreement dated as of October 9, 2001 by and between the Registrant and Kenneth A. Miller (incorporated by reference to Exhibit 10.10 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.3				The Amended and Restated 1997 Stock Incentive Plan (incorporated by reference to Exhibit 99 of the Registrant's Registration Statement on Form S-8 Registration, File No. 333-112351).
10.4				1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.8 of the Registrant's Registration Statement on Form S-8, File No. 333-70527).
10.5				Rights Agreement, dated as of December 3, 1998, between the Registrant and American Stock Transfer and Trust Company, which includes the form of Certificate of Designation for the Series A Junior Participating Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Series A Preferred Shares as Exhibit C (incorporated by reference to Exhibit 4 of Registrant's Current Report on Form 8-K, dated December 3, 1998).
10.6				Negotiable Promissory Note, dated April 1, 2001, between the Registrant and Donald Woodring (incorporated by reference to Exhibit 10.19 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2001).
10.7				Employment Agreement, dated as of October 9, 2001, by and between Stephen C. Yablonski and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.8				Employment Agreement, dated as of October 9, 2001, by and between Andrew C. Melfi and the Registrant (incorporated by reference to Exhibit 10.21 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.9				Employment Agreement, dated as of October 9, 2001, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.22 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.10				Employment Agreement, dated as of October 9, 2001, by and between Paul J. Johnson and the Registrant (incorporated by reference to Exhibit 10.23 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).

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Exhibit No.
10.11				Employment Agreement, dated as of October 9, 2001, by and between Paul Eterno and the Registrant (incorporated by reference to Exhibit 10.24 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.12				Promissory Note Secured By Stock Pledge Agreement, dated September 4, 2001, by and between Kenneth A. Miller and the Registrant (incorporated by reference to Exhibit 10.26 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
10.13*				Settlement Agreement, dated as of October 1, 2002, by and between Loral Skynet(, a division of Loral SpaceCom Corporation and the Registrant (incorporated by reference to Exhibit 10.28 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2002).
10.14				Separation Agreement and General Release, dated as of January 22, 2003, by and between G. Patrick Flemming and the Registrant (incorporated by reference to Exhibit 10.29 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended December 31, 2002).
10.15				Letter Agreement, dated as of January 31, 2003, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.30 of the Registrant's Quarterly Report on Form 10-Q, for the quarter ended December 31, 2002).
10.16				Loan and Security Agreement, dated as of September 15, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.31 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2003).
10.17				Loan Modification Agreement, dated as of October 8, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.17 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.18				Second Loan Modification Agreement, dated as of March 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.18 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.19				Third Loan Modification Agreement, dated as of June 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.19 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.20				Fourth Loan Modification Agreement, dated as of September 24, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).
10.21				Fifth Loan Modification Agreement, dated as of October 29, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.1 of the Registrant's Registration Statement on Form 8-K, File No. 000-22839).
10.22				Form of Securities Purchase Agreement, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant's Registration Statement on Form S-3, File No. 333-112024.
10.23				Form of Warrant, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant's Registration Statement on Form S-3, File No. 333-112024).
14				Registrant's Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14 of the Registrant's Annual Report on Form 10-K for the year ended June 30, 2004).

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Exhibit No.
21				Subsidiaries of the Registrant (filed herewith).
23				Consent of Independent Registered Public Accounting Firm (filed herewith).
31.1				Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended (filed herewith).
31.2				Chief Financial Officer Certification required by Rules 13a- 14 and 15d- 14 under the Securities Exchange Act of 1934, as amended (filed herewith).
32				Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002 (filed herewith).

*	Confidential treatment granted for portions of this agreement.

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