UNITEDSTATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

  QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the quarterly period ended September 30,2005

OR

  TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the transition period from         to        

Commission file number: 000-22839

Globecomm Systems Inc.(Exact nameof Registrant as specified in its charter)

|                                                             |  |                                    |  |  |  |  |
|-------------------------------------------------------------|--|------------------------------------|--|--|--|--|
| Delaware                                                    |  | 11-3225567                         |
| (Stateor other jurisdiction ofincorporation ororganization) |  | (I.R.S. EmployerIdentificationNo.) |
|                                                        |  |                               |
| 45 OserAvenue,Hauppauge,NY                                  |  | 11788                              |
| (Addressof principal executive offices)                     |  | (ZipCode)                          |
|                                                             |

Registrant's telephonenumber, including area code: (631) 231-9800

Indicate bycheck mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days.Yes        No   

Indicate by check mark whether the Registrant is an acceleratedfiler (as defined in Rule 12b-2 of the Act).Yes      No  

Indicate by check markwhether the registrant is a shell company (as defined by Rule12b-2 of the Exchange Act).Yes      No  

As of November 3,2005, there were 15,013,161 shares of the Registrant's commonstock, $0.001 par value,outstanding.

----

GLOBECOMM SYSTEMSINC.

Index to the September 30, 2005 Form 10-Q

|                                     |  |                                                                                                                           |  |        |        |        |  |  |  |  |
|-------------------------------------|--|---------------------------------------------------------------------------------------------------------------------------|--|--------|--------|--------|--|--|--|--|
|                                |  |                                                                                                                      |  | Page   |
| Part I — FinancialInformation |
| Item1.                              |  | Financial Statements                                                                                                      |  |   | 3      |   |
|                                |  | Consolidated Balance Sheets —As of September 30, 2005 (unaudited) and June  30,2005                                 |  |   | 3      |   |
|                                |  | Consolidated Statements ofOperations (unaudited) — For the three months ended September 30,2005 and 2004            |  |   | 4      |   |
|                                |  | ConsolidatedStatement of Changes in Stockholders' Equity (unaudited) —For the three months ended September 30, 2005 |  |   | 5      |   |
|                                |  | Consolidated Statements of Cash Flows (unaudited)— For the three months ended September 30, 2005 and2004            |  |   | 6      |   |
|                                |  | Notes to ConsolidatedFinancial Statements (unaudited)                                                                     |  |   | 7      |   |
| Item2.                              |  | Management's Discussion and Analysis of FinancialCondition and Results of Operations                                      |  |   | 12     |   |
| Item3.                              |  | Quantitative and Qualitative Disclosures about MarketRisk                                                                 |  |   | 25     |   |
| Item 4.                             |  | Controls andProcedures                                                                                                    |  |   | 25     |   |
|                                |  |                                                                                                                      |  |   |   |   |
| Part II —Other Information    |
| Item 1.                             |  | LegalProceedings                                                                                                          |  |   | 26     |   |
| Item 2.                             |  | UnregisteredSales of Equity Securities and Use of Proceeds                                                                |  |   | 26     |   |
| Item 3.                             |  | Defaults Upon SeniorSecurities                                                                                            |  |   | 26     |   |
| Item 4.                             |  | Submission ofMatters to a Vote of Security Holders                                                                        |  |   | 26     |   |
| Item 5.                             |  | Other Information                                                                                                         |  |   | 26     |   |
| Item 6.                             |  | Exhibits                                                                                                                  |  |   | 26     |   |
|                                |  | Signatures                                                                                                                |  |   | 27     |   |
|                                     |

2

----

PART I —FINANCIAL INFORMATION

Item 1.     Financial Statements

GLOBECOMM SYSTEMS INC.CONSOLIDATED BALANCE SHEETS(Inthousands, except sharedata)

|                                                                                                                                           |  |                  |         |             |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------|--|------------------|---------|-------------|--|--------|---------|---------|--|--|
|                                                                                                                                      |  | September30,2005 |         | June30,2005 |
|                                                                                                                                      |  | (Unaudited)      |         |        |
| **Assets**                                                                                                                                |  |             |    |        |  |   |    |    |
| Currentassets:                                                                                                                            |  |             |    |        |  |   |    |    |
| Cash and cashequivalents                                                                                                                  |  | $                | 24,790  |        |  | $      | 25,609  |    |
| Accountsreceivable,net                                                                                                                    |  |             | 21,278  |        |  |   | 22,700  |    |
| Inventories                                                                                                                               |  |             | 15,814  |        |  |   | 12,886  |    |
| Prepaidexpenses and other currentassets                                                                                                   |  |             | 753     |        |  |   | 858     |    |
| Deferred incometaxes                                                                                                                      |  |             | 38      |        |  |   | 38      |    |
| Totalcurrent assets                                                                                                                       |  |             | 62,673  |        |  |   | 62,091  |    |
| Fixedassets,net                                                                                                                           |  |             | 15,929  |        |  |   | 16,050  |    |
| Goodwill                                                                                                                                  |  |             | 7,204   |        |  |   | 7,204   |    |
| Otherassets                                                                                                                               |  |             | 1,034   |        |  |   | 1,033   |    |
| Totalassets                                                                                                                               |  | $                | 86,840  |        |  | $      | 86,378  |    |
| **Liabilitiesand Stockholders' Equity**                                                                                                   |  |             |    |        |  |   |    |    |
| Currentliabilities:                                                                                                                       |  |             |    |        |  |   |    |    |
| Accountspayable                                                                                                                           |  | $                | 16,964  |        |  | $      | 15,550  |    |
| Deferredrevenues                                                                                                                          |  |             | 3,127   |        |  |   | 5,563   |    |
| Accruedpayroll and related fringebenefits                                                                                                 |  |             | 1,561   |        |  |   | 1,671   |    |
| Otheraccruedexpenses                                                                                                                      |  |             | 1,885   |        |  |   | 2,471   |    |
| Deferredliabilities                                                                                                                       |  |             | 316     |        |  |   | 316     |    |
| Totalcurrentliabilities                                                                                                                   |  |             | 23,853  |        |  |   | 25,571  |    |
| Deferredliabilities, less currentportion                                                                                                  |  |             | 591     |        |  |   | 670     |    |
| Commitmentsandcontingencies                                                                                                               |  |             |    |        |  |   |    |    |
| Stockholders'equity:                                                                                                                      |  |             |    |        |  |   |    |    |
| Series A JuniorParticipating, shares authorized, issued and outstanding: none atSeptember 30, 2005 and June 30,2005                       |  |             | — |        |  |   | — |    |
| Common stock,$.001 par value, 50,000,000 shares authorized, shares issued:15,423,694 at September 30, 2005 and 15,103,587 at June 30,2005 |  |             | 15      |        |  |   | 15      |    |
| Additional paid-incapital                                                                                                                 |  |             | 134,458 |        |  |   | 133,003 |    |
| Accumulateddeficit                                                                                                                        |  |             | (69,571 | )      |  |   | (70,384 | )  |
| Accumulatedother comprehensiveincome                                                                                                      |  |             | 275     |        |  |   | 284     |    |
| Treasury stock, atcost, 465,351 shares at September 30, 2005 and June 30,2005                                                             |  |             | (2,781  | )      |  |   | (2,781  | )  |
| Totalstockholders'equity                                                                                                                  |  |             | 62,396  |        |  |   | 60,137  |    |
| Totalliabilities and stockholders'equity                                                                                                  |  | $                | 86,840  |        |  | $      | 86,378  |    |
|                                                                                                                                           |

Seeaccompanying notes.

3

----

GLOBECOMM SYSTEMS INC. CONSOLIDATEDSTATEMENTS OF OPERATIONS (In thousands, except per sharedata)(Unaudited)

|                                                                                      |  |                   |        |                   |  |        |         |        |  |  |
|--------------------------------------------------------------------------------------|--|-------------------|--------|-------------------|--|--------|---------|--------|--|--|
|                                                                                 |  | ThreeMonths Ended |
|                                                                                 |  | September30,2005  |        | September 30,2004 |
| Revenuesfrom ground segment systems, networks and enterprisesolutions                |  | $                 | 23,019 |              |  | $      | 21,586  |   |
| Revenuesfrom data communicationsservices                                             |  |              | 6,557  |              |  |   | 3,873   |   |
| Totalrevenues                                                                        |  |              | 29,576 |              |  |   | 25,459  |   |
| Costsand operating expenses:                                                         |  |              |   |              |  |   |    |   |
| Costs from groundsegment systems, networks and enterprisesolutions                   |  |              | 19,525 |              |  |   | 18,062  |   |
| Costsfrom data communicationsservices                                                |  |              | 5,568  |              |  |   | 3,194   |   |
| Sellingandmarketing                                                                  |  |              | 1,514  |              |  |   | 1,169   |   |
| Researchanddevelopment                                                               |  |              | 109    |              |  |   | 298     |   |
| Generalandadministrative                                                             |  |              | 2,256  |              |  |   | 628     |   |
| Totalcosts and operatingexpenses                                                     |  |              | 28,972 |              |  |   | 23,351  |   |
| Incomefromoperations                                                                 |  |              | 604    |              |  |   | 2,108   |   |
| Interestincome                                                                       |  |              | 229    |              |  |   | 73      |   |
| Incomebefore incometaxes                                                             |  |              | 833    |              |  |   | 2,181   |   |
| Provisionfor incometaxes                                                             |  |              | 20     |              |  |   | — |   |
| Netincome                                                                            |  | $                 | 813    |              |  | $      | 2,181   |   |
| Basicnet income per commonshare                                                      |  | $                 | 0.06   |              |  | $      | 0.15    |   |
| Dilutednet income per commonshare                                                    |  | $                 | 0.05   |              |  | $      | 0.15    |   |
| Weighted-averageshares used in the calculation of basic net income per commonshare   |  |              | 14,719 |              |  |   | 14,180  |   |
| Weighted-averageshares used in the calculation of diluted net income per commonshare |  |              | 15,336 |              |  |   | 14,705  |   |
|                                                                                      |

Seeaccompanying notes.

4

----

GLOBECOMM SYSTEMS INC. CONSOLIDATEDSTATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREEMONTHS ENDED SEPTEMBER 30, 2005 (In thousands)(Unaudited)

|                                       |  |                                     |        |                          |  |                    |        |                                           |  |                                       |         |                          |  |        |         |         |  |        |        |         |  |        |        |        |  |        |        |         |  |        |        |         |  |  |
|---------------------------------------|--|-------------------------------------|--------|--------------------------|--|--------------------|--------|-------------------------------------------|--|---------------------------------------|---------|--------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                  |  |     CommonStock |        | AdditionalPaid-inCapital |  | AccumulatedDeficit |        | AccumulatedOtherComprehensiveIncome(Loss) |  |     TreasuryStock |         | TotalStockholders'Equity |
|                                  |  | Shares                              |        | Amount                   |  | Shares             |        | Amount                                    |  |
| Balanceat June 30,2005                |  |                                | 15,104 |                     |  | $                  | 15     |                                      |  | $                                     | 133,003 |                     |  | $      | (70,384 | )  |  | $      | 284    |    |  |   | 465    |   |  | $      | (2,781 | )  |  | $      | 60,137 |    |
| Proceedsfrom exercise of stockoptions |  |                                | 240    |                     |  |               |   |                                      |  |                                  | 1,015   |                     |  |   |    |    |  |   |   |    |  |   |   |   |  |   |   |    |  |   | 1,015  |    |
| Proceedsfrom exercise ofwarrants      |  |                                | 80     |                     |  |               |   |                                      |  |                                  | 440     |                     |  |   |    |    |  |   |   |    |  |   |   |   |  |   |   |    |  |   | 440    |    |
| Comprehensiveincome:                  |  |                                |   |                     |  |               |   |                                      |  |                                  |    |                     |  |   |    |    |  |   |   |    |  |   |   |   |  |   |   |    |  |   |   |    |
| Netincome                             |  |                                |   |                     |  |               |   |                                      |  |                                  |    |                     |  |   | 813     |    |  |   |   |    |  |   |   |   |  |   |   |    |  |   | 813    |    |
| Lossfrom foreign currencytranslation  |  |                                |   |                     |  |               |   |                                      |  |                                  |    |                     |  |   |    |    |  |   | (9     | )  |  |   |   |   |  |   |   |    |  |   | (9     | )  |
| Totalcomprehensiveincome              |  |                                |   |                     |  |               |   |                                      |  |                                  |    |                     |  |   |    |    |  |   |   |    |  |   |   |   |  |   |   |    |  |   | 804    |    |
| Balanceat September 30,2005           |  |                                | 15,424 |                     |  | $                  | 15     |                                      |  | $                                     | 134,458 |                     |  | $      | (69,571 | )  |  | $      | 275    |    |  |   | 465    |   |  | $      | (2,781 | )  |  | $      | 62,396 |    |
|                                       |

Seeaccompanying notes.

5

----

GLOBECOMM SYSTEMS INC. CONSOLIDATEDSTATEMENTS OF CASH FLOWS (In thousands)(Unaudited)

|                                                                             |  |                   |         |                   |  |        |         |         |  |  |
|-----------------------------------------------------------------------------|--|-------------------|---------|-------------------|--|--------|---------|---------|--|--|
|                                                                        |  | ThreeMonths Ended |
|                                                                        |  | September30, 2005 |         | September 30,2004 |
| **OPERATINGACTIVITIES:**                                                    |  |              |    |              |  |   |    |    |
| Netincome                                                                   |  | $                 | 813     |              |  | $      | 2,181   |    |
| Adjustmentsto reconcile net income to net cash used in operatingactivities: |  |              |    |              |  |   |    |    |
| Depreciation andamortization                                                |  |              | 767     |              |  |   | 744     |    |
| Provision(benefit) for doubtfulaccounts                                     |  |              | 118     |              |  |   | (1,371  | )  |
| Changesin deferredliabilities                                               |  |              | (79     | )            |  |   | (79     | )  |
| Stockcompensationexpense                                                    |  |              | — |              |  |   | 5       |    |
| Changesin operating assets and liabilities:                                 |  |              |    |              |  |   |    |    |
| Accountsreceivable                                                          |  |              | 1,294   |              |  |   | (4,678  | )  |
| Inventories                                                                 |  |              | (2,928  | )            |  |   | (3,683  | )  |
| Prepaidexpenses and other currentassets                                     |  |              | 105     |              |  |   | 705     |    |
| Otherassets                                                                 |  |              | (1      | )            |  |   | (10     | )  |
| Accountspayable                                                             |  |              | 1,429   |              |  |   | 4,071   |    |
| Deferredrevenue                                                             |  |              | (2,435  | )            |  |   | 819     |    |
| Accruedpayroll and related fringebenefits                                   |  |              | (110    | )            |  |   | (186    | )  |
| Otheraccruedexpenses                                                        |  |              | (585    | )            |  |   | (26     | )  |
| Netcash used in operatingactivities                                         |  |              | (1,612  | )            |  |   | (1,508  | )  |
| **INVESTINGACTIVITIES:**                                                    |  |              |    |              |  |   |    |    |
| Purchases of fixedassets                                                    |  |              | (649    | )            |  |   | (627    | )  |
| Restrictedcash                                                              |  |              | — |              |  |   | (9,985  | )  |
| Netcash used in investingactivities                                         |  |              | (649    | )            |  |   | (10,612 | )  |
| **FINANCINGACTIVITIES:**                                                    |  |              |    |              |  |   |    |    |
| Proceeds from exercise of stockoptions                                      |  |              | 1,015   |              |  |   | 149     |    |
| Proceeds fromexercise ofwarrants                                            |  |              | 440     |              |  |   | 962     |    |
| Netcash provided by financingactivities                                     |  |              | 1,455   |              |  |   | 1,111   |    |
| Effectof foreign currency translation oncash                                |  |              | (13     | )            |  |   | (1      | )  |
| Netdecrease in cash and cashequivalents                                     |  |              | (819    | )            |  |   | (11,010 | )  |
| Cash andcash equivalents at beginning ofperiod                              |  |              | 25,609  |              |  |   | 28,252  |    |
| Cashand cash equivalents at end ofperiod                                    |  | $                 | 24,790  |              |  | $      | 17,242  |    |
|                                                                             |

Seeaccompanying notes.

6

----

GLOBECOMM SYSTEMSINC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30,2005 (Unaudited)

1. Basis of Presentation

Theaccompanying unaudited consolidated financial statements have beenprepared in accordance with accounting principles generally accepted inthe United States for interim financial information and in accordancewith the instructions to Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the UnitedStates for complete financial statements. In the opinion of management,all material adjustments (consisting of normal recurring adjustments)considered necessary for a fair presentation of the results for suchperiods have been included. The consolidated balance sheet at June 30,2005 has been derived from the audited consolidated financialstatements at that date but does not include all of the information andfootnotes required by accounting principles generally accepted in theUnited States for complete financial statements. The results ofoperations for the three months ended September 30, 2005, are notnecessarily indicative of the results that may be expected for the fullfiscal year ending June 30, 2006, or for any future period.

Theaccompanying consolidated financial statements should be read inconjunction with the audited consolidated financial statements of theCompany for the fiscal year ended June 30, 2005 and the accompanyingnotes thereto contained in the Company's Annual Report on Form10-K, filed with the Securities and Exchange Commission on September13, 2005.

Principles of Consolidation

Theconsolidated financial statements include the accounts of the Companyand its wholly-owned subsidiaries, Globecomm Network ServicesCorporation ("GNSC"), and Globecomm SystemsEurope Limited (collectively, the "Company").All significant intercompany balances and transactions have beeneliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity withaccounting principles generally accepted in the United States requiresmanagement to make estimates and assumptions that affect the amountsreported in the consolidated financial statements and accompanyingnotes. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenuein accordance with Staff Accounting Bulletin No. 104 ("SAB104"), Revenue Recognition, for its production-typecontracts that are sold separately as standard satellite ground segmentsystems when persuasive evidence of an arrangement exists, the sellingprice is fixed or determinable, collectibility is reasonably assured,delivery has occurred and the contractual performance specificationshave been met. The Company's standard satellite ground segmentsystems produced in connection with these contracts are typicallyshort-term (less than twelve months in term) and manufactured using astandard modular production process. Such systems require lessengineering, drafting and design efforts than the Company'slong-term complex production-type projects. Revenue is recognized onthe Company's standard satellite ground segment systems uponshipment and acceptance of factory performance testing which is whentitle transfers to the customer. The amount of revenues recorded oneach standard production-type contract is reduced by thecustomer's contractual holdback amount, which typically requires10% to 30% of the contract value to be retained by thecustomer until installation and final acceptance is complete. Thecustomer generally becomes obligated to pay 70% to 90% ofthe contract value upon shipment and acceptance of factory performancetesting. Installation is not deemed to be essential to thefunctionality of the system since 

7

----

installation does not require significantchanges to the features or capabilities of the system, does not requirecomplex software integration and interfacing and the Company has notexperienced any difficulties installing such equipment. In addition,the customer or other third party vendors can install the system. Theestimated relative fair value of the installation services isdetermined by management, which is typically less than thecustomer's contractual holdback percentage. If the holdback isless than the fair value of installation, the Company will deferrecognition of revenues, determined on a contract-by-contract basisequal to the fair value of the installation services. Payments receivedin advance by customers are deferred until shipment and are presentedas deferred revenues in the accompanying consolidated balancesheets.

The Company recognizes revenue using thepercentage-of-completion method of accounting upon the achievement ofcertain contractual milestones in accordance with Statement of Position81-1, Accounting for Performance of Construction-Type and CertainProduction-Type Contracts, for its non-standard, complexproduction-type contracts for the production of satellite groundsegment systems and equipment that are generally integrated into thecustomer's satellite ground segment network. The equipment andsystems produced in connection with these contracts are typicallylong-term (in excess of twelve months in term) and require significantcustomer-specific engineering, drafting and design effort in order toeffectively integrate all of the customizable earth station equipmentinto the customer's ground segment network. These contractsgenerally have larger contract values, greater economic risks andsubstantive specific contractual performance requirements due to theengineering and design complexity of such systems and relatedequipment. Progress payments received in advance by customers arenetted against the inventory balances in the accompanying consolidatedbalance sheets.

Contract costs generally include purchasedmaterial, direct labor, overhead and other direct costs. Anticipatedcontracted losses are recognized, as they become known.

Revenuesfrom data communications services are derived primarily fromInternet-based services. Service revenues from Internet access arerecognized ratably over the period in which services are provided.Payments received in advance of providing Internet access services aredeferred until the period such services are provided and are presentedas deferred revenues in the accompanying consolidated balancesheets.

Costs from Ground Segment Systems, Networks andEnterprise Solutions

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

Costs from DataCommunications Services

Costs from data communications servicesrelating to Internet-based services consist primarily of satellitespace segment charges, Internet connectivity fees, voice terminationcosts and network operations expenses. Satellite space segment chargesconsist of the costs associated with obtaining satellite bandwidth (themeasure of capacity) used in the transmission of services to and fromthe satellites leased from operators. Network operations expensesconsist primarily of costs associated with the operation of the NetworkOperation Center, on a twenty-four hour a day, seven-day a week basis,including personnel and related costs and depreciation.

Research and Development

Research and developmentexpenditures are expensed as incurred.

Stock-BasedCompensation

In December 2004, the Financial AccountingStandards Board (FASB) issued SFAS No. 123 (revised 2004), Share-BasedPayment, which is a revision of SFAS 123 ("SFAS123R"). SFAS 123R 

8

----

eliminates the ability to account forshare-based compensation under the intrinsic value method permitted byAPB 25. This requires the Company to adopt the fair value model forrecognizing compensation expense for employee stock options, and wouldhave the effect of reducing the Company's reported net income andnet income per share.

On July 1, 2005, the Company adoptedSFAS  123R using a modified prospective application, as permittedunder SFAS 123R.   Accordingly, prior period amounts have notbeen restated.   Under this application, the Company is requiredto record compensation expense for all awards granted after the date ofadoption and for the unvested portion of previously granted awards thatremain outstanding at the date of adoption. Before the adoption of SFAS123R, the Company applied APB 25 to account for its stock-basedawards.   Under APB 25, the Company was not required to recognizecompensation expense for the cost of stock options. 

TheBlack-Scholes option valuation model was developed for use inestimating the fair value of traded options, which have no vestingrestrictions and are fully transferable. In addition, option valuationmodels require the input of highly subjective assumptions, includingthe expected stock price volatility. Because the Company's stockoptions have characteristics significantly different from those oftraded options, and because changes in the subjective input assumptionscan materially affect the fair value estimate, in management'sopinion, the existing models do not necessarily provide a reliablesingle measure of the fair value of the Company's stock optionsunder the Black-Scholes option valuation model.

The followingtable details the effect on net income and earnings per share hadstock-based compensation expense for the stock options been recorded inthe three months ended September 30, 2004 based on the fair-valuemethod under SFAS 123.   The reported and pro forma net incomeand earnings per share for the three months ended September 30, 2005 inthe table below are the same since stock-based compensation expense iscalculated under the provisions of SFAS 123R.   There was nostock based compensation expense for the three months ended September30,2005.

|                                                             |  |                                      |         |                  |  |        |       |         |  |  |
|-------------------------------------------------------------|--|--------------------------------------|---------|------------------|--|--------|-------|---------|--|--|
|                                                        |  | ThreeMonths Ended                    |
|                                                        |  | September30,2005                     |         | September30,2004 |
|                                                        |  | (Unaudited)                          |
|                                                        |  | (Inthousands, except per share data) |
| Reported netincome                                          |  | $                                    | 813     |             |  | $      | 2,181 |    |
| Stockcompensation expense included in reported netincome    |  |                                 | — |             |  |   | 5     |    |
| Stock compensationexpense determined under fair valuemethod |  |                                 | — |             |  |   | (428  | )  |
| Pro-formanetincome                                          |  | $                                    | 813     |             |  | $      | 1,758 |    |
| Reportedbasic net income per commonshare                    |  | $                                    | 0.06    |             |  | $      | 0.15  |    |
| Reporteddiluted net income per commonshare                  |  | $                                    | 0.05    |             |  | $      | 0.15  |    |
| Pro-formabasic net income per commonshare                   |  | $                                    | 0.06    |             |  | $      | 0.12  |    |
| Pro-formadiluted net income per commonshare                 |  | $                                    | 0.05    |             |  | $      | 0.12  |    |
|                                                             |

Goodwilland Other Intangible Assets

Goodwill represents the excess ofthe purchase price of businesses over the fair value of theidentifiable net assets acquired. In accordance with SFAS No. 142,Goodwill and Other Intangible Assets, goodwill and other indefinitelife intangible assets are no longer amortized, but instead tested forimpairment at least annually. The impairment test for goodwill uses atwo-step approach, which is performed at the reporting unit level. Stepone compares the fair value of the reporting unit (calculated using adiscounted cash flow method) to its carrying value. If the carryingvalue exceeds the fair value, there is a potential impairment and steptwo must be performed. Step two compares 

9

----

the carrying value of the reportingunit's goodwill to its implied fair value (i.e., fair value ofthe reporting unit less the fair value of the unit's assets andliabilities, including identifiable intangible assets). If the carryingvalue of goodwill exceeds its implied fair value, the excess isrequired to be recorded as an impairment. There have been no eventsduring the three months ended September 30, 2005 that would result inany goodwill impairment.

Comprehensive Income

Comprehensive income for the three months ended September 30, 2005of approximately $804,000 includes a foreign currency translation lossof approximately $9,000. Comprehensive income for the three monthsended September 30, 2004 of approximately $2,160,000 includes a foreigncurrency translation loss of approximately $21,000.

Income Taxes

In assessing the realizability ofdeferred tax assets, management considers whether it is more likelythan not that some portion or all of the deferred tax assets will berealized. The ultimate realization of the net deferred tax assets isdependent upon the generation of future taxable income prior to theexpiration of any net operating loss carryforwards. For the threemonths ended September 30, 2005 and the year ended June 30, 2005, dueto the uncertainty regarding the Company's ability to utilize itsnet operating losses in the future, the Company provided a valuationallowance against its previously recorded deferred tax assets exceptfor approximately $38,000, representing state investment tax creditcarryforwards that will be utilized to offset state capital taxes onthe Company's combined state tax return.

ProductWarranties

The Company offers warranties on its contracts, thespecific terms and conditions of which vary depending upon the contractand work performed. Generally, a basic limited warranty, includingparts and labor, is provided to customers for one year. The Company canrecoup certain of these costs through product warranties it holds withits original equipment manufacturers, which typically are one year interm. Historically, warranty expense has been minimal, however,management periodically assesses the need for any additional warrantyreserve.

Reclassifications

Certain prior periodamounts have been reclassified to conform with the current yearpresentation.

2. Basic and Diluted Net Income Per CommonShare

The Company computes net income per share in accordancewith the provisions of SFAS No. 128, Earnings Per Share. Basic netincome per common share is computed by dividing the net income for theperiod by the weighted-average number of common shares outstanding forthe period. For diluted earnings per share the weighted average sharesinclude the incremental common shares issuable upon the exercise ofstock options and warrants (using the treasury stock method). Theincremental common shares for stock options and warrants are excludedfrom the calculation of diluted net income per share, if their effectis anti-dilutive. Diluted net income per share for the three monthsended September 30, 2005 and 2004, excludes the effect of approximately2,395,000, and 2,512,000 stock options and warrants in the calculationof the incremental common shares, respectively, as their effect wouldhave been anti-dilutive.

10

----

3. Inventories

Inventoriesconsist of thefollowing:

|                                 |  |                              |        |              |  |        |        |        |  |  |
|---------------------------------|--|------------------------------|--------|--------------|--|--------|--------|--------|--|--|
|                            |  | September30, 2005(Unaudited) |        | June 30,2005 |
|                            |  | (Inthousands)                |
| Raw materials andcomponentparts |  | $                            | 113    |         |  | $      | 111    |   |
| Work-in-progress                |  |                         | 17,426 |         |  |   | 15,485 |   |
|                            |  |                         | 17,539 |         |  |   | 15,596 |   |
| Lessprogresspayments            |  |                         | 1,725  |         |  |   | 2,710  |   |
|                            |  | $                            | 15,814 |         |  | $      | 12,886 |   |
|                                 |

4.Segment Information

The Company operates through two businesssegments. Its ground segment systems, networks and enterprise solutionssegment, through Globecomm Systems Inc. and Globecomm Systems EuropeLimited, is engaged in the design, assembly and installation of groundsegment systems and networks. Its data communications services segment,through GNSC, provides satellite communication servicescapabilities.

The Company's reportable segments arebusiness units that offer different products and services. Thereportable segments are each managed separately because they providedistinct products and services.

The following is theCompany's business segment information for the three months endedSeptember 30, 2005 and 2004 and as of September 30, 2005 and June 30,2005:

|                                                         |  |                   |        |                  |  |        |        |         |  |  |
|---------------------------------------------------------|--|-------------------|--------|------------------|--|--------|--------|---------|--|--|
|                                                    |  | ThreeMonths Ended |
|                                                    |  | September30,2005  |        | September30,2004 |
|                                                    |  | (Unaudited)       |
|                                                    |  | (Inthousands)     |
| Revenues:                                               |  |              |   |             |  |   |   |    |
| Groundsegment systems, networks and enterprisesolutions |  | $                 | 23,483 |             |  | $      | 21,706 |    |
| Datacommunicationsservices                              |  |              | 6,904  |             |  |   | 4,754  |    |
| Intercompanyeliminations                                |  |              | (811   | )           |  |   | (1,001 | )  |
| Totalrevenues                                           |  | $                 | 29,576 |             |  | $      | 25,459 |    |
| Incomefrom operations:                                  |  |              |   |             |  |   |   |    |
| Ground segment systems,networks and enterprisesolutions |  | $                 | 403    |             |  | $      | 2,221  |    |
| Datacommunicationsservices                              |  |              | 111    |             |  |   | (117   | )  |
| Interestincome                                          |  |              | 229    |             |  |   | 73     |    |
| Intercompanyeliminations                                |  |              | 90     |             |  |   | 4      |    |
| Incomebefore incometaxes                                |  | $                 | 833    |             |  | $      | 2,181  |    |
| Depreciationand amortization:                           |  |              |   |             |  |   |   |    |
| Ground segment systems,networks and enterprisesolutions |  | $                 | 292    |             |  | $      | 303    |    |
| Datacommunicationsservices                              |  |              | 493    |             |  |   | 445    |    |
| Intercompanyeliminations                                |  |              | (18    | )           |  |   | (4     | )  |
| Totaldepreciation andamortization                       |  | $                 | 767    |             |  | $      | 744    |    |
| Expendituresfor long-lived assets:                      |  |              |   |             |  |   |   |    |
| Ground segmentsystems, networks and enterprisesolutions |  | $                 | 172    |             |  | $      | 33     |    |
| Datacommunicationsservices                              |  |              | 477    |             |  |   | 594    |    |
| Totalexpenditures for long-livedassets                  |  | $                 | 649    |             |  | $      | 627    |    |
|                                                         |

11

----

|                                                         |  |                             |         |             |  |        |         |         |  |  |
|---------------------------------------------------------|--|-----------------------------|---------|-------------|--|--------|---------|---------|--|--|
|                                                    |  | September30,2005(Unaudited) |         | June30,2005 |
|                                                    |  | (Inthousands)               |
| Assets:                                                 |  |                        |    |        |  |   |    |    |
| Groundsegment systems, networks and enterprisesolutions |  | $                           | 140,249 |        |  | $      | 139,117 |    |
| Datacommunicationsservices                              |  |                        | 14,434  |        |  |   | 13,712  |    |
| Intercompanyeliminations                                |  |                        | (67,843 | )      |  |   | (66,451 | )  |
| Totalassets                                             |  | $                           | 86,840  |        |  | $      | 86,378  |    |
|                                                         |

Item2. Management's Discussion and Analysis of Financial Conditionand Results of Operations.

You should read the followingdiscussion of our financial condition and results of operations withthe consolidated financial statements and related notes includedelsewhere in this Quarterly Report on Form 10-Q. This discussioncontains, in addition to historical information, forward-lookingstatements within the meaning of the Private Securities LitigationReform Act of 1995, based on our current expectations, assumptions,estimates and projections. These forward-looking statements involverisks and uncertainties. Our actual results could differ materiallyfrom those anticipated in these forward-looking statements as a resultof certain factors, such as, among others, uncertain demand for ourservices and products due to economic and industry-specific conditions,the risks associated with operating in international markets and ourdependence on a limited number of contracts for a high percentage ofour revenues. These risks and others are more fully described in the"Risk Factors" section of this QuarterlyReport and in our other filings with the Securities and ExchangeCommission, including our Annual Report on Form 10-K and QuarterlyReports on Form 10-Q. We undertake no obligation to update publicly anyforward-looking statements for any reason, even if new informationbecomes available or other events occur in the future.

Overview

Our business is global and subject totechnological and business trends in the telecommunicationsmarketplace. It is also affected by geopolitical developments involvingareas of the world in which our customers are located, particularly indeveloping countries and areas of the world involved in armedconflicts.

Our business had been adversely affected by theglobal economic slowdown from 2000–2004 and, in particular, thesignificant challenges facing the telecommunications industryworldwide. We continue to see improvement in the segments we serve, inparticular within the U.S. Government and government related entitiesmarketplace. However, some of the adverse consequences of the downturncontinue to impact our business based upon the inability of some of ourcustomers and prospects to raise capital to fund projects,particularly, in developing countries.

We currently have twosignificant contracts with the Ministry of Communication of the IslamicTransitional State of Afghanistan, and derived 13% of ourrevenues in the three months ended September 30, 2005 from thiscustomer. Also, we conduct a substantial proportion of our business indeveloping countries. Hostilities in Afghanistan, or in connection withany armed conflict affecting areas where our customers are located, mayimpact our performance on these contracts, and consequently our resultsof operations.

Revenues related to contracts for ground segmentsystems, networks and enterprise solutions and data communicationsservices have been fixed-price contracts in a majority of cases.Profitability of such contracts is subject to inherent uncertainties asto the cost of performance. In addition to possible errors or omissionsin making initial estimates, cost overruns may be incurred as a resultof unforeseen obstacles, including both physical conditions andunexpected problems encountered in engineering design and testing.Since our business is frequently concentrated in a limited number oflarge contracts, a significant cost overrun on any contract could havea material adverse effect on our business, financial condition andresults of operations.

Contract costs generally includepurchased material, direct labor, overhead and other direct costs.Anticipated contract losses are recognized in the period identified.Costs from ground segment 

12

----

systems, networks and enterprise solutionsconsist primarily of the costs of purchased materials (includingshipping and handling costs), direct labor and related overheadexpenses, project-related travel and living costs and subcontractorsalaries. Costs from data communications services consist primarily ofsatellite space segment charges, Internet connectivity fees and networkoperations expenses. Satellite space segment charges consist of thecosts associated with obtaining satellite bandwidth (the measure ofcapacity) used in the transmission of services to and from thesatellites leased from operators. Network operations expenses consistprimarily of costs associated with the operation of the networkoperations center on a twenty-four hour a day, seven day a week basis,including personnel and related costs and depreciation. Selling andmarketing expenses consist primarily of salaries, travel and livingcosts for sales and marketing personnel. Research and developmentexpenses consist primarily of salaries and related overhead expenses.General and administrative expenses consist of expenses associated withour management, finance, contract and administrative functions.

Critical Accounting Policies

Certain of our accountingpolicies require judgment by management in selecting the appropriateassumptions for calculating financial estimates. By their nature, thesejudgments are subject to an inherent degree of uncertainty. Thesejudgments are based on our historical experience, the terms of existingcontracts, our observance of trends in the industry, informationprovided by our customers, and information available from other outsidesources, as appropriate. Actual results may differ from these judgmentsunder different assumptions or conditions. Our accounting policies thatrequire management to apply significant judgment include:

Revenue Recognition

We recognize revenue inaccordance with Staff Accounting Bulletin No. 104 ("SAB104"), Revenue Recognition, for our production-typecontracts that are sold separately as standard satellite ground segmentsystems when persuasive evidence of an arrangement exists, the sellingprice is fixed or determinable, collectibility is reasonably assured,delivery has occurred and the contractual performance specificationshave been met. Our standard satellite ground segment systems producedin connection with these contracts are typically short-term (less thantwelve months in term) and manufactured using a standard modularproduction process. Such systems require less engineering, drafting anddesign efforts than our long-term complex production-type projects.Revenue is recognized on our standard satellite ground segment systemsupon shipment and acceptance of factory performance testing which iswhen title transfers to the customer. The amount of revenues recordedon each standard production-type contract is reduced by thecustomer's contractual holdback amount, which typically requires10% to 30% of the contract value to be retained by thecustomer until installation and final acceptance is complete. Thecustomer generally becomes obligated to pay 70% to 90% ofthe contract value upon shipment and acceptance of factory performancetesting. Installation is not deemed to be essential to thefunctionality of the system since installation does not requiresignificant changes to the features or capabilities of the equipment,does not require complex software integration and interfacing and wehave not experienced any difficulties installing such equipment. Inaddition, the customer or other third party vendors can install theequipment. The estimated relative fair value of the installationservices is determined by management, which is typically less than thecustomer's contractual holdback percentage. If the holdback isless than the fair value of installation, we will defer recognition ofrevenues, determined on a contract-by-contract basis equal to the fairvalue of the installation services. Payments received in advance bycustomers are deferred until shipment and are presented as deferredrevenues.

We recognize revenue using thepercentage-of-completion method of accounting upon the achievement ofcertain contractual milestones in accordance with Statement of Position81-1, Accounting for Performance of Construction-Type and CertainProduction-Type Contracts, for our non-standard, complexproduction-type contracts for the production of satellite groundsegment systems and equipment that are generally integrated into thecustomer's satellite ground segment network. The equipment andsystems produced in connection with these contracts are typically

13

----

long-term (in excess of twelve months interm) and require significant customer-specific engineering, draftingand design effort in order to effectively integrate all of thecustomizable earth station equipment into the customer's groundsegment network. These contracts generally have larger contract values,greater economic risks and substantive specific contractual performancerequirements due to the engineering and design complexity of suchsystems and related equipment. Progress payments received in advance bycustomers are netted against the inventories balance.

Costsfrom Ground Segment Systems, Networks and EnterpriseSolutions

Costs related to our production-type contractsand our non-standard, complex production-type contracts rely onestimates based on total expected contract costs. We use estimates ofthe costs applicable to various elements which we believe arereasonable. Since these contract costs depend on estimates, which areassessed continually during the term of these contracts, costs aresubject to revisions as the contract progresses to completion. Revisionin cost estimates are reflected in the period in which they becomeknown. In the event an estimate indicates that a loss will be incurredat completion, we record the loss in the period identified.

Goodwill Impairment

Goodwill represents the excessof the purchase price of businesses over the fair value of theidentifiable net assets acquired. In accordance with SFAS No. 142,Goodwill and Other Intangible Assets, goodwill and other indefinitelife intangible assets are no longer amortized, but instead tested forimpairment at least annually. The impairment test for goodwill uses atwo-step approach, which is performed at the reporting unit level. Stepone compares the fair value of the reporting unit (calculated using adiscounted cash flow method) to its carrying value. If the carryingvalue exceeds the fair value, there is a potential impairment and steptwo must be performed. Step two compares the carrying value of thereporting unit's goodwill to its implied fair value (i.e., fairvalue of the reporting unit less the fair value of the unit'sassets and liabilities, including identifiable intangible assets). Ifthe carrying value of goodwill exceeds its implied fair value, theexcess is required to be recorded as an impairment charge. Theimpairment test is dependent upon estimated future cash flows of thedata communication services segment. There have been no events duringthe three months ended September 30, 2005 that would result in anygoodwill impairment.

Allowances for DoubtfulAccounts

We maintain allowances for doubtful accounts forestimated losses resulting from the inability of our customers to makerequired payments. We assess the customer's ability to pay basedon a number of factors, including our past transaction history with thecustomer and the creditworthiness of the customer. An assessment of theinherent risks in conducting our business with foreign customers isalso made since a significant portion of our revenues is international.Management specifically analyzes accounts receivable, historical baddebts, customer concentrations, customer creditworthiness and currenteconomic trends. If the financial condition of our customers were todeteriorate in the future, resulting in an impairment of their abilityto make payments, additional allowances may be required.

Inventories

Inventories consist primarily ofwork-in-progress from costs incurred in connection with specificcustomer contracts, which are stated at the lower of cost or marketvalue. In assessing the realizability of inventories, we are requiredto make estimates of the total contract costs based on the variouselements of the work-in-progress. It is possible that changes to theseestimates could cause a reduction in the net realizable value of ourinventories.

Results of Operations

Three MonthsEnded September 30, 2005 and 2004

Revenues from GroundSegment Systems, Networks and Enterprise Solutions.    Revenuesincreased by $1.4 million, or 6.6%, to $23.0 million for thethree months ended September 30, 2005 

14

----

compared to $21.6 million for the threemonths ended September 30, 2004. The increase in revenues was primarilythe result of increased infrastructure sales in the U.S. Government andgovernment related entities marketplace, coupled with increased salesdue to a general overall improvement in the telecommunications industrysegments we serve and the achievement of shipment milestones associatedwith projects currently in progress offset by a decrease in sales atGlobecomm Systems Europe Limited.

Revenues from DataCommunication Services.    Revenues increased by $2.7 million, or69.3%, to $6.6 million for the three months ended September 30,2005 compared to $3.9 million for the three months ended September 30,2004. The increase was due to the increase in Voice Over InternetProtocol (VoIP) and the video broadcast service offerings.

Costs from Ground Segment Systems, Networks and EnterpriseSolutions.    Costs from ground segment systems, networks andenterprise solutions increased by $1.5 million, or 8.1%, to$19.5 million for the three months ended September 30, 2005 from $18.1million for the three months ended September 30, 2004. The increase wasattributable to a higher revenue base. Costs as a percentage of relatedrevenues increased to 84.8% for the three months ended September30, 2005 from 83.7% for the three months ended September 30,2004. This increase was mainly attributable to a non-recurring costrecovery of $0.4 million related to a settlement with a large customerin the three months ended September 30, 2004, while no comparablebenefit occurred in this period in 2005.

Costs from DataCommunications Services.    Costs from data communicationsservices increased by $2.4 million, or 74.3%, to $5.6 millionfor the three months ended September 30, 2005 from $3.2 million for thethree months ended September 30, 2004. The increase is a result ofadditional voice termination costs for the VoIP service and spacesegment costs required for our video broadcast service.

Selling and Marketing.    Selling and marketing expensesincreased by $0.3 million, or 29.5%, to $1.5 million for thethree months ended September 30, 2005 from $1.2 million for the threemonths ended September 30, 2004. The increase is a result of anincrease in consulting fees and salary and salary related expensesrelated to marketing efforts.

Research andDevelopment.    Research and development expenses decreased by$0.2 million, or 63.4%, to $0.1 million for the three monthsended September 30, 2005 compared to $0.3 million for the three monthsended September 30, 2004. The decrease was principally due to costsassociated with product research efforts in remote video monitoringsystems in the three months ended September 30, 2004, which did notreoccur in the 2005 period.

General andAdministrative.    General and administrative expenses increasedby $1.6 million, or 259.2%, to $2.3 million for the three monthsended September 30, 2005 from $0.6 million for the three months endedSeptember 30, 2004. The increase in general and administrative expenseswas primarily due to a bad debt recovery of $1.5 million related to asettlement agreement reached with a customer in the three months endedSeptember 30, 2004, which did not reoccur in the 2005 period.

Interest Income.    Interest income increased by $0.2million, or 213.7%, to $0.2 million for the three months endedSeptember 30, 2005 from $0.1 million for the three months endedSeptember 30, 2004 as a result of increased interest rates.

Liquidity and Capital Resources

At September 30, 2005, wehad working capital of $38.8 million, including cash and cashequivalents of $24.8 million, net accounts receivable of $21.2 million,inventories of $15.8 million, prepaid expenses and other current assetsof $0.8 million, offset by $17.0 million in accounts payable, $3.1million in deferred revenues and $3.8 million in accrued expenses andother current liabilities.

Net cash used in operating activitiesduring the three months ended September 30, 2005 was $1.6 million,which primarily related to an increase in inventory of $2.9 million dueto timing of shipments of certain jobs and a reduction in progresspayments on long term contracts, a decrease in deferred revenue of $2.4million due to timing differences between project billings and revenuerecognition 

15

----

milestones resulting from specific customercontracts, offset by an increase in accounts payable of $1.4 millionrelating to the increase in revenues and the timing of vendor payments,a decrease in accounts receivables due to the timing of billings andcollections from customers, net income of $0.8 million, and a non-cashitem representing depreciation and amortization expense of $0.8 millionprimarily related to the network operations center and satellite earthstation equipment.

Net cash used in investing activities duringthe three months ended September 30, 2005 was $0.6 million, whichrelated to the purchase of $0.6 million of fixed assets for our networkoperations center, specifically related to the video broadcast and VoIPplatforms.

Net cash provided by financing activities during thethree months ended September 30, 2005 was $1.5 million, which relatedto $1.0 million of proceeds from the exercise of stock options and $0.4million of proceeds from the exercise of warrants.

We have acredit agreement in place which provides for a working capital creditfacility of up to $20.0 million, which expires in November 2006. Theline of credit bears interest at the prime rate, and is collateralizedby a first security interest on all of our personal property. Thecredit agreement allows us to borrow and apply letters of creditagainst the availability under the line of credit. In addition, thecredit agreement contains certain financial and other covenants,deposit requirements, monthly reporting provisions and otherrequirements, as defined in the credit agreement, with which we were incompliance at September 30, 2005. As of September 30, 2005, noborrowings were outstanding under this credit facility, however, therewere standby letters of credit of approximately $12.8 million, whichwere applied against and reduced the amounts available under thiscredit facility.

We lease satellite space segment services andother equipment under various operating lease agreements, which expirein various years through 2009. Future minimum lease payments due onthese leases through September 30, 2006 are approximately $8.0million.

At September 30, 2005 we had contractual obligationsand commercial commitments as follows (in thousands):

PaymentsDue by Period

|                              |  |        |        |                 |  |           |        |           |  |                  |        |        |  |        |        |        |  |        |         |        |  |  |
|------------------------------|--|--------|--------|-----------------|--|-----------|--------|-----------|--|------------------|--------|--------|--|--------|--------|--------|--|--------|---------|--------|--|--|
|                         |  | Total  |        | Lessthan 1 year |  | 1-3 years |        | 4-5 years |  | Morethan 5 years |
| **ContractualObligations**   |  |   |   |            |  |      |   |      |  |             |   |   |  |   |   |   |  |   |    |   |
| Operatingleases              |  | $      | 14,319 |            |  | $         | 8,048  |      |  | $                | 5,937  |   |  | $      | 334    |   |  | $      | — |   |
| Total contractualobligations |  | $      | 14,319 |            |  | $         | 8,048  |      |  | $                | 5,937  |   |  | $      | 334    |   |  | $      | — |   |
|                              |

Amount of Commitment Expiration PerPeriod

|                                 |  |        |        |                  |  |           |        |          |  |                 |        |        |  |        |         |        |  |        |          |        |  |  |
|---------------------------------|--|--------|--------|------------------|--|-----------|--------|----------|--|-----------------|--------|--------|--|--------|---------|--------|--|--------|----------|--------|--|--|
|                            |  | Total  |        | Less than 1 year |  | 1-3 years |        | 4-5years |  | More than5years |
| **Other CommercialCommitments** |  |   |   |             |  |      |   |     |  |            |   |   |  |   |    |   |  |   |     |   |
| Standbyletters ofcredit         |  | $      | 12,756 |             |  | $         | 4,544  |     |  | $               | 8,212  |   |  | $      | — |   |  | $      | —- |   |
| Total commercialcommitments     |  | $      | 12,756 |             |  | $         | 4,544  |     |  | $               | 8,212  |   |  | $      | — |   |  | $      | —  |   |
|                                 |

We expect that our cashand working capital requirements for operating activities will increaseas we continue to implement our business strategy. Managementanticipates additional working capital requirements for work inprogress for orders as obtained and that we may experience negativecash flows due to quarter to quarter operating performance.

GNSChas had, and we expect it will continue to have, working capital andadditional capital expenditure requirements, which have, and maycontinue to put increased pressure on our capital resources.

Ourfuture capital requirements will depend upon many factors, includingthe success of our marketing efforts in the ground segment systems,networks and data communications services 

16

----

business, the nature and timing of customerorders and the level of capital requirements related to the expansionof our service offerings. Based on current plans, we believe that ourexisting capital resources will be sufficient to meet working capitalrequirements at least through September 30, 2006. However, we cannotassure you that there will be no unforeseen events or circumstancesthat would consume available resources significantly before that time.For example, future events occurring in response to the hostilities inIraq and Afghanistan, or in connection with any armed conflict,including, without limitation, future terrorist attacks against theUnited States or its allies or military or trade or travel disruptionsimpacting our ability to sell and market our products and services inthe United States and internationally may impact our results ofoperations. In particular, we currently have two significant contractswith the Ministry of Communication of the Islamic Transitional State ofAfghanistan. Unexpected events negatively impacting internationalcommerce, including additional conflicts in the Middle East, coulddefer our ability to close contracts with international customers.Additional funds may not be available when needed and, even ifavailable, additional funds may be raised through financingarrangements and/or the issuance of preferred or common stock orconvertible securities on terms and prices significantly more favorablethan those of the currently outstanding common stock, which could havethe effect of diluting or adversely affecting the holdings or rights ofour existing stockholders. If adequate funds are unavailable, we may berequired to delay, scale back or eliminate some of our operatingactivities, including, without limitation, the timing and extent of ourmarketing programs, capital expenditures and research and developmentactivities and we may be required to reduce headcount. We cannot assureyou that additional financing will be available to us on acceptableterms, or at all.

Risk Factors

A limitednumber of customer contracts account for a significant portion of ourrevenues, and the inability to replace a key customer contract or thefailure of the customer to implement its plans would adversely affectour results of operations, business and financial condition.

We rely on a small number of customer contracts for a large portionof our revenue. Specifically, we have agreements with five customers toprovide equipment and services, from which we expect to generate asignificant portion of our future revenues. We derived 52% ofour revenues in the three months ended September 30, 2005 from fourcustomers. Also, we conduct a substantial proportion of our business indeveloping countries. If any key customer is unable to implement itsbusiness plan, the market for these customers' services declines,political or military conditions make performance impossible or if allor any of the customers modifies or terminates its agreement with us,and we are unable to replace these contracts, our results ofoperations, business and financial condition would be materiallyharmed.

Risks associated with operating ininternational markets could restrict our ability to expand globally andharm our business and prospects.

We market and sell ourproducts and services in the United States and internationally. Weanticipate that international sales will continue to account for asignificant portion of our total revenues for the foreseeable futurewith a significant portion of the international revenue coming fromdeveloping countries, including countries in areas of conflict likeAfghanistan. There are a number of risks inherent in conducting ourbusiness internationally, including:

|              |                                                                                                                                                                                                                                     |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | general political and economic instabilityin international markets, including the hostilities in Iraq andAfghanistan, could impede our ability to deliver our products andservices to customers and harm our results of operations; |

|              |                                                                                                 |
|--------------|-------------------------------------------------------------------------------------------------|
| •  | difficulties in collecting accountsreceivable could adversely affect our results of operations; |

|              |                                                                                                                 |
|--------------|-----------------------------------------------------------------------------------------------------------------|
| •  | changes in regulatory requirements couldrestrict our ability to deliver services to our internationalcustomers; |

|              |                                                                                                                                  |
|--------------|----------------------------------------------------------------------------------------------------------------------------------|
| •  | export restrictions,tariffs, licenses and other trade barriers could prevent us fromadequately equipping our network facilities; |

|              |                                                                                                                                           |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------|
| •  | differing technology standards acrosscountries may impede our ability to integrate our products and servicesacross international borders; |

17

----

|              |                                                                                                                                                                                                               |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | protectionistlaws and business practices favoring local competition may give unequalbargaining leverage to key vendors in countries where competition isscarce, significantly increasing our operating costs; |

|              |                                                                                                               |
|--------------|---------------------------------------------------------------------------------------------------------------|
| •  | increased expenses associated withmarketing services in foreign countries could affect our ability tocompete; |

|              |                                                                                                                                              |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------|
| •  | relying on localsubcontractors for installation of our products and services couldadversely impact the quality of our products and services; |

|              |                                                                                              |
|--------------|----------------------------------------------------------------------------------------------|
| •  | difficulties in staffing and managingforeign operations could affect our ability to compete; |

|              |                                                                           |
|--------------|---------------------------------------------------------------------------|
| •  | complex foreign laws and treaties couldaffect our ability to compete; and |

|              |                                                                  |
|--------------|------------------------------------------------------------------|
| •  | potentially adverse taxes could affect ourresults of operations. |

These and other risks could impede ourability to manage our international operations effectively, limit thefuture growth of our business, increase our costs and requiresignificant management attention.

If GNSC does notexecute its business strategy or if the market for its services failsto develop or develops more slowly than we expect, our results ofoperations will be harmed.

GNSC's future revenues andresults of operations are dependent on its execution of its businessstrategy and development of the market for its current and futureservices. Despite the settlement agreements which modified and reducedour satellite bandwidth obligations, we cannot assure you that thetransponder space will be efficiently and substantially utilized orthat an increase in orders will be realized. GNSC has had, and weexpect will continue to have, cash requirements, which have decreasedand will continue to decrease our cash resources. If GNSC does notefficiently and substantially utilize its transponder space capacityand increase its level of orders, its cash requirements may increaseand our results of operations will be harmed. In addition, significantcapital expenditures have been required as we have built our VoIP andvideo broadcast service offerings. If our VoIP and video broadcastservice offerings are not accepted, or if the market fails to grow, wecannot assure you that we will be able to realize an appropriate returnon these capital expenditures.

In the event of acatastrophic loss affecting our operations in Hauppauge, New York ourresults of operations would be harmed.

GNSC revenues andresults of operations are dependant on the infrastructure of theNetwork Operations Center and the International Teleport at ourheadquarters in Hauppauge, New York. A catastrophic event to thisfacility or to the infrastructure of the surrounding area would resultin significant delays in restoring a majority of the datacommunications services capabilities. These capabilities permit us tooffer an integrated suite of products and services and the incapacityof our communications infrastructure would negatively impact ourability to sell our ground segment systems and networks. This wouldresult in the loss of revenues and adversely effect our business,results of operations and financial condition.

Ourmarkets are highly competitive and we have many establishedcompetitors, and we may lose market share as a result.

Themarkets in which we operate are highly competitive and this competitioncould harm our ability to sell our products and services on prices andterms favorable to us. Our primary competitors in the satellite groundsegment systems and networks market generally fall into two groups: (1)system integrators, like ITT, Data Path, and Global CommunicationServices, and (2) equipment manufacturers which also provide integratedsystems, like Andrew Corporation, Viasat, Alcatel and ND Satcom AG.

In the end-to-end satellite-based enterprise solutions and broadcastservices markets, we compete with other satellite communicationcompanies who provide similar services, like Ascent, Globecast, andConvergent Media Systems. In addition, in managed network services wemay compete with other communications service providers like Segoviaand AT&T, and satellite owners like Panamsat, Loral 

18

----

Skynet, New Skies Satellites N.V. andIntelsat. We anticipate that our competitors may develop or acquireservices that provide functionality that is similar to that provided byour services and that those services may be offered at significantlylower prices or bundled with other services. These competitors may havethe financial resources to withstand substantial price competition, maybe in a better position to endure difficult economic conditions ininternational markets and may be able to respond more quickly than wecan to new or emerging technologies and changes in customerrequirements. Moreover, many of our competitors have more extensivecustomer bases, broader customer relationships and broader industryalliances than we do that they could use to their advantage incompetitive situations.

The markets in which we operate havelimited barriers to entry, and we expect that we will face additionalcompetition from existing competitors and new market entrants in thefuture. Moreover, our current and potential competitors haveestablished or may establish strategic relationships among themselvesor with third parties to increase the ability of their products andservices to address the needs of our current and prospective customers.The potential strategic relationships of existing and new competitorsmay rapidly acquire significant market share, which would harm ourbusiness and financial condition.

If our products andservices are not accepted in developing countries with emergingmarkets, our revenues will be impaired.

We anticipate thata substantial portion of the growth in the demand for our products andservices will come from customers in developing countries due to a lackof basic communications infrastructure in these countries. However, wecannot guarantee an increase in the demand for our products andservices in developing countries or that customers in these countrieswill accept our products and services at all. Our ability to penetrateemerging markets in developing countries is dependent upon variousfactors including:

|              |                                                                                                                                                                                              |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | the speed at whichcommunications infrastructure, including terrestrial microwave, coaxialcable and fiber optic communications systems, which compete withsatellite-based services, is built; |

|              |                                                                                                                          |
|--------------|--------------------------------------------------------------------------------------------------------------------------|
| •  | the effectiveness of our local resellersand sales representatives in marketing and selling our products andservices; and |

|              |                                                          |
|--------------|----------------------------------------------------------|
| •  | the acceptance of ourproducts and services by customers. |

If our products and servicesare not accepted, or the market potential we anticipate does notdevelop, our revenues will be impaired.

We have had ahistory of operating losses and negative cash flow. Our negative cashflows may increase as we pursue our business plan and our losses mayreoccur, which may strain our capital resources.

Althoughwe have had six consecutive profitable quarters, we have incurredsignificant net losses since we began operating in August 1994. Weincurred net losses of $1.3 million during the fiscal year ended June30, 2004, and $19.6 million during the fiscal year ended June 30, 2003.As of September 30, 2005 our accumulated deficit was $69.6 million. Ourability to maintain profitability will depend upon our ability togenerate significant revenues through new profitable customer contractsand the expansion of our existing products and services, including ourdata communications services. We cannot assure you that we will be ableto obtain new profitable customer contracts or generate significantadditional revenues from those contracts or any new products orservices that we introduce. In the past, we have incurred significantnegative cash flows, which may reoccur if our business plan is notsuccessful. Also, if we are unable to sustain or increase our profitson a quarterly or annual basis in the future or if our businessundergoes a period of rapid growth, our operating cash flows may benegatively impacted.

We derive a substantial portionof our revenues from fixed-price projects, under which we assumegreater financial risk if we fail to accurately estimate the costs ofthe projects.

We derive a substantial portion of ourrevenues from fixed-price projects. We assume greater financial riskson a fixed-price project than on a time-and-expense based project. Ifwe miscalculate 

19

----

the resources or time we need for thesefixed-price projects, the costs of completing these projects may exceedour original estimates, which would negatively impact our results ofoperations.

Since sales of satellite communicationsequipment are dependent on the growth of communications networks, ifmarket demand for these networks declines, our revenue andprofitability are likely to decline.

We derive, and expectto continue to derive, a significant amount of revenues from the saleof satellite ground segment systems and networks. If the long-termgrowth in demand for communications networks does not continue toreturn from recent depressed levels, the demand for our satelliteground segment systems and networks may decline or grow more slowlythan we expect. As a result, we may not be able to grow our business,our revenues may decline from current levels and our results ofoperations may be harmed. The demand for communications networks andthe products used in these networks is affected by various factors,many of which are beyond our control. For example, the uncertaingeneral economic conditions have affected the overall rate of capitalspending by many of our customers. Also, many companies have found itdifficult to raise capital to finish building their communicationsnetworks and, therefore, have placed fewer orders. The economicslowdown resulted in a softening of demand from our customers. Wecannot predict the extent to which demand will increase. Further,increased competition among satellite ground segment systems andnetworks manufacturers has increased pricing pressures. We continue tosee improvement in the segments we serve, in particular within the U.S.Government and government related entities marketplace, but a futurereduction in opportunities from U.S. Government and government relatedagencies will negatively impact our results of operations.

We depend upon certain key personnel and may not be ableto retain these employees. If we lose the services of these individualsor cannot hire additional qualified personnel, our business will beharmed.

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

Our future performance depends on the continuedservice of our key technical, managerial and marketing personnel; inparticular, David Hershberg and Kenneth Miller based upon theirindividual knowledge of the markets in which we operate. The employmentof any of our key personnel could cease at any time.

Satellites upon which we rely may malfunction or bedamaged or lost.

In the delivery of our data communicationsservices, we lease space segment from various satellite transpondervendors. The damage or loss of any of the satellites used by us, or thetemporary or permanent malfunction of any of the satellites upon whichwe rely, would likely result in the interruption of our satellite-basedcommunications services. This interruption could have a materialadverse effect on our business, results of operations and financialcondition.

We depend on our suppliers, some of whichare our sole or a limited source of supply, and the loss of thesesuppliers could materially adversely affect our business, results ofoperations and financial condition.

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

20

----

Our network may experiencesecurity breaches, which could disrupt our services.

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

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

Our business isdependent on the continued success and development of satellitecommunications technology, which competes with terrestrialcommunications transport technologies like terrestrial microwave,coaxial cable and fiber optic communications systems. Fiber opticcommunications systems have penetrated areas in which we havetraditionally provided services. If the satellite communicationsindustry fails to continue to develop, or if any technologicaldevelopment significantly improves the cost or efficiency of competingterrestrial systems relative to satellite systems, then our businessand financial condition would be materially harmed.

We may not be able to keep pace with technologicalchanges, which would make our products and services becomenon-competitive and obsolete.

The telecommunicationsindustry, including satellite-based communications services, ischaracterized by rapidly changing technologies, frequent new productand service introductions and evolving industry standards. If we areunable, for technological or other reasons, to develop and introducenew products and services or enhancements to existing products andservices in a timely manner or in response to changing marketconditions or customer requirements, our products and services wouldbecome non-competitive and obsolete, which would harm our business,results of operations and financial condition.

We maybe unable to raise additional funds to meet our capital requirements inthe future.

We believe that our available cash resourceswill be sufficient to meet our working capital and capital expenditurerequirements through at least September 30, 2006. However, our futureliquidity and capital requirements are difficult to predict, as theydepend on numerous factors, including the success of our existingproduct and service offerings, as well as competing technological andmarket developments. We may need to raise additional funds in order tomeet additional working capital requirements and to support additionalcapital expenditures. Should this need arise, additional funds may notbe available when needed and, even if additional funds are available,we may not find the terms favorable or commercially reasonable. Ifadequate funds are unavailable, we may be required to delay, reduce oreliminate some of our operating activities, including marketingprograms, capital expenditures and research and development. If weraise additional funds by issuing equity securities, our existingstockholders will own a smaller percentage of our capital stock and newinvestors may pay less on average for their securities than, and couldhave rights superior to, existing stockholders.

Unauthorized use of our intellectual property by thirdparties may damage our business.

We regard our trademarks,trade secrets and other intellectual property as beneficial to oursuccess. Unauthorized use of our intellectual property by third partiesmay damage our business. We rely on trademark, trade secret and patentprotection and contracts, including confidentiality and licenseagreements 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 obtainand use our intellectual property without our authorization.

Wecurrently have been granted three patents in the United States, one forremote access to the Internet using satellites, one for satellitecommunication with automatic frequency control, and one for a monitorand control system for satellite communications networks and the like.We have two other patents pending in the United States, one forimplementing facsimile and data communications using 

21

----

Internet protocols and another for adistributed satellite-based cellular network. We currently have onePatent Cooperation Treaty patent application pending for implementingfacsimile and data communications using Internet protocols. We alsointend to seek further patents on our technology, if appropriate. Wecannot assure you that patents will be issued for any of our pending orfuture patent applications or that any claims allowed from suchapplications will be of sufficient scope, or be issued in all countrieswhere our products and services can be sold, to provide meaningfulprotection or any commercial advantage to us. Also, our competitors maybe able to design around our patents. The laws of some foreigncountries in which our products and services are or may be developed,manufactured or sold may not protect our products and services orintellectual property rights to the same extent as do the laws of theUnited States and thus make the possibility of piracy of our technologyand products and services more likely.

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

Defending against intellectual property infringementclaims could be time consuming and expensive, and if we are notsuccessful, could cause substantial expenses and disrupt ourbusiness.

We cannot be sure that the products, services,technologies and advertising we employ in our business do not or willnot infringe valid patents, trademarks, copyrights or otherintellectual property rights held by third parties. We may be subjectto legal proceedings and claims from time to time relating to theintellectual property of others in the ordinary course of our business.Prosecuting infringers and defending against intellectual propertyinfringement claims could be time consuming and expensive, andregardless of whether we are or are not successful, could causesubstantial expenses and disrupt our business. We may incur substantialexpenses in defending against these third party claims, regardless oftheir merit. Successful infringement claims against us may result insubstantial monetary liability and/or may materially disrupt theconduct of, or necessitate the cessation of, segments of ourbusiness.

Risks Related to the Securities Markets and Ownershipof Our Common Stock

Our stock price isvolatile.

From October 1, 2004 through September 30, 2005,our stock price ranged from a low of $5.08 per share to a high of $8.44per share. The market price of our common stock, like that of thesecurities of many telecommunications and high technology industrycompanies, could be subject to significant fluctuations and is likelyto remain volatile based on many factors, including the following:

|              |                                           |
|--------------|-------------------------------------------|
| •  | quarterly variations in operatingresults; |

|              |                                                                                       |
|--------------|---------------------------------------------------------------------------------------|
| •  | announcements of newtechnology, products or services by us or any of our competitors; |

|              |                                                                          |
|--------------|--------------------------------------------------------------------------|
| •  | changes in financial estimates orrecommendations by securities analysts; |

|              |                               |
|--------------|-------------------------------|
| •  | general market conditions; or |

|              |                                                                          |
|--------------|--------------------------------------------------------------------------|
| •  | domestic and international economicfactors unrelated to our performance. |

Additionally, numerousfactors relating to our business may cause fluctuations or declines inour stock price.

The stock markets in general and the marketsfor telecommunications stocks in particular have experienced extremevolatility that has often been unrelated to the operating performanceof particular companies. These broad market fluctuations may adverselyaffect the trading price of our common stock.

22

----

Because our common stock isthinly traded, it may be difficult to sell shares of our common stockinto the markets without experiencing significant pricevolatility.

Our common stock is currently traded on theNasdaq National Market. Because of the relatively small number ofshares that are traded, it may be difficult for an investor to find apurchaser for shares of our common stock without experiencingsignificant price volatility. We cannot guarantee that an activetrading market will develop, that our common stock will have a highertrading volume than it has historically had or that it will maintainits current market price. This illiquidity could have a materialadverse effect on the market price of our stock.

Athird party could be prevented from acquiring shares of our stock at apremium to the market price because of our anti-takeoverprovisions.

Various provisions with respect to votes in theelection of directors, special meetings of stockholders, and advancenotice requirements for stockholder proposals and director nominationsof our amended and restated certificate of incorporation, by-laws andSection 203 of the General Corporation Law of the State of Delawarecould make it more difficult for a third party to acquire us, even ifdoing so might be beneficial to our stockholders. In addition, we havea poison pill in place and employment provisions with our seniorexecutives that have change of control provisions that could make anacquisition of us by a third party more difficult.

Wehave not paid dividends in the past and do not expect to pay dividendsin the future, and any return on investment may be limited to the valueof our stock.

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

Risks Related to GovernmentApprovals

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

Operations and Use of Satellites

We aresubject to various federal laws and regulations, which may havenegative effects on our business. We operate FCC licensed earthstations in Hauppauge, New York, subject to the Communications Act of1934, as amended (the "FCC Act"), and therules and regulations of FCC. Pursuant to the FCC Act and rules, wehave obtained and are required to maintain radio transmission licensesfrom the FCC for both domestic and foreign operations of our earthstations. We have also obtained and are required to maintainauthorization issued under Section 214 of the FCC Act to act as atelecommunications carrier, which authorization also extends to GNSC.These licenses should be renewed by the FCC in the normal course aslong as we remain in compliance with FCC rules and regulations.However, we cannot guarantee that the FCC will grant additionallicenses when our existing licenses expire, nor are we assured that theFCC will not adopt new or modified technical requirements that willrequire us to incur expenditures to modify or upgrade our equipment asa condition of retaining our licenses. We are also required to complywith FCC regulations regarding the exposure of humans to radiofrequency radiation from our earth stations. These regulations, as wellas local land use regulations, restrict our freedom to choose where tolocate our earth stations. In addition, prior to a third partyacquisition of us, we would need to seek approval from the FCC totransfer the radio transmission licenses we have obtained to the thirdparty upon the consummation of the acquisition. However, we cannotassure you that the FCC will permit the transfer of these licenses.These approvals may make it more difficult for a third party to acquireus.

Foreign Regulations

Regulatoryschemes in countries in which we may seek to provide oursatellite-delivered data communications services may impose impedimentson our operations. Some countries in which we 

23

----

intend to operate have telecommunicationslaws and regulations that do not currently contemplate technicaladvances in telecommunications technology like Internet/intranettransmission by satellite. We cannot assure you that the presentregulatory environment in any of those countries will not be changed ina manner, which may have a material adverse impact on our business.Either we or our local partners typically must obtain authorizationfrom each country in which we provide our satellite-delivered datacommunications services. The regulatory schemes in each country aredifferent, and thus there may be instances of noncompliance of which weare not aware. We cannot assure you that our licenses and approvals areor will remain sufficient in the view of foreign regulatoryauthorities, or that necessary licenses and approvals will be grantedon a timely basis in all jurisdictions in which we wish to offer ourproducts and services or that restrictions applicable thereto will notbe unduly burdensome.

Regulation of theInternet

Due to the increasing popularity and use of theInternet, it is possible that a number of laws and regulations may beadopted at the local, national or international levels with respect tothe Internet, covering issues including user privacy and expression,pricing of products and services, taxation, advertising, intellectualproperty rights, information security or the convergence of traditionalcommunication services with Internet communications. It is anticipatedthat a substantial portion of our Internet operations will be carriedout in countries that may impose greater regulation of the content ofinformation coming into the country than that which is generallyapplicable in the United States, including but not limited to privacyregulations in numerous European countries and content restrictions incountries such as the People's Republic of China. To the extentthat we provide content as a part of our Internet services, it will besubject to laws regulating content. Moreover, the adoption of laws orregulations may decrease the growth of the Internet, which could inturn decrease the demand for our Internet services or increase our costof doing business or in some other manner have a material adverseeffect on our business, operating results and financial condition. Inaddition, the applicability of existing laws governing issues includingproperty ownership, copyrights and other intellectual property issues,taxation, libel, court jurisdiction and personal privacy to theInternet is uncertain. The vast majority of these laws were adoptedprior to the advent of the Internet and related technologies and, as aresult, do not contemplate or address the unique issues of the Internetand related technologies. Changes to these laws intended to addressthese issues, including some recently proposed changes, could createuncertainty in the marketplace which could reduce demand for ourproducts and services, could increase our cost of doing business as aresult of costs of litigation or increased product development costs,or could in some other manner have a material adverse effect on ourbusiness, financial condition and results of operations.

Telecommunications Taxation, Support Requirements, andAccess Charges

All telecommunications carriers providingdomestic services in the United States are required to contribute aportion of their gross revenues for the support of universaltelecommunications services. Also, some telecommunications services aresubject to special taxation and to contribution requirements to supportservices to special groups, like persons with disabilities. Ourservices may be subject to new or increased taxes and contributionrequirements that could affect our profitability, particularly if weare not able to pass them through to customers for either competitiveor regulatory reasons.

Internet services are currently exemptfrom charges that long distance telephone companies pay for access tothe networks of local telephone companies in the United States. Effortshave been made from time to time, and may be made again in the future,to eliminate this exemption. If these access charges are imposed ontelephone lines used to reach Internet service providers and/or if flatrate telephone services for Internet access are eliminated orcurtailed, the cost to customers who access our satellite facilitiesusing telephone company-provided facilities could increase to an extentthat could discourage the demand for our services. Likewise, the demandfor our services in other countries may be affected by the availabilityand cost of local telephone or other telecommunications facilities toreach our facilities.

24

----

Export of TelecommunicationsEquipment

The sale of our ground segment systems,networks, and communications services outside the United States issubject to compliance with the regulations of the United States ExportAdministration and, in certain circumstances, with InternationalTraffic in Arms regulations. The absence of comparable restrictions oncompetitors in other countries may adversely affect our competitiveposition. In addition, in order to ship our products into and implementour services in some countries, the products must satisfy the technicalrequirements of that particular country. If we were unable to complywith such requirements with respect to a significant quantity of ourproducts, our sales in those countries could be restricted, which couldhave a material adverse effect on our business, results of operationsand financial condition.

Foreign Ownership

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

Item 3. Quantitative and Qualitative Disclosures About MarketRisk

We are subject to a variety of risks, including foreigncurrency exchange rate fluctuations relating to certain purchases fromforeign vendors and our wholly-owned subsidiary, Globecomm SystemsEurope Limited, which primarily deals in British Pounds Sterling. Inthe normal course of business, we assess these risks and haveestablished policies and procedures to manage our exposure tofluctuations in foreign currency values.

Our objective inmanaging our exposure to foreign currency exchange rate fluctuations isto reduce the impact of adverse fluctuations in earnings and cash flowsassociated with foreign currency exchange rates. Accordingly, we mayutilize from time to time foreign currency forward contracts to hedgeour exposure on firm commitments denominated in foreign currency. AtSeptember 30, 2005 we had no outstanding foreign exchangecontracts.

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

Item4. Controls and Procedures

Quarterly Evaluation of theCompany's Disclosure Controls and Internal Controls.

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)  | As of the end of the period covered by thisQuarterly Report on Form 10-Q, an evaluation was carried out under thesupervision and with the participation of senior management, includingour Chief Executive Officer and Chief Financial Officer, of theeffectiveness of the design and operation of our disclosure controlsand procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under theSecurities Exchange Act of 1934, as amended)**.** Based upon thatevaluation, our Chief Executive Officer and Chief Financial Officerconcluded that our disclosure controls and procedures are effective (i)for gathering, analyzing and disclosing the information that theCompany is required to disclose in reports filed under the SecuritiesExchange Act of 1934, as amended (the "ExchangeAct") and (ii) to ensure that information required to bedisclosed in the reports that the Company files or submits under theExchange Act is accumulated and communicated to the Company'smanagement, including our Chief Executive Officer and Chief FinancialOfficer, to allow timely decisions regarding requireddisclosure. |

25

----

|           |                                                                                                                                                                                                                                                                                                                                                                                           |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)  | There have been nochanges in the Company's internal controls over financialreporting (as defined in Exchange Act Rule 13a-15(f) of the SecuritiesExchange Act of 1934, as amended) or in other factors during the fiscalquarter ended September 30, 2005 that materially affected, or arereasonably likely to materially affect, the Company's internalcontrols over financial reporting. |

Part II — OtherInformation

Item 1.    Legal Proceedings

None

Item 2.    Unregistered Sales ofEquity Securities and Use of Proceeds

None

Item 3.    Defaults Upon Senior Securities

None

Item 4.    Submission of Matters to aVote of Security Holders

None

Item5.    Other Information

None

Item6.    Exhibits

Index to Exhibits:

ExhibitNo.

|            |                                                                                                                                                 |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1  | Chief Executive OfficerCertification required by Rules 13a-14 and 15d-14 under the SecuritiesExchange Act of 1934, as amended (filed herewith). |

|            |                                                                                                                                                   |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2  | Chief Financial Officer Certificationrequired by Rules 13a- 14 and 15d- 14 under the Securities Exchange Actof 1934, as amended (filed herewith). |

|          |                                                                                                                                        |
|----------|----------------------------------------------------------------------------------------------------------------------------------------|
| 32  | Certification Pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 (filed herewith). |

26

----

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalfby the undersigned thereunto duly authorized.

|                                               |  |                                                                                                                                                                                                                                                                                                                                       |  |  |  |  |
|-----------------------------------------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
|                                          |  | **GLOBECOMMSYSTEMS INC.**                                                                                                                                                                                                                                                                                                             |
|                                          |  |             (Registrant)                                                                                                                                                                                                                                                  |
| Date:    November 9, 2005 |  | /s/ DAVIDE. HERSHBERG                                                                                                                                                                                                                                                                                                                 |
|                                          |  | David E.Hershberg            Chairman of the Board and            Chief Executive Officer            (Principal Executive Officer)                |
| Date:    November 9, 2005 |  | /s/ANDREW C. MELFI                                                                                                                                                                                                                                                                                                                    |
|                                          |  | Andrew C.Melfi            Vice President, ChiefFinancial             Officer and Treasurer (Principal            Financial and AccountingOfficer) |
|                                               |

27

----

Index toExhibits:

Exhibit No.

|      |  |                                                                                                                                                  |  |  |  |  |
|------|--|--------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| 31.1 |  | ChiefExecutive Officer Certification required by Rules 13a-14 and 15d-14under the Securities Exchange Act of 1934, as amended (filedherewith).   |
| 31.2 |  | Chief Financial OfficerCertification required by Rules 13a- 14 and 15d- 14 under theSecurities Exchange Act of 1934, as amended (filedherewith). |
| 32   |  | Certification Pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (filedherewith).            |
|      |

28

----