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

                                    FORM 10-K

              |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2002
                                       OR
              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 000-22839

                             GLOBECOMM SYSTEMS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                          11-3225567
(STATE OR OTHER JURISDICTION OF                         (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NO.)


     45 OSER AVENUE,
       HAUPPAUGE, NY                                             11788
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)


                                 (631) 231-9800
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                       NAME OF EACH EXCHANGE
   TITLE OF EACH CLASS                                  ON WHICH REGISTERED
   -------------------                                  -------------------
        None                                                    None


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                          Common Stock, $.001 par value
                                (Title of class)

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

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


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         As of September 26, 2002, there were 12,583,317 shares of the
registrant's common stock, $0.001 par value, outstanding, and the aggregate
market value of the voting stock held by non-affiliates of the registrant was
approximately $30.4 million based on the last reported sale price on the Nasdaq
National Market on that date.


                       DOCUMENTS INCORPORATED BY REFERENCE

         The Proxy Statement of Globecomm Systems Inc. relative to the 2002
Annual Meeting of Stockholders to be held on November 21, 2002, is incorporated
by reference into Part III of this Annual Report on Form 10-K.



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                                     PART I
ITEM 1. BUSINESS

OVERVIEW

         Globecomm Systems Inc., or Globecomm, was incorporated in Delaware in
August 1994. We offer end-to-end, value-added satellite-based communications
infrastructure and services. We do this by leveraging our core satellite ground
segment systems and network capabilities, with the satellite services
capabilities that are generally provided by our wholly-owned subsidiary, NetSat
Express, Inc., or NetSat. The services we offer include wide area network
connectivity, broadband connectivity to end users, Internet connectivity,
content delivery network services, media distribution and other network services
on a global basis. To provide these services, we engineer all the necessary
satellite and terrestrial facilities as well as provide the integration services
required to implement those facilities. We also operate and maintain these
communications services on an ongoing basis. Our customers generally have
network service requirements that require point-to-point or point-to-multipoint
connections via a hybrid network of satellite and terrestrial facilities, and
include communications service providers, commercial enterprises, multinational
corporations, Internet Service Providers, or ISPs, broadcasters and other
content providers and government entities. Our service business is built on the
foundation of our core business as a supplier of ground segment systems and
networks for satellite-based communications. We provide these ground segment
systems and networks on a contract basis. These implementations include the
necessary hardware and software to support a wide range of network applications
using satellite, broadcast and terrestrial technologies.

         NetSat provides end-to-end satellite-based service solutions around the
world. NetSat offers ISPs, commercial enterprises, broadcasters and government
customers a wide range of network service solutions, including Internet backbone
connectivity, content delivery network applications, back-office capabilities,
communications points of presence, or POP, infrastructure, and network
management services. We incorporate NetSat services as part of our "one stop
shopping" solutions that include systems infrastructure and related network
services for our customers.


SERVICES AND PRODUCTS

     OUR GROUND SEGMENT SYSTEMS AND NETWORKS

         We design, engineer, integrate and install satellite-based ground
segment systems and network solutions for the complex and changing
communications requirements of our customers. Our ground segment systems
typically consist of an earth station and ancillary subsystems. An earth station
is an integrated system consisting of antennas, radio signal transmitting and
receiving equipment, modulation/demodulation equipment, monitor and control
systems and voice, data and video network interface equipment. Ancillary
subsystems may include microwave links or fiber optic links for the transmission
of communications traffic to a central office, or generators for emergency power
requirements. Our customizable modular earth stations may be sold separately as
stand-alone ground segment systems or may be used as building blocks to be
integrated into a complete ground segment system or network. We believe that
this modular approach allows us to engineer our ground segment systems and
networks to serve client-specific service requirements rapidly, cost-effectively
and efficiently with minimal site preparation. All of our earth stations are
configurable to conform to applicable satellite standards.

         MODULAR BUILDING BLOCK EARTH STATION. These earth stations provide
         point-to-point high-capacity data links and hubs for satellite
         networks. Generally, all electronics are housed in an indoor equipment
         enclosure. We typically sell these earth stations at prices ranging
         from approximately $250,000 to $600,000.


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         COMMERCIAL TERMINAL. This family of earth stations encompasses a range
         of general purpose, medium-capacity earth stations, and is principally
         used by corporate, common carrier and government networks. Generally,
         all radio frequency electronics are housed in weatherproof enclosures
         mounted on the antenna. The satellite modem is housed in an indoor
         equipment enclosure. We typically sell these earth stations at prices
         ranging from approximately $100,000 to $300,000.

         COMPACT EARTH STATION. We designed this family of digital earth
         stations to be used principally to provide limited capacity to areas
         with limited or no telecommunications infrastructure. These earth
         stations integrate radio frequency and satellite modem components into
         one antenna mounted package. We typically sell these earth stations at
         prices ranging from approximately $20,000 to $45,000.

         EXPLORER C/K TRANSPORTABLE EARTH STATION. We designed this family of
         digital earth stations primarily for emergency communications and news
         gathering. The group is comprised of portable, modular earth stations
         designed to be quickly deployed and operated anywhere in the world. The
         latest model, the Explorer Ku, incorporates technology from the Compact
         Earth Station product line to minimize cost, size and weight. All
         components are mounted in separate cases, which are small enough to be
         easily transported by commercial carriers, including airplanes and
         trucks. We market these earth stations at prices ranging from
         approximately $50,000 to $100,000.

         EXPLORER II MOBILE TERMINAL. We designed this family of digital
         terminals to serve the mobile satellite services market for high-speed
         data and voice terminals with optional video conferencing. We offer the
         Explorer II, a high-speed data terminal for use in news gathering,
         emergency communications, data gathering, and other applications
         requiring mobility and data at rates of 64 kilobits per second, or
         Kbps. We typically sell these earth stations at prices ranging from
         approximately $20,000 to $50,000.

OUR COMMUNICATIONS SERVICES

         We tailor our communication services to meet our customers' needs by
offering standardized services and custom-engineered solutions. Our standardized
services may be sold separately or may be used as building blocks as a part of a
custom-engineered solution. We use our expertise in satellite communications,
Internet Protocol, communications networks and information technology in
designing our custom-engineered solutions.

STANDARDIZED SERVICES

         WIDE AREA NETWORK ANYWHERE.(TM) This service offering provides
         high-speed networking between major POPs. We are currently providing
         point-to-point service to customers who require connections from our
         Long Island International Teleport in New York to POPs in Latin America
         and the Middle East.

         SKYBORNE.(SM) This service offering provides point-to-multipoint
         content delivery of multimedia content. Content providers and large
         ISPs are using content delivery services that can enhance access to
         multimedia and static content for their users and enhance web site
         response times by avoiding delays and outages caused by public network
         congestion. Content delivery networks can be implemented effectively
         using satellite Internet Protocol based broadcasting to very small,
         low cost receiving earth terminals, with high data rates. We also
         provide business application services for the storage and scheduling
         of content for our customers.

         INTRANET ANYWHERE.(TM) The technologies which have been developed for
         the Internet have been used in the creation of private corporate
         networks, or intranets. Intranets provide employees in geographically
         dispersed locations with access to corporate databases and other
         private corporate


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         information. This service offering provides secure high-speed two way
         data transmission directly to local area networks using standards-based
         satellite receiver technology. We intend to offer this service to
         customers requiring secure high-speed data transmission between
         corporate headquarters and one or more remote offices, and as the
         return link for our SKYBORNE(SM) services.

         ISDN ANYWHERE.(TM) This service offering provides full-time connections
         at rates of 64 Kbps and 128 Kbps to geographically dispersed
         locations. We can provide these services to organizations needing
         full-time digital connections for voice, data and video conferencing in
         locations around the world where the terrestrial infrastructure is
         inadequate or unavailable.

         BANDWIDTH ON DEMAND ANYWHERE.(TM) This service offering provides
         high-speed data connections for intermittent use through a bandwidth
         subscription service. It provides data rates from 64 Kbps up to 384
         Kbps to geographically dispersed locations. Customers who have high
         bandwidth requirements would use this service to reduce their costs
         when they only need intermittent services, like emergency
         communications services.

     CUSTOM ENGINEERED SOLUTIONS

         The following is an example of how we provide custom-engineered
communications solutions for one of our customers:

         THE CHALLENGE. We were selected by Shoreline Communications Inc., a
communications service provider in the island nation of Tonga, to design and
implement the voice, data, television, cellular and Internet infrastructure, as
well as the connections between Tonga, where the existing communications
infrastructure was inadequate, and the United States.

         THE SOLUTION. We designed and continue to build a nationwide voice and
data telecommunications and television broadcast network using a combination of
satellite systems, terrestrial television and GSM cellular systems and local
wireless communications technology. In addition, we provided Shoreline
Communications with the information technology infrastructure necessary to
provide Internet access from the United States Internet backbone to Tonga using
satellites. We also provide international satellite connections for voice and
data traffic between Tonga and Los Angeles, California, as well as the
associated billing services. The voice and data satellite and terrestrial
network we custom-engineered is based on a combination of network technologies,
each designed to enhance delivery of a particular service. We currently provide
network services in Los Angeles to operate and maintain these communications
services.


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[GRAPHIC OMITTED]


NETSAT SERVICES

         The growth of the Internet has been dramatic, and this growth is
projected to continue, particularly outside North America and Western Europe.
Satellite-based communications benefit from this trend as many of these regions
lack the terrestrial networks required to accommodate the rapid and reliable
transmission of the vast amounts of information underlying the Internet. NetSat,
a wholly-owned subsidiary of Globecomm, is a network service provider that
offers Internet access and other network services to ISPs and other enterprises
around the world. NetSat combines satellite and terrestrial communications
networks to provide customers around the world high-speed access services to the
United States Internet backbone, as well as the public switched telephone
network for private networks. NetSat currently has customers in Africa, the
Pacific Rim region, Central and South America, Eastern and Central Europe and
the Middle East.

         Internet Access Services

         NetSat's Internet access services, marketed under the Access
Plus(TM) brand name, provides high-speed access to the United States Internet
backbone. NetSat provides the necessary satellite transmission services and
terrestrial transit and routing services. In addition, it currently provides
earth stations and the necessary installation services together with Globecomm.
NetSat services are highly configurable, providing guaranteed levels of service
for its customers. Its services can be implemented through its worldwide
network, and global deployment capabilities through suppliers like Globecomm.
NetSat provides a wide variety of circuit sizes, which allows it to serve large
and small ISPs, communications services providers and corporations. A circuit is
comprised of satellite and terrestrial components that provide the bandwidth
needed by the customer. NetSat's customers lease circuits as small as 64 Kbps
and as large as 45 Mbps, where a megabit is 1000 times larger than a kilobit.
NetSat offers two-way circuits, providing bandwidth to and from the Internet, as
well as one-way circuits, where the customer has its own return circuit through
a local terrestrial connection to the Internet.

         NetSat also provides a bandwidth capacity bursting option, allowing
bursts of up to the full capacity of a satellite circuit. With bursting, the
customer's guaranteed bandwidth is a part of a shared satellite channel with
other customers who also have guaranteed bandwidths. The bursting service allows
a


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customer to acquire more bandwidth than its guaranteed when there is available
bandwidth on the same shared satellite channel that NetSat has not committed to
other customers.


SALES AND MARKETING

         We market our products and services to communications services
providers, commercial enterprises, ISPs, broadcasters and other content
providers and government entities. We have structured our sales and marketing
approach to respond effectively to the opportunities in the communications
services market, as well as the traditional ground segment systems and networks
market. Our marketing activities are organized regionally, as well as on an
industry-specific basis. We use both direct and indirect sales channels to
market our services and products. Our direct sales force focuses on
industry-specific markets, including government, broadcast and commercial
enterprises. During the fiscal year ended June 30, 2002, we increased our direct
sales force to focus on targeting U.S. customers, including the government
market, given the potential requirements for our products and services in the
United States.

         Our regional business teams sell and market our communications services
and ground segment systems and networks internationally. These regional business
teams are responsible for orders and programs in the regions to which they are
assigned, as well as for the delivery of our products and services and for
account management of our existing customers. Currently, we have business teams
responsible for the Americas, the Asia-Pacific region, Africa, the Middle East
and Europe.

         These regional business teams work together to identify, develop and
maintain customer relationships through local sales representatives, sales
executives and account managers. Together, they develop close and continuing
relationships with our customers. Our sales representatives in these regions
provide a local presence and identify prospective customers for our sales
executives. Our account managers may also function as project engineers for
network integration and service initiation programs for their accounts. We
believe this account management focus provides continuity and loyalty between
our customers and us. We also believe that our approach fosters long-term
relationships that lead to follow-on work and referrals to new customers. These
accounts also provide us with a market for the new products and services that we
develop. In addition, we obtain sales leads for new customers through referrals
from industry suppliers.

         We have sales and marketing staff located at our headquarters in
Hauppauge, New York, as well as in Hong Kong and the United Kingdom. Our office
in the United Kingdom is part of our wholly-owned subsidiary, Globecomm Systems
Europe Limited. These offices provide both sales and technical support in the
regions for which they have responsibility. As of June 30, 2002, we employed 44
persons with sales and marketing responsibility, of which 21 are full-time sales
executives and 23 have dual engineering and sales and marketing
responsibilities.

         Our marketing program is intended to build national and international
awareness of our brand. We use direct mailings, print advertising to targeted
markets and trade publications to enhance awareness and acquire leads for our
direct and indirect sales teams. We create brand awareness by participating in
industry trade shows sponsored by organizations like the International
Telecommunications Union, the National Association of Broadcasters and the
Communications Managers Association. We also provide marketing information on
our web site and conduct joint marketing programs with sales representatives in
various regions to reach new customers.

         NetSat's marketing strategy is carried out primarily through
Globecomm's sales channels including Globecomm's direct sales staff and the
regional business teams, as well as direct sales and marketing through the World
Wide Web.


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CUSTOMERS

         We have established a diversified base of customers in a variety of
industries. Our customers include communications services providers, commercial
enterprises, multinational corporations, ISPs, broadcasters and other content
providers and government entities. We typically rely upon a small number of
customers for a large portion of our revenues. For example, approximately 11% of
our revenues in fiscal 2002 were derived from one customer. We expect that in
the near term a significant portion of our revenues will continue to be derived
from one or a limited number of customers (the identity of whom may vary from
year to year) as we seek to expand our business and customer base.


BACKLOG

         At June 30, 2002, our backlog was approximately $80.3 million compared
to approximately $101.0 million at June 30, 2001. We record an order in backlog
when we receive a firm contract or purchase order, which identifies product
quantities, sales price, service dates and delivery dates. Backlog represents
the amount of unrecorded revenue on undelivered orders and services to be
provided and a percentage of revenues from sales of products that have been
shipped but have not been accepted by the customer. Our backlog at any given
time is not necessarily indicative of future period revenues. A substantial
portion of our backlog is comprised of large orders, the cancellation of
any of which could have a material adverse effect on our operating results. For
example, at June 30, 2002, $45.6 million, or approximately 56.8%, of our backlog
represented contracts with five customers. We cannot assure you that these
contracts or any others in our backlog will not be cancelled or revised. See
"Risk Factors" beginning on page 29.


COMMUNICATIONS INFRASTRUCTURE

         We built and own the teleport facility located at our headquarters in
Hauppauge, New York. We are a member of the World Teleport Association (WTA) and
were awarded the Teleport Operator of the Year award from the WTA for the year
2000. Our teleport is designed to meet the most stringent requirements for
high-speed data communications requirements. This teleport is used to transmit
and receive signals from satellites positioned to serve customers in Latin
America, the United States, Canada, Europe, the Middle East and Africa. Our
teleport uses redundant critical systems and uninterruptible power supplies with
back-up power generation.

         NetSat also leases teleport services in Los Angeles to transmit and
receive signals from satellites positioned to serve customers in the Pacific Rim
region. Connection to the United States Internet backbone in Los Angeles is
achieved through leased fiber optic circuits.

         We, along with NetSat, lease transponder capacity to meet the
bandwidth needs of our and their customers. NetSat leases multiple, redundant,
high-capacity fiber connections to provide reliable Internet data, voice and
data traffic to locations in New York City where it interconnects with
telecommunications service providers and the United States Internet backbone.

         NetSat has built and staffs a network operations center, or NOC, to
manage its customer circuits. The NOC operates 24 hours per day, seven days per
week to monitor customer circuits, respond to customer inquiries and initiate
new services. Customers can purchase or lease from us, or from NetSat, as a part
of its service, the equipment needed at the customers' locations to transmit and
receive the satellite signals. Globecomm offers installation and maintenance
services for this equipment.


PRODUCT DESIGN, ASSEMBLY AND TESTING


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         We assign a project team to each contract into which we enter. Each
team is led by a project engineer who is responsible for execution of the
project. This includes engineering and design, assembly and testing,
installation and customer acceptance. A project may include engineers,
integration specialists, buyer-planners and an operations team. Our standard
satellite ground segment systems are manufactured using a standard modular
production process. Typically, long-term projects require significant
customer-specific engineering, drafting and design efforts. Once the system is
designed, the integration specialist works with the buyer-planner and the
operations team to assure a smooth transfer from the engineering phase to the
integration phase. The integration phase consists mainly of integrating the
purchased equipment, components and subsystems into a complete functioning
system. Assembly, integration and test operations are conducted on both an
automated and manual basis, depending primarily on production volume.

         We provide facilities for complete in-plant testing of all our systems
before delivery in order to assure all performance specifications will be met
during installation at the customer's site. We employ formal total quality
management programs and other training programs, and have been certified by the
International Organization of Standards quality certification process for ISO
9001, a standard that enumerates specific requirements an organization must
follow in order to assure consistent quality in the supply of products and
services. The certification process qualifies us for access to virtually all
domestic and international projects, and we believe that this represents a
competitive advantage.



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RESEARCH AND DEVELOPMENT

         We have developed internal research and development resources in
Internet Protocol networks, content delivery networks, broadcast systems,
network management systems, and system products. The costs of developing new
technologies are funded partially by the investments made by us and partially by
development funded by specific customer program requirements. This approach
provides us with a cost-effective means to develop new technology, while
minimizing our direct research and development expenditures. Furthermore, we
believe that our research and development capabilities allow us to offer added
value in developing solutions for our customers, while at the same time we
maintain the opportunity to develop products through our strategic supplier
relationships. Our internal research and development efforts generally focus on
the development of products and services not available from other suppliers to
the industry. Current efforts are focused on developing content delivery network
technology for our enterprise customers, broadcast systems technology for our
new competitive service provider customers and broadcast customers, network
management system products for all our earth terminal and network customers, and
customizable systems for our government customers. For the years ended June 30,
2000, 2001 and 2002, we have incurred approximately $0.8 million, $0.9 million,
and $1.2 million, respectively, in internal research and development expenses.


COMPETITION

         In the satellite ground segment systems and networks market, we believe
that our ability to compete successfully is based primarily on management's
reputation and the ability to provide a solution that meets the customer's
requirements, including competitive pricing, performance, on-time delivery,
reliability, and customer support.

         In the communications services market, we believe that our ability to
compete successfully is based primarily on management's reputation and providing
prompt delivery and initiation of service, competitive pricing, consistent and
reliable connections, and high-quality customer support.

         Our primary competitors in the satellite ground segment systems and
networks market generally fall into three groups: (1) vertically integrated
satellite systems providers like Nippon Electric Corporation, (2) system
integrators like IDB Systems, a division of MCI WorldCom Inc. and (3) equipment
manufacturers who also provide integrated systems, like Andrew Corporation and
Vertex-RSI.

         In the communications services and Internet access services markets, we
compete with other satellite communication companies who provide similar
services, like Loral CyberStar, Inc., PanAmSat Corporation and Verestar, as well
as other ISPs. In addition, we may compete with other communications services
providers, MCI WorldCom Inc., and satellite owners like New Skies Satellites
N.V. and Intelsat. We anticipate that our competitors may develop or acquire
services that provide functionality that is similar to that provided by our
services and that those services may be offered at significantly lower prices or
bundled with other services. In addition, we anticipate that continuing
deregulation worldwide is expected to result in the formation of a significant
number of new competitive service providers over the next two or three years.

         Current and potential participants in the markets in which we compete
have established or may establish cooperative relationships among themselves or
with third parties. These cooperative relationships may increase the ability of
their products and services to address the needs of our current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge that will enable them to acquire significant market share
rapidly. We believe that increased competition is likely to result in price
reductions, reduced gross profit margins and loss of market share, any of which
would have a material adverse effect on our business, results of operations and
financial condition.


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INTELLECTUAL PROPERTY

         We rely heavily on the technological and creative skills of our
personnel, new product developments, computer programs and designs, frequent
product enhancements, reliable product support and proprietary technological
expertise in maintaining our competitive position. We have secured patent
protection on some of our products, and have secured trademarks and service
marks to protect some of our products and services.

         We currently have two patents in the United States for remote access to
the Internet using satellites and for satellite communication with automatic
frequency control and have two patent applications pending in the United States
and one Patent Cooperation Treaty patent application pending. We also intend to
seek additional patents on our technology, if appropriate. We have filed
applications for trademark registration of Globecomm Systems Inc., Globecomm and
GSI in the United States and various other countries. NetSat has received
trademark registration for NetSat in the United States, the European Community,
Russia and Brazil. We have also received trademark registrations in the United
States for MBB2001(TM), CTF2001(TM), CES2001(TM) and AXXSYS(TM), which relate to
our customizable modular earth stations. We intend to seek registration of other
trademarks and service marks in the future.


GOVERNMENT REGULATIONS

     OPERATIONS AND USE OF SATELLITES

         We are subject to various federal laws and regulations, which may have
negative effects on our business. We operate Federal Communications Commission,
or FCC, licensed earth stations in Hauppauge, New York, subject to the
Communications Act of 1934, as amended, or the FCC Act, and the rules and
regulations of the FCC. Pursuant to the FCC Act and FCC rules and regulations,
we have obtained and are required to maintain radio transmission licenses from
the FCC for both domestic and foreign operations of our earth stations. These
licenses should be renewed by the FCC in the normal course as long as we remain
in compliance with FCC rules and regulations. However, we cannot guarantee that
additional licenses will be granted by the FCC when our existing licenses
expire, nor can we assure you that the FCC will not adopt new or modified
technical requirements that will require us to incur expenditures to modify or
upgrade our equipment as a condition of retaining our licenses.

         We are also required to comply with FCC regulations regarding the
exposure of humans to radio frequency radiation from our earth stations. These
regulations, as well as local land use regulations, restrict our freedom to
choose where to locate our earth stations.

         NetSat does not currently hold any FCC licenses, permits, or
authorizations, nor does it currently provide any FCC regulated services.
Therefore, it is not subject to the FCC Act or FCC rules and regulations.
However, NetSat may hold such licenses, permits, or authorizations, or provide
these services in the future, and would then be required to comply with the FCC
requirements.

     COMMON CARRIER REGULATION

         We currently provide services to our customers on a private carrier
basis and not as a common carrier. Were our business methods or the federal
regulatory structure to change such that operating as a common carrier becomes
desirable, we would be required to comply with the FCC's requirements for common
carriers. These requirements include, but are not limited to, filing tariffs
setting forth our rates and service terms, being forbidden from unjust and
unreasonable discrimination among customers, notifying the


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FCC before discontinuing service, and complying with FCC equal employment
opportunity regulations and reporting requirements.

         We do not currently provide telecommunications services between points
in the same state and so are exempt from state regulation of our services.
However, we could become subject to state telecommunications regulations if we
did provide intrastate telecommunications services.

     FOREIGN OWNERSHIP

         As long as we offer services on a private basis, there are no
restrictions on foreign ownership of our earth stations. If we offered services
as a common carrier, however, we would be subject to statutory requirements that
generally forbid more than 20% ownership or control of an FCC licensee by
non-United States citizens and more than 25% ownership of a licensee's parent by
non-United States citizens. The FCC may authorize foreign ownership in the
licensee's parent in excess of these percentages. Under current policies, the
FCC has granted these authorizations where the applicant does not control
monopoly or bottleneck facilities and the foreign owners are citizens of
countries that are members of the World Trade Organization or provide equivalent
competitive opportunities to United States citizens.

         We may, in the future, be required to seek FCC approval for foreign
ownership if we operate as a common carrier and ownership of our stock exceeds
the thresholds mentioned above. Failure to comply with these policies may result
in an order to divest the offending foreign ownership, fines, denial of license
renewal, and/or license revocation proceedings against the licensee by the FCC.
We have no knowledge of any present foreign ownership which would result in a
violation of the FCC rules and regulations.

     FOREIGN REGULATIONS

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

     REGULATION OF THE INTERNET

         Our Internet operations (other than the operation of a teleport) are
not currently subject to direct government regulation in the United States or
most other countries, and there are currently few laws or regulations directly
applicable to access to or commerce on the Internet. However, due to the
increasing popularity and use of the Internet it is possible that a number of
laws and regulations may be adopted at the local, national or international
levels with respect to the Internet, covering issues like user privacy and
expression, pricing of products and services, taxation, advertising,
intellectual property rights, information security, or the convergence of
traditional communication services with Internet communications.


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<PAGE>


         We anticipate that a substantial portion of our, or NetSat's, Internet
operations will be carried out in countries which may impose greater regulation
of the content of information coming into their country than that which is
generally applicable in the United States. Examples of this include privacy
regulations in Europe and content restrictions in countries, such as the
Republic of China. To the extent that we provide content as a part of our
Internet services, it will be subject to laws regulating content. Moreover, the
adoption of laws or regulations may decrease the growth of the Internet, which
could in turn decrease the demand for our Internet services, or increase our
cost of doing business or otherwise negatively affect our business. In addition,
the applicability to the Internet of existing laws governing issues including
property ownership, copyrights and other intellectual property issues, taxation,
libel and personal privacy is uncertain. The vast majority of these laws were
adopted prior to the advent of the Internet and related technologies and, as a
result, do not contemplate or address the unique issues of the Internet and
related technologies. Changes to these laws intended to address these issues,
including some recently proposed changes, could create uncertainty in the
marketplace. These changes could reduce demand for our products and services or
could increase our cost of doing business as a result of costs of litigation or
increased product development costs.

     TELECOMMUNICATIONS TAXATION, SUPPORT REQUIREMENTS, AND ACCESS CHARGES

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

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

     EXPORT OF TELECOMMUNICATIONS EQUIPMENT

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


EMPLOYEES

         As of June 30, 2002, we had 206 full-time employees, including 96 in
engineering and program management, 55 in the manufacturing, operations support,
and network operations, 21 in sales and marketing, and 34 in management and
administration. Our employees are not covered by any collective-bargaining
agreements. We believe that our relations with our employees are good.


                                       13
<PAGE>


ITEM 2. PROPERTIES

         We own approximately 122,000 square feet of space in a facility on
approximately seven acres located at 45 Oser Avenue, Hauppauge, New York. This
facility houses our principal offices and production facilities, as well as the
offices and the network operations center of NetSat. We are in the third year of
a five-year lease at a base monthly rent of approximately $3,600 for office and
operations facilities for our wholly-owned subsidiary, Globecomm Systems Europe
Limited, in the United Kingdom. In addition, we have a lease for office space in
Hong Kong at a monthly rental fee of approximately $3,900.


ITEM 3. LEGAL PROCEEDINGS

         On July 26, 2000, we filed a lawsuit against Gilat Satellite Networks
Ltd. and StarBand Communications Inc. in the United States District Court for
the Eastern District of New York, charging them with infringement of our United
States Patent No. 5,912,883. The defendants denied infringement and challenged
the validity of the patent. The litigation was settled by the parties in January
2002 and was contemporaneously dismissed by the Court pursuant to a stipulation
between the parties which did not have a material effect on us.

         On August 6, 2002, we issued a notice of termination to a major
customer in the Middle East for failure to pay for services rendered, and
included a demand for full payment of the past due balance and specified
liquidated damages for early termination. The customer responded by issuing its
own notice of termination claiming certain breaches of the contract by NetSat,
which claims we have denied. The contract requires settlement of disputes by
arbitration to be held in New York. We intend to fully pursue all available
remedies to recover monies owed for services rendered and for liquidated
damages, including arbitration if required.


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

         None


                                       14
<PAGE>


                                     PART II

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

         Our common stock is quoted on the Nasdaq National Market under the
symbol "GCOM." The fiscal 2001 and 2002 high and low sales prices are as
follows:

<TABLE>
<CAPTION>
                                                                                                       High     Low
                                                                                                       ----     ---
<S>                                                                                                  <C>      <C>
First Quarter Fiscal 2002......................................................................    $   7.34 $  4.90
Second Quarter Fiscal 2002.....................................................................        6.49    3.81
Third Quarter Fiscal 2002......................................................................        8.40    4.85
Fourth Quarter Fiscal 2002.....................................................................        7.15    3.16

First Quarter Fiscal 2001......................................................................       16.06    9.25
Second Quarter Fiscal 2001.....................................................................       14.25    4.31
Third Quarter Fiscal 2001......................................................................       13.69    7.38
Fourth Quarter Fiscal 2001.....................................................................       10.75    6.06
</TABLE>

         At September 26, 2002, there were approximately 3,700 stockholders of
record of our common stock, as shown in the records of our transfer agent.

         At the close of the Nasdaq National Market on September 26, 2002, our
market price per share was $2.61.

         As of June 30, 2002, we had not declared or paid dividends on our
common stock since inception and we do not expect to pay dividends in the
foreseeable future.

         The table below sets forth securities we have authorized for issuance
under our equity compensation plans.

            EQUITY COMPENSATION PLAN INFORMATION AS OF JUNE 30, 2002

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                        Number of                                 Number of securities
                                    securities to be                            remaining available for
                                       issued upon                               future issuance under
       Plan category                   exercise of         Weighted-average       equity compensation
                                       outstanding        exercise price of         plans (excluding
                                    options, warrants    outstanding options,   securities reflected in
                                       and rights        warrants and rights          column (a))
---------------------------------------------------------------------------------------------------------
                                           (a)                   (b)                      (c)
---------------------------------------------------------------------------------------------------------
<S>                                   <C>                      <C>                      <C>
 Equity compensation plan approved
   by security holders                2,913,975                $  8.07                  558,382
---------------------------------------------------------------------------------------------------------
 Equity compensation plans not
   approved by security holders         863,468                $ 11.16                       -
---------------------------------------------------------------------------------------------------------
           Total                      3,777,443                $  8.78                  558,382
---------------------------------------------------------------------------------------------------------
</TABLE>

         The equity compensation plans, authorized for issuance that were
adopted without the approval of the security holders, relate to outstanding
warrants. During November 1996, we issued ten-year warrants, to five consultants
to purchase an aggregate of 64,125 shares of common stock at a price per share
of $8.07, in consideration for services rendered. During the fiscal year ended
June 30, 2001, we issued five-year warrants, in connection with the purchase of
minority interests in NetSat, to purchase an aggregate of 807,643 shares of
common stock at a price per share of $11.375.


                                       15
<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

         Our selected consolidated financial data as of and for each
of the five years in the period ended June 30, 2002 have been derived from our
audited consolidated financial statements. EBITDA represents loss before
minority interests in operations of our consolidated subsidiary, interest
income, interest expense, provision for income taxes, depreciation and
amortization expense, a gain on the sale of consolidated subsidiary's common
stock and a gain on sale of investment. EBITDA does not represent cash flows
defined by accounting principles generally accepted in the United States and
does not necessarily indicate that our cash flows are sufficient to fund all of
our cash needs. EBITDA is a financial measure commonly used in our industry and
should not be considered in isolation or as a substitute for net income, cash
flows from operating activities or other measures of liquidity determined in
accordance with accounting principles generally accepted in the United States.
EBITDA may not be comparable to other similarly titled measures of other
companies. We record an order in backlog when we receive a firm contract or
purchase order, which identifies product quantities, sales price, service dates
and delivery dates. Backlog represents the amount of unrecorded revenue on
undelivered orders and services to be provided and a percentage of revenues from
sales of products that have been shipped but have not been accepted by the
customer. Our backlog at any given time is not necessarily indicative of future
period revenues. Certain balances in the prior years have been reclassified to
conform to the current year presentation. During the fiscal year ended June 30,
2002, we changed the presentation of our consolidated statements of operations
to better represent current industry reporting practices.




                                       16
<PAGE>


                             SELECTED FINANCIAL DATA
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                       YEARS ENDED JUNE 30,
                                                ----------------------------------------------------------------
                                                    1998         1999          2000         2001         2002
                                                -----------  -----------   -----------  -----------  -----------
<S>                                             <C>          <C>           <C>          <C>          <C>
STATEMENTS OF OPERATIONS DATA:
Revenues from ground segment systems,
    networks and enterprise solutions.......    $    57,419  $    46,397   $    69,584  $    78,744   $   64,101
Revenues from data communications services..            686        2,661         8,987       24,170       22,478
                                                -----------  -----------   -----------  -----------  -----------
Total revenues..............................         58,105       49,058        78,571      102,914       86,579
                                                -----------  -----------   -----------  -----------  -----------
Costs and operating expenses:
  Costs from ground segment systems,
    networks and enterprise solutions.......         48,515       41,235        60,634       70,907       57,083
  Costs from data communications services...          1,059        2,894        10,101       22,661       26,705
  Selling and marketing.....................          4,187        5,183         6,139        7,235        6,735
  Research and development..................          1,188        1,325           784          850        1,185
  General and administrative................          4,968        5,941         8,797        9,822       11,970
  Terminated acquisition costs..............              -          972             -            -            -
  Asset impairment charge...................              -          679             -        2,857          237
  Restructuring charge......................              -            -             -        1,950            -
                                                -----------  -----------   -----------  -----------  -----------
Total costs and operating expenses..........         59,917       58,229        86,455      116,282      103,915
                                                -----------  -----------   -----------  -----------  -----------
Loss from operations........................         (1,812)      (9,171)       (7,884)     (13,368)     (17,336)

Other income (expense):
  Interest income...........................          1,271          980         1,727        3,194        1,030
  Interest expense..........................             (5)          (1)       (2,522)      (6,579)        (957)
  Gain on sale of consolidated subsidiary's
    common stock............................              -            -         2,353            -            -
  Gain on sale of investment................              -            -             -          304            -
                                                -----------  -----------   -----------  -----------  -----------
Loss before income taxes and minority
  interests in operations of consolidated
  subsidiary................................           (546)      (8,192)       (6,326)     (16,449)     (17,263)

Provision for income taxes..................              -            -             -       (1,600)           -
                                                -----------  -----------   -----------  -----------  -----------
Loss before minority interests in operations
    of consolidated subsidiary..............           (546)      (8,192)       (6,326)     (18,049)     (17,263)
Minority interests in operations of
    consolidated subsidiary.................              -            -         2,745         (650)           -
                                                -----------  -----------   -----------  -----------  -----------
Net loss....................................     $     (546) $    (8,192)  $    (3,581) $   (18,699) $   (17,263)
                                                ===========  ===========   ===========  ===========  ===========
Basic and diluted net loss per common share.     $    (0.06) $     (0.90)  $     (0.36) $     (1.55) $     (1.36)
                                                ===========  ===========   ===========  ===========  ===========
Weighted-average shares used in the
  calculation of basic and diluted net loss
  per common share .........................          8,553        9,109        10,016       12,060        12,707
                                                ===========  ===========   ===========  ===========  ============
</TABLE>


<TABLE>
<CAPTION>

                                                                                 YEARS ENDED JUNE 30,
                                                ------------------------------------------------------------------------------------
                                                        1998          1999            2000              2001            2002
                                                        ----          ----            ----              ----            ----
<S>                                              <C>             <C>              <C>              <C>             <C>
OTHER OPERATING DATA:
EBITDA .....................................     $    (1,096)   $    (7,904)    $     (4,537)    $     (6,139)    $    (13,675)
Cash flows used in operating activities.....          (5,678)        (4,408)          (8,925)         (11,823)          (2,942)
Cash flows used in investing activities.....          (7,342)        (4,435)            (361)          (7,446)          (2,387)
Cash flows provided by (used in) financing
    activities..............................          29,198           (555)          62,614             (982)          (1,018)
Capital expenditures, net of non-cash capital
    lease expenditures......................           3,678          3,818            6,926            5,350            1,687

Backlog at end of year......................          43,572         63,746          100,139          101,013           80,269

</TABLE>



                                       17
<PAGE>


<TABLE>
<CAPTION>

                                                                                      JUNE 30,
                                                 -----------------------------------------------------------------------------------
                                                        1998            1999            2000               2001            2002
                                                        ----            ----            ----               ----            ----
<S>                                               <C>            <C>             <C>                 <C>             <C>
Balance Sheet Data:
Cash and cash equivalents...................      $     31,342   $    11,944      $    65,289        $    45,038      $   38,708
Working capital.............................            31,461        19,450           74,531             60,399          43,702
Total assets................................            60,617        61,653          222,754            124,999         100,297
Long-term liabilities.......................                 -             -           96,355             13,446          12,693
Minority interests in consolidated subsidiary                -             -              126                  -               -
Series A Participating Preferred stock of
  consolidated subsidiary...................                 -             -            5,000                  -               -
Total stockholders' equity..................            44,014        36,257           90,524             85,141          67,040
</TABLE>


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

         You should read the following discussion of our financial condition and
results of operations with the consolidated financial statements and related
notes included elsewhere in this Annual Report on Form 10-K. This discussion
contains, in addition to historical information, forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act of 1995,
based on our current expectations, assumptions, estimates and projections. These
forward-looking statements involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, such as, among others, the decline in
demand for our services and products due to economic and industry-specific
conditions, the risks associated with operating in international markets and our
dependence on a limited number of contracts for a high percentage of our
revenue. These risks and others are more fully described in the "Risk Factors"
section and elsewhere in this Annual Report on Form 10-K. We undertake no
obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.


OVERVIEW

         Since our inception, a majority of our revenues have been generated by
ground segment systems, networks and enterprise solutions business. Contracts
for these ground segment systems and networks and communications services have
been fixed-price contracts in a majority of cases. Profitability of such
contracts is subject to inherent uncertainties as to the cost of performance. In
addition to possible errors or omissions in making initial estimates, cost
overruns may be incurred as a result of unforeseen obstacles, including both
physical conditions and unexpected problems encountered in engineering design
and testing. Since our business is frequently concentrated in a limited number
of large contracts, a significant cost overrun on any contract could have a
material adverse effect on our business, financial condition and results of
operations.

         Contract costs generally include purchased material, direct labor,
overhead and other indirect costs. Anticipated contract losses are recognized in
the period identified. Costs from ground segment systems, networks and
enterprise solutions consist primarily of the costs of purchased materials,
direct labor and related overhead expenses, project-related travel, living costs
and subcontractor salaries. Costs from data communications services consist
primarily of satellite space segment charges, Internet connectivity fees,
network operations expenses and depreciation. Satellite space segment charges
consist of the costs associated with obtaining satellite bandwidth (the measure
of capacity) used in the transmission of services to and from the satellite
leased from operators. Network operations expenses consist primarily of costs
associated with the operation of the network operations center on a twenty-four
hour a day, seven day a week basis, including personnel and related costs.
Depreciation relates to a capitalized transponder lease and the network
operations center. Selling and marketing expenses consist primarily of salaries,
travel and living costs for sales and marketing personnel. Research and
development expenses consist primarily of salaries and related overhead expenses
paid to engineers. General and administrative expenses consist of expenses
associated with our management, finance, contract and administrative functions.



                                       18
<PAGE>


         Our business has been adversely affected by the current global economic
slowdown and, in particular, the significant challenges facing the
telecommunications industry worldwide. These challenges include excess bandwidth
resulting from weak consumer and business demand, which has fallen far short of
expectations, and the attendant financial distress facing both traditional
telecommunication carriers and the new generation of competitive local exchange
carriers. Moreover, as a result of the uncertainties facing the economy,
corporations have seriously restricted their capital expenditures to those that
are absolutely necessary. The reduction in demand has been accompanied by
significant pricing pressures and intensifying competition, while the financial
difficulties of industry participants and customers have created risks
associated with collectibility of accounts receivable. We have experienced a
decline in bookings of contract orders as customers and prospects delay
projects. These negative trends are expected to continue to impact our business
and prospects for the foreseeable future.


CRITICAL ACCOUNTING POLICIES

         Certain of our accounting policies require judgment by management in
selecting the appropriate assumptions for calculating financial estimates. By
their nature, these judgments are subject to an inherent degree of uncertainty.
These judgments are based on our historical experience, terms of existing
contracts, our observance of trends in the industry, information provided by our
customers, and information available from other outside sources, as appropriate.
Actual results may differ from these judgments under different assumptions or
conditions. Our accounting policies that require management to apply significant
judgment include:

     REVENUE RECOGNITION

         We recognize revenue in accordance with Staff Accounting Bulletin No.
101 ("SAB 101"), Revenue Recognition in Financial Statements, for our
production-type contracts that are sold separately as standard satellite ground
segment systems when persuasive evidence of an arrangement exists, the selling
price is fixed or determinable, collectibility is reasonably assured, delivery
has occurred and the contractual performance specifications have been met. Our
standard satellite ground segment systems produced in connection with these
contracts is typically short-term (less than twelve months in term) and
manufactured using a standard modular production process. Such systems require
less engineering, drafting and design efforts than our long-term complex
production-type projects. Revenue is recognized on our standard satellite ground
segment systems upon shipment and acceptance of factory performance testing
which is when title transfers to the customer. The amount of revenues recorded
on each standard production-type contract is reduced by the customer's
contractual holdback amount, which typically requires 10% to 30% of the contract
value to be retained by the customer until installation and final acceptance is
complete. The customer generally becomes obligated to pay 70% to 90% of the
contract value upon shipment and acceptance of factory performance testing.
Installation is not deemed to be essential to the functionality of the system
since installation does not require significant changes to the features or
capabilities of the equipment, does not require complex software integration and
interfacing and we have not experienced any difficulties installing such
equipment. In addition, the customer or other third party vendors can install
the equipment. The estimated relative fair value of the installation services is
determined by management, which is typically less than the customer's
contractual holdback percentage. If the holdback is less than the fair value of
installation, we will defer recognition of revenues, determined on a
contract-by-contract basis equal to the fair value of the installation services.
Payments received in advance by customers are deferred until shipment and are
presented as deferred revenues.

         We recognize revenue using the percentage-of-completion method of
accounting upon the achievement of certain contractual milestones in accordance
with Statement of Position 81-1, Accounting for Performance of Construction-Type
and Certain Production-Type Contracts, for our non-standard, complex
production-type contracts for the production of satellite ground segment systems
and equipment that are generally integrated into the customers' satellite ground
segment network. The equipment and systems produced in connection with these
contracts are typically long-term (in excess of twelve months in term) and
require significant customer-specific engineering, drafting and design effort in
order to effectively



                                       19
<PAGE>



integrate all of the customizable earth station equipment into the customers'
ground segment network. These contracts generally have larger contract values,
greater economic risks and substantive specific contractual performance
requirements due to the engineering and design complexity of such systems and
related equipment. Progress payments received in advance by customers are netted
against the inventory balances.

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

     COSTS FROM GROUND SEGMENT SYSTEMS, NETWORKS AND ENTERPRISE SOLUTIONS

         Costs related to our production-type contracts and our non-standard,
complex production-type contracts rely on estimates based on total expected
contract costs. We use reasonable, dependable estimates of the costs applicable
to various elements. Since these contract costs depend on estimates, which are
assessed continually during the term of these contracts, costs are subject to
revisions as the contract progresses to completion. Revision in cost estimates
are reflected in the period in which they become known. In the event an estimate
indicates that a loss will be incurred at completion, we record the costs in the
period identified.

     GOODWILL

         Goodwill represents the excess of the purchase price over the fair
value of the net assets acquired primarily from the buyback of the minority
interests of NetSat. In the fiscal year-ended June 30, 2002 with our adoption
of SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other
indefinite life intangible assets are no longer amortized, but instead tested
for impairment at least annually.

         In assessing goodwill, we must make assumptions regarding the estimated
future cash flows and other factors to determine the fair value of goodwill.
Future events could cause us to conclude that impairment indicators exist and
that the goodwill associated with NetSat is impaired. Any resulting impairment
could have a material adverse effect on our financial condition and results of
operations.

     ALLOWANCES FOR DOUBTFUL ACCOUNTS

         We maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. We
assess the customer's ability to pay based on a number of factors, including our
past transaction history with the customer and the credit worthiness of the
customer. Management specifically analyzes accounts receivable, historical bad
debts, customer concentrations, customer credit-worthiness and current economic
trends. If the financial condition of our customers were to deteriorate in the
future, resulting in an impairment of their ability to make payments, additional
allowances may be required.

     INVENTORIES

         Inventories consist primarily of work-in-progress from costs incurred
in connection with specific customer contracts, which are stated at the lower of
cost or market value. In assessing the realizability of inventories, we are
required to make estimates of the total contract costs based on the various
elements of the work-in-progress. It is possible that changes to these estimates
could cause a reduction in the net realizable value of our inventories.




                                       20
<PAGE>


RESULTS OF OPERATIONS


FISCAL YEARS ENDED JUNE 30, 2001 AND 2002

         Revenues from Ground Segment Systems, Networks and Enterprise
Solutions. Revenues from ground segment systems, networks and enterprise
solutions decreased by $14.6 million, or 18.6% from $78.7 million for the fiscal
year ended June 30, 2001 to $64.1 million for the fiscal year ended June 30,
2002. The decrease relates to the decrease in the shipment and/or completion of
contracts as a result of a decline in bookings of contract orders due to the
continued uncertainty surrounding the global economic slowdown in the
telecommunications industry, resulting in customers and prospects continuing to
delay projects. We expect the trend in revenues that adversely affected our
results of operations for the fiscal year June 30, 2002 to continue to adversely
impact us.

         Revenues from Data Communications Services. Revenues from data
communications services decreased by $1.7 million, or 7.0% from $24.2 million
for the fiscal year ended June 30, 2001 to $22.5 million for the fiscal year
ended June 30, 2002. The decrease reflects changes in market conditions
including the global economic slowdown in the telecommunications industry,
pricing pressures in the marketplace and penetration of fiber into areas we have
traditionally provided services. We expect the trend



                                       21
<PAGE>


in revenues that adversely affected our results of operations for the fiscal
year June 30, 2002 to continue to adversely impact us, coupled with the
termination of services from our largest Middle East customer in August 2002.

         Costs from Ground Segment Systems, Networks and Enterprise Solutions.
Costs from ground segment systems, networks and enterprise solutions decreased
by $13.8 million, or 19.5%, from $70.9 million for the fiscal year ended June
30, 2001 to $57.1 million for the fiscal year ended June 30, 2002. The decrease
is attributable to a lower revenue base. Costs as a percentage of related
revenues decreased from 90.0% for the fiscal year ended June 30, 2001 to 89.1%
for the fiscal year ended June 30, 2002. The decrease was mainly attributable to
a change in contract mix.

         Costs from Data Communications Services. Costs from data communications
services increased by $4.0 million, or 17.8%, from $22.7 million for the fiscal
year ended June 30, 2001 to $26.7 million for the fiscal year ended June 30,
2002. Costs as a percentage of related revenues increased from 93.8% for the
fiscal year ended June 30, 2001 to 118.8% for the fiscal year ended June 30,
2002. The increase is primarily due to an increase in transponder costs due to
the reclassification of certain satellite transponders leased to operating
leases from capital leases based on the renegotiation of certain long-term lease
agreements during the fiscal quarter ended June 30, 2001. The corresponding
decrease was in interest expense during the fiscal year ended June 30, 2002.

         Selling and Marketing. Selling and marketing expenses decreased by $0.5
million, or 6.9%, from $7.2 million for the fiscal year ended June 30, 2001 to
$6.7 million for the fiscal year ended June 30, 2002. The decrease was
attributable to a reduction in work force in the sales and marketing department
of our data communications services business in the fiscal quarter ended June
30, 2001, partially offset by the development of a new direct sales force in the
ground segment systems, networks and enterprise solutions business.

         Research and Development. Research and development expenses increased
by $0.3 million, or 39.4%, from $0.9 million for the fiscal year ended June 30,
2001 to $1.2 million for the fiscal year ended June 30, 2002. The increase was
attributable to internal development of new monitoring and control technologies,
as well as the initial development of various subsystems for solutions we are
providing to a new customer.

         General and Administrative. General and administrative expenses
increased by $2.1 million, or 21.9%, from $9.8 million for the fiscal year ended
June 30, 2001 to $12.0 million for the fiscal year ended June 30, 2002. General
and administrative expenses as a percentage of revenues increased from 9.6% for
the fiscal year ended June 30, 2001 to 13.8% for the fiscal year ended June 30,
2002. The increase in general and administrative expenses for the fiscal year
ended June 30, 2002 primarily resulted from the recording of a $3.2 million
allowance for uncollectible accounts receivable from our largest Middle East
customer, an increase in legal expenses, mainly related to settling a patent
infringement case and an increase in insurance premiums, partially offset by a
reduction in work force, including the reduction of the management team of our
data communications services business, which took place in the fiscal quarter
ended June 30, 2001.

         Asset Impairment Charge. The asset impairment charge of $2.9 million
for the fiscal year ended June 30, 2001, related to three cost basis investments
that were written-down in the fiscal quarter ended June 30, 2001. Our management
evaluated these investments and believed it would be appropriate to write-down
these investments to zero based on their financial uncertainty. The asset
impairment charge of $0.2 million for the fiscal year ended June 30, 2002,
related to a write-down of the net carrying value of goodwill relating to the
acquisition of a wireless local loop telephone network solutions business during
the fiscal year ended June 30, 1999.

         Restructuring Charge. The restructuring charge of $2.5 million (of
which $0.5 was charged to costs from data communications services) for the
fiscal year ended June 30, 2001 relates to management's plan to reduce costs and
improve the data communications services business operating efficiencies. As a
result of this restructuring, we terminated 31 employees including executive
management, marketing,



                                       22
<PAGE>



administration and operations support personnel. The major components of the
restructuring charge included severance payments to terminated employees of
approximately $0.9 million, fees incurred in connection with the termination of
certain leased satellite transponders of approximately $0.5 million (charged to
costs from data communications services), the write-off of certain capitalized
costs in the amount of approximately $0.6 million associated with our terminated
financing activities and the write-off of the estimated book value of equipment
in the amount of approximately $0.5 million in connection with our
discontinuance of certain product lines. At June 30, 2001, approximately $0.5
million of the restructuring charge was accrued and included in other accrued
expenses. During the fiscal year ended June 30, 2002, the restructuring plan was
completed whereby $0.3 million was charged against the restructuring accrual for
charges related to space segment cancellation fees, and $0.2 million was
reversed into income (credit to costs from data communications services) due to
the resolution of liabilities for less than originally estimated.

         Interest Income. Interest income decreased by $2.2 million, or 67.8%,
from $3.2 million for the fiscal year ended June 30, 2001 to $1.0 million for
the fiscal year ended June 30, 2002. The decrease is primarily due to
significant decline in interest rates coupled with a decrease in cash and cash
equivalents due to cash used in operations during the fiscal year ended June 30,
2002.

         Interest Expense. Interest expense decreased by $5.6 million, or 85.5%,
from $6.6 million for the fiscal year ended June 30, 2001 to $1.0 million for
the fiscal year ended June 30, 2002. The decrease was due to the
reclassification of certain satellite leased transponders to operating leases
from capital leases based on the renegotiation of certain long-term lease
agreements during the fiscal quarter ended June 30, 2001. The corresponding
increase was in costs from data communications services during the fiscal year
ended June 30, 2002.

         Gain on Sale of Investment. The gain on sale of investment of $0.3
million for the fiscal year ended June 30, 2001, related to the sale of our
interest in one of our investments, which was accounted for as a cost method
investment, during the fiscal quarter ended December 31, 2000.


FISCAL YEARS ENDED JUNE 30, 2000 AND 2001

         Revenues from Ground Segment Systems, Networks and Enterprise
Solutions. Revenues from ground segment systems, networks and enterprise
solutions increased by $9.1 million, or 13.2% from $69.6 million for the fiscal
year ended June 30, 2000 to $78.7 million for the fiscal year ended June 30,
2001. The increase reflected an overall increase in the number of shipments
and/or completion of contracts as we expanded our businesses.

         Revenues from Data Communications Services. Revenues from data
communications services increased by $15.2 million, or 168.9% from $9.0 million
for the fiscal year ended June 30, 2000 to $24.2 million for the fiscal year
ended June 30, 2001 related to additional service revenues derived from new and
existing Internet access service customers.

         Costs from Ground Segment Systems, Networks and Enterprise Solutions.
Costs from ground segment systems, networks and enterprise solutions increased
by $10.3 million, or 16.9%, from $60.6 million for the fiscal year ended June
30, 2000 to $70.9 million for the fiscal year ended June 30, 2001. The increase
was attributable to the corresponding increase in revenues. Costs as a
percentage of revenues increased from 87.1% for the fiscal year ended June 30,
2000 to 90.0% for the fiscal year ended June 30, 2001. The increase was mainly
attributable to a change in contract mix.

         Costs from Data Communications Services. Costs from data communications
services increased by $12.6 million, or 124.3%, from $10.1 million for the
fiscal year ended June 30, 2000 to $22.7 million for the fiscal year ended June
30, 2001. The increase related to additional satellite space segment transponder
costs and the expansion of the network operations center to support the
increasing service base. Costs as a



                                       23
<PAGE>


percentage of revenues decreased from 112.4% for the fiscal year ended June 30,
2000 to 93.8% for the fiscal year ended June 30, 2001. The decrease was
primarily due to the increase in revenues, which increased transponder
utilization.

         Selling and Marketing. Selling and marketing expenses increased by $1.1
million, or 17.9%, from $6.1 million for the fiscal year ended June 30, 2000 to
$7.2 million for the fiscal year ended June 30, 2001. The increase is
attributable to our data communications services business increase in sales and
marketing efforts to penetrate into new regions.

         Research and Development. Research and development expenses increased
by $0.1 million, or 8.4%, from $0.8 million for the fiscal year ended June 30,
2000 to $0.9 million for the fiscal year ended June 30, 2001. The increase was
due to our data communications services business research and development
efforts for potential new products.

         General and Administrative. General and administrative expenses
increased by $1.0 million, or 11.7%, from $8.8 million for the fiscal year ended
June 30, 2000 to $9.8 million for the fiscal year ended June 30, 2001. General
and administrative expenses as a percentage of revenues decreased from 11.1% for
the fiscal year ended June 30, 2000 to 9.5% for the fiscal year ended June 30,
2001. The increase in general and administrative expenses for the fiscal year
ended June 30, 2001 primarily resulted from an increase in our data
communications services business personnel, including expenses related to an
increase in its management team.

         Asset Impairment Charge. The asset impairment charge of $2.9 million
for the fiscal year ended June 30, 2001, related to three cost basis investments
that were written-down in the fiscal fourth quarter ended June 30, 2001. Our
management evaluated these investments and believed it would be appropriate to
write-down these investments to zero based on their financial uncertainty.

         Restructuring Charge. The restructuring charge of $2.5 million for the
fiscal year ended June 30, 2001 related to management's plan to reduce costs and
improve the data communications services business operating efficiencies. As a
result of this restructuring, we terminated 31 employees including executive
management, marketing, administration and operations support personnel. The
major components of the restructuring charge included severance payments to
terminated employees of approximately $0.9 million, fees incurred in connection
with the termination of certain leased satellite transponders of approximately
$0.5 million (charged to costs from data communications services), the write-off
of certain capitalized costs in the amount of approximately $0.6 million
associated with our terminated financing activities and the write-off of the
estimated book value of equipment in the amount of approximately $0.5 million in
connection with our discontinuance of certain product lines. At June 30, 2001,
approximately $0.5 million of the restructuring charge was accrued and included
in other accrued expenses.

         Interest Income. Interest income increased by $1.5 million, or 84.9%,
from $1.7 million for the fiscal year ended June 30, 2000 to $3.2 million for
the fiscal year ended June 30, 2001. The increase is primarily due to the
increase of cash and cash equivalents due to the investment of the net proceeds
from our secondary common stock offering completed in April 2000.

         Interest Expense. Interest expense increased by $4.1 million, or
160.9%, from $2.5 million for the fiscal year ended June 30, 2000 to $6.6
million for the fiscal year ended June 30, 2001. The increase relates to our
data communications services business capital lease obligations entered into
during fiscal year 2000 for satellite space segment transponders.



                                       24
<PAGE>


         Gain on Sale of Consolidated Subsidiary's Common Stock. The gain on
sale of consolidated subsidiary's common stock of $2.4 million for the fiscal
year ended June 30, 2000 related to our sale of 1,400,000 shares of common stock
of our data communications services business at $2.50 per share during the
fiscal quarter ended December 31, 1999.

         Gain on Sale of Investment. The gain on sale of investment of $0.3
million in the year ended June 30, 2001, relates to the sale of our interest in
one of our investments, which is accounted for as a cost method investment,
during the fiscal quarter ended December 31, 2000.


QUARTERLY RESULTS

         The following tables set forth unaudited consolidated financial
information for each of the eight fiscal quarters in the period ended June 30,
2002. We believe that this information has been presented on the same basis as
the audited consolidated financial statements appearing elsewhere in the Annual
Report on Form 10-K, and we believe all necessary adjustments, consisting only
of normal recurring adjustments, have been included in the amounts stated below
to present fairly the unaudited quarterly results of operations when read in
conjunction with our audited consolidated financial statements and related notes
included elsewhere in this Annual Report on Form 10-K. The operating results for
any quarter are not necessarily indicative of the operating results for any
future period. Certain balances in the prior years have been reclassified to
conform to the current year presentation. During the fiscal year ended June 30,
2002, we changed the presentation of our consolidated statements of operations
to better represent current industry reporting practices.



                                       25
<PAGE>


<TABLE>
<CAPTION>


                                                                      THREE MONTHS ENDED
                                -------------------------------------------------------------------------------------------
                                 SEPT. 30,   DEC. 31,    MAR. 31,    JUNE 30,    SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,
                                 ---------   --------    --------    --------    ---------   --------   --------   --------
                                   2000       2000        2001        2001        2001         2001       2002       2002
                                   ----       ----        ----        ----        ----         ----       ----       ----
                                                                       (IN THOUSANDS)
<S>                              <C>          <C>          <C>         <C>          <C>           <C>       <C>       <C>

Consolidated Statement of
  Operations Data:
Revenues from ground segment
   systems, networks and
   enterprise solutions.......  $ 20,553   $  20,714   $ 18,042    $ 19,435     $ 18,034    $ 16,939    $ 15,120    $ 14,008
Revenues from data
   communications services....     5,891       6,110      6,207       5,962        6,186       5,708       5,172       5,412
                                ---------   --------   --------    --------     --------    --------    ---------   --------
Total revenues................    26,444      26,824     24,249      25,397       24,220      22,647      20,292      19,420

Costs and operating expenses:
Costs from ground segment
   systems, networks and
   enterprise solutions.......    18,193      18,478     16,086      18,150       16,177      15,297      13,166      12,443
Costs from data communications
   services...................     5,640       5,350      5,578       6,093        7,111       6,410       6,698       6,486
Selling and marketing.........     2,096       1,944      1,680       1,515        1,606       1,615       1,581       1,933
Research and development......       210         157        258         225          247         173         366         399
General and administrative....     2,747       2,754      2,584       1,737        2,107       2,216       2,179       5,468
Asset impairment charge.......         -           -          -       2,857            -           -           -         237
Restructuring charge..........         -           -          -       1,950            -           -           -           -
                                ---------   --------   --------    --------     --------    --------    --------    --------
Total costs and operating
   expenses...................    28,886      28,683     26,186      32,527       27,248      25,711      23,990      26,966
                                ---------   --------   --------    --------     --------    --------    --------    --------
Loss from operations..........    (2,442)     (1,859)    (1,937)     (7,130)      (3,028)     (3,064)     (3,698)     (7,546)

Other income (expense):
Interest income...............       978         868        775         573          423         254         190         163
Interest expense..............    (1,951)     (2,077)    (2,306)       (245)        (243)       (241)       (237)       (236)
Gain on sale of investment....         -         304          -           -            -           -           -           -
                                ---------   --------   --------    --------     --------    --------    --------    --------
Loss before income taxes and
   minority interests.........    (3,415)     (2,764)    (3,468)     (6,802)      (2,848)     (3,051)     (3,745)     (7,619)
Provision for income taxes....      (415)       (580)      (118)       (487)           -           -           -           -
                                ---------   --------   --------    --------     --------    --------    --------    --------
Loss before minority interests    (3,830)     (3,344)    (3,586)     (7,289)      (2,848)     (3,051)     (3,745)     (7,619)
Minority interests in
   operations of consolidated
   subsidiary.................         37       (555)      (132)          -            -           -           -           -
                                ---------   --------   --------    --------     --------    --------    --------    --------
Net loss .....................  $  (3,793)  $ (3,899)  $ (3,718)   $ (7,289)    $ (2,848)   $ (3,051)   $ (3,745)   $ (7,619)
                                =========   ========   ========    ========     ========    ========    ========    ========

Basic and diluted net loss
   per common share...........  $   (0.32)  $  (0.33)  $  (0.31)   $  (0.58)    $  (0.22)   $  (0.24)   $  (0.29)   $  (0.60)
                                =========   ========   ========    ========     ========    ========    ========    ========
Weighted-average shares used
   in the calculation of
   basic and diluted net loss
   per common share...........     11,879     11,890     11,962      12,510       12,718      12,719      12,753      12,638
                                =========   ========   ========    ========     ========    ========    ========    ========
</TABLE>

                                       26
<PAGE>


         We may continue to experience significant quarter-to-quarter
fluctuations in our consolidated results of operations, which may result in
volatility in the price of our common stock. See "Risk Factors" beginning on
page 29.


LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2002, we had working capital of $43.7 million, including
cash and cash equivalents of $38.7 million, restricted cash of $0.6 million, net
accounts receivable of $15.0 million, inventories of $8.6 million and prepaid
expenses and other current assets of $1.4 million, offset by $12.9 million in
accounts payable, $3.5 million in deferred revenue and $4.1 million in accrued
expenses and other current liabilities.

         Net cash used in operating activities during the fiscal year ended June
30, 2002 was $2.9 million, which primarily related to the net loss of $17.3
million, a decrease in accounts payable of $2.4 million relating to the timing
of vendor payments and a decrease in deferred revenue of $2.3 million due to the
timing of advance payments from customers on contracts, offset by a decrease in
inventories of $6.7 million due to the completion of certain jobs, a decrease in
accounts receivable of $6.3 million due to collections on certain contract
billings and the reduction in revenues, a provision for doubtful accounts of
$4.0 million mainly attributable to a $3.2 million allowance for uncollectible
accounts receivable from one customer and depreciation and amortization expense
of $3.7 million related to the network operation center and one satellite space
segment transponder.

         Net cash used in investing activities during fiscal year ended June 30,
2002 was $2.4 million, which relates to the purchase of $1.7 million in fixed
assets primarily for satellite earth station equipment and our network
operations center in order to support our service base and $0.7 million for
advances to certain offices.

         Net cash used in financing activities during fiscal year ended June 30,
2002 was $1.0 million, which primarily related to the repurchase of 200,000
shares of stock from an officer.

         Effective April 11, 2002, we amended our bank agreement and established
a $5.0 million working capital line of credit. The modified credit facility
bears interest at the prime rate (4.75% at June 30, 2002) and is collateralized
by a first security interest on most of our assets. The credit facility, which
expires on April 10, 2003, contains certain financial covenants, with which we
were in compliance at June 30, 2002. As of June 30, 2002, no amounts were
outstanding under this credit facility, however, there are outstanding standby
letters of credit, bid proposals and performance guarantees of approximately
$2.0 million which are applied against and reduce the amounts available under
the working capital line of credit.

         We lease satellite space segment services and other equipment under
various operating lease agreements, which expire in various years through 2008.
Future minimum lease payments due on these leases through June 30, 2003 are
approximately $15.5 million.

         On November 7, 2001, the Board of Directors authorized a stock
repurchase program whereby we can repurchase up to $2.0 million of our
outstanding stock, representing approximately 3.7% of the total shares
outstanding on that date. On November 15, 2001, we repurchased 2,000 shares at a
fair market price of $4.45 per share on such date. On May 7, 2002, the Company
repurchased 200,000 shares at a fair market price of $5.82 per share from an
officer of the Company. The timing, price, quantity and manner of future
purchases will be at the discretion of management, depending on market
conditions and other factors, subject to compliance with the applicable
securities laws.

         We expect that our cash and working capital requirements for operating
activities will increase as we continue to implement our business strategy.
Management anticipates that we will experience negative cash flows due to
continued operating losses as a result of a decrease in orders and continued
under-utilization of satellite transponder space of NetSat.

         NetSat has had, and we expect it will continue to have, significant
working capital requirements, which have, and will, put increased pressure on
our capital resources. We are currently exploring a number of alternative
strategies to reduce the drain on our resources caused by NetSat's losses. These
include strategies to better utilize, or reduce the cost of underutilized,
transponder capacity, as well as strategies to deal with NetSat's funding needs.
We cannot assure you that we will successfully achieve our goal of improving
NetSat's working capital requirements.


                                       27
<PAGE>


         Our future capital requirements will depend upon many factors,
including the success of our marketing efforts in the ground segment systems,
networks, and communications services business, the nature and timing of
customer orders, the extent to which we must conduct research and development
efforts internally and potential acquisitions of complementary businesses,
products or technologies. Based on current plans, we believe that our existing
capital resources will be sufficient to meet working capital requirements
through June 30, 2003. However, we cannot assure you that there will be no
change that would consume available resources significantly before that time.
For example, the terrorist attacks on the United States in 2001, as well as
future events occurring in response to, or in connection with them, including,
without limitation, future terrorist attacks against the United States or its
allies or military or trade or travel disruptions impacting our ability to sell
and market our products and services in the United States and internationally
may impact our results of operations. Additional funds may not be available when
needed and even if available, additional funds may be raised through financing
arrangements and/or the issuance of preferred or common stock or convertible
securities on terms and prices significantly more favorable than those of the
currently outstanding common stock, which could have the effect of diluting or
adversely affecting the holdings or rights of our existing stockholders. If
adequate funds are unavailable, we may be required to delay, scale back or
eliminate some of our operating activities, including, without limitation, the
timing and extent of our marketing programs, the extent and timing of hiring
additional personnel and our research and development activities. We cannot
assure you that additional financing will be available to us on acceptable
terms, or at all.


CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

        At June 30, 2002, the Company had contractual obligations and commercial
commitments as follows (in thousands):

<TABLE>
<CAPTION>

------------------------------- -----------------------------------------------------------------------------
   CONTRACTUAL OBLIGATIONS                                 PAYMENTS DUE BY PERIOD
------------------------------- -----------------------------------------------------------------------------
                                    Total       Less than 1 year    1-3 years      4-5 years   After 5 years
------------------------------- --------------- ----------------- --------------- ------------ --------------
<S>                             <C>             <C>                <C>            <C>          <C>
Capital lease obligation           $16,871        $ 1,387           $ 2,774         $ 2,774      $ 9,936
------------------------------- --------------- ----------------- --------------- ------------ --------------
Operating leases                    76,556         15,489            29,377          25,432        6,258
------------------------------- --------------- ----------------- --------------- ------------ --------------
Total contractual cash
   obligations                     $93,427        $16,876           $32,151         $28,206      $16,194
------------------------------- --------------- ----------------- --------------- ------------ --------------
</TABLE>

<TABLE>
<CAPTION>

------------------------------- --------------- -------------------------------------------------------------
                                TOTAL AMOUNTS            AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
OTHER COMMERCIAL COMMITMENTS      COMMITTED     Less than 1 year    1-3 years      4-5 years   Over 5 years
------------------------------- --------------- ----------------- --------------- ------------ --------------
<S>                             <C>             <C>                <C>            <C>          <C>
Standby letters of credit           $1,370        $  683                $8                 -         $679
------------------------------- --------------- ----------------- --------------- ------------ --------------
Performance guarantees                 607           607                 -                 -            -
------------------------------- --------------- ----------------- --------------- ------------ --------------
Total commercial
   commitments                      $1,977        $1,290                $8                $-         $679
------------------------------- --------------- ----------------- --------------- ------------ --------------
</TABLE>


RELATED PARTY TRANSACTIONS

         During the fiscal year ended June 30, 2001, we advanced $200,000 and
$40,000 to a Vice President and our General Manager, respectively. We received
two promissory notes payable on December 31, 2002 for such advances, which bear
interest at an annual rate of 5.0% payable quarterly. During the fiscal year
ended June 30, 2002, we increased the $200,000 loan to $300,000 and amended the
promissory note accordingly. At June 30, 2001, principal amounts outstanding
under these promissory notes were included in other assets and accrued interest
receivable thereon were included in other current assets. At June 30, 2002,
principal amounts and accrued interest outstanding under these promissory notes
were included in other current assets.

         During the fiscal year ended June 30, 2002, we advanced $300,000 to our
Chief Executive Officer. We received a promissory note payable on September 30,




                                       28
<PAGE>


2004 which bears interest at an annual rate of 5.0% payable quarterly, and
secured by a stock pledge agreement. On May 7, 2002, our Chief Executive Officer
sold 200,000 shares of common stock at a fair market price of $5.82 per share on
such date in connection with our stock repurchase program. We deducted
amounts outstanding on the promissory note together with accrued interest
thereon from the gross proceeds paid to our Chief Executive Officer in
connection with this transaction.

         During the fiscal year ended June 30, 2002, we advanced $300,000 to our
President. We received a promissory note payable on September 30, 2004, which
bears interest at an annual rate of 5.0% payable quarterly, and secured by a
stock pledge agreement. At June 30, 2002, principal amounts outstanding under
this promissory note were included in other assets and accrued interest
receivable thereon were included in other current assets.


RECENT ACCOUNTING PRONOUNCEMENTS

         In August 2001, SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets ("SFAS No. 144"), was issued, which supersedes SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. SFAS No. 144 addresses the financial accounting and
reporting for the impairment or disposal of long-lived assets. We do not expect
the adoption of this statement to have a material impact on our consolidated
financial position, results of operations or liquidity.


RISK FACTORS

WE HAVE A HISTORY OF OPERATING LOSSES AND NEGATIVE CASH FLOW AND EXPECT OUR
LOSSES TO CONTINUE.

         We have incurred significant net losses since we began operating in
August 1994. We incurred net losses of $17.3 million during the fiscal year
ended June 30, 2002, $18.7 million during the fiscal year ended June 30, 2001
and $3.6 million during the fiscal year ended June 30, 2000. As of June 30,
2002, our accumulated deficit was approximately $54.3 million. We anticipate
that we will continue to incur net losses. Our ability to achieve and maintain
profitability will depend upon our ability to generate significant revenues
through new customer contracts and the expansion of our existing products and
services, including our communications services. We cannot assure you that we
will be able to obtain new customer contracts or generate significant additional
revenues from those contracts or any new products or services that we introduce.
Even if we become profitable, we may not sustain or increase our profits on a
quarterly or annual basis in the future.

SINCE SALES OF SATELLITE COMMUNICATIONS EQUIPMENT ARE DEPENDENT ON THE GROWTH OF
COMMUNICATIONS NETWORKS, AS MARKET DEMAND FOR THESE NETWORKS DECLINES, OUR
REVENUE AND PROFITABILITY ARE LIKELY TO DECLINE.

         We derive, and expect to continue to derive, a significant amount of
revenue from the sale of satellite ground segment systems and networks. If the
long-term growth in demand for communications networks does not occur as we
expect, the demand for our satellite ground segment systems and networks may
decline or grow more slowly than we expect. As a result, we may not be able to
grow our business, our revenue may decline from current levels and our results
of operations may be harmed. The demand for communications networks and the
products used in these networks is affected by various factors, many of which
are beyond our control. For example, general economic conditions have
deteriorated and affected the overall rate of capital spending by our customers.
Also, many companies are finding it increasingly difficult to raise capital to
finish building their communications networks and, therefore, are placing fewer
orders with our customers. The current economic slowdown has resulted in a
softening of demand from our customers. We believe that this slowdown is
generally the result of slower than forecasted growth in a number of key
segments, including communications infrastructure equipment, resulting from a
reduction in



                                       29
<PAGE>


the capital spending of service providers. We cannot predict the extent to which
this softening of demand will continue. Further, increased competition among
satellite ground segment systems and networks manufacturers has increased
pricing pressures.

RISKS ASSOCIATED WITH OPERATING IN INTERNATIONAL MARKETS COULD RESTRICT OUR
ABILITY TO EXPAND GLOBALLY AND HARM OUR BUSINESS AND PROSPECTS.

         We market and sell our products and services in the United States and
internationally. We anticipate that international sales will continue to account
for a significant portion of our total revenues for the foreseeable future with
a significant portion of the international revenue coming from developing
countries. We presently conduct our international sales in the following
geographic areas: Africa, the Asia-Pacific Region, Australia, Central and South
America, Eastern and Central Europe and the Middle East. There are some risks
inherent in conducting our business internationally, including:

         o    general political and economic instability in international
              markets, as well as a result of the terrorist attacks in the
              United States on September 11, 2001 and the related outbreak of
              hostilities, could impede our ability to deliver our products and
              services to customers and harm our results of operations;

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

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

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

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

         o    increased expenses associated with marketing services in foreign
              countries could effect our ability to compete;

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

         o    difficulties in staffing and managing foreign operations could
              effect our ability to compete;

         o    potentially adverse taxes could adversely affect our results of
              operations;

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

         o    difficulties in collecting accounts receivable could adversely
              affect our results of operations.

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

IF WE ARE NOT SUCCESSFUL IN SELLING OUR COMMUNICATIONS SERVICES TO OUR CUSTOMERS
FOR WHOM WE HAVE HISTORICALLY PROVIDED SATELLITE GROUND SEGMENT SYSTEMS AND
NETWORKS, OUR RESULTS OF OPERATIONS WILL BE HARMED.


                                       30
<PAGE>


         We have historically provided our customers with satellite ground
segment systems and networks on a project-by-project basis. We intend on
marketing to our customers our communications services. These services not only
provide the implementation of the satellite ground segment systems and networks
but also provide for the ongoing operation and maintenance of these systems and
networks. If we are not successful in selling these communications services to
our existing customers, it will harm our results of operations.

IF NETSAT DOES NOT EXECUTE ITS BUSINESS STRATEGY OR IF THE MARKET FOR ITS
SERVICES FAILS TO DEVELOP OR DEVELOPS MORE SLOWLY THAN IT EXPECTS, OUR RESULTS
OF OPERATIONS WILL BE HARMED AND OUR STOCK PRICE MAY BE ADVERSELY AFFECTED.

         NetSat's revenues from data communications services has decreased and
the costs of data communications services has increased in the fiscal year ended
June 30, 2002. Its future revenues and results of operations are dependent on
its execution of its business strategy and development of the market for its
current and future services. In particular, the current level and manner of
utilization of NetSat's transponder space, as well as a decrease in orders
currently being experienced, continues to harm our results of operation. We
cannot assure you that the transponder space will be efficiently and
substantially utilized or that an increase in orders will be realized. NetSat
has had, and we expect will continue to have, significant cash requirements,
which have and will decrease our cash resources. If NetSat does not efficiently
and substantially utilize its transponder space capacity or increase its level
of orders, its cash requirements may increase and our results of operations will
be harmed.

CURRENCY DEVALUATIONS IN THE FOREIGN MARKETS IN WHICH WE OPERATE COULD DECREASE
DEMAND FOR OUR PRODUCTS AND SERVICES.

         We denominate our foreign sales in U.S. dollars. Consequently,
decreases in the value of local currencies relative to the U.S. dollar in the
markets in which we operate could adversely affect the demand for our products
and services by increasing the price of our products and services in the
currencies of the countries in which they are sold. The difficult economic
conditions in international markets and the resulting foreign currency
devaluations have led to a decrease in demand for our products and services, and
the decrease in bookings received by us from these foreign regions has adversely
affected our results of operations for the fiscal years ended June 30, 2001 and
2002. We expect that these negative trends will continue to adversely impact our
results of operations.

YOU SHOULD NOT RELY ON OUR QUARTERLY OPERATING RESULTS AS AN INDICATION OF OUR
FUTURE RESULTS BECAUSE THEY ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, AND IF WE
FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS OR INVESTORS, OUR STOCK
PRICE COULD DECLINE SIGNIFICANTLY.

         Our future revenues and results of operations may significantly
fluctuate due to a combination of factors, including:

         o    delays and/or a decrease in the booking of new contracts;

         o    general political and economic conditions in the United States and
              abroad as a result of the terrorist attacks on September 11, 2001
              and the related outbreak of hostilities;

         o    the length of time needed to initiate and complete customer
              contracts;

         o    the demand for and acceptance of our existing products and
              services;

         o    the cost of providing our products and services;




                                       31
<PAGE>


         o    the introduction of new and improved products and services by us
              or our competitors;

         o    market acceptance of new products and services;

         o    the mix of revenue between our standard products, custom-built
              products and our communications services;

         o    the timing of significant marketing programs;

         o    our ability to hire and retain additional personnel;

         o    the competition in our markets; and

         o    difficult global economic conditions and the currency devaluations
              in international markets which have, and may continue to,
              adversely impact our quarterly results.

         Accordingly, you should not rely on quarter-to-quarter comparisons of
our results of operations as an indication of our future performance. It is
possible that in future periods our results of operations may be below the
expectations of public market analysts and investors, which could cause the
trading price of our common stock to decline.

OUR MARKETS ARE HIGHLY COMPETITIVE AND WE HAVE MANY ESTABLISHED COMPETITORS, AND
WE MAY LOSE MARKET SHARE AS A RESULT.

         The markets in which we operate are highly competitive and this
competition could harm our ability to sell our products and services on prices
and terms favorable to us. Our primary competitors in the satellite ground
segment and networks market include vertically integrated satellite systems
providers like Nippon Electric Corporation, systems integrators like IDB
Systems, a division of MCI WorldCom Inc. and equipment manufacturers who also
provide integrated systems like Andrew Corporation and Vertex-RSI.

         In the communications services and Internet access services markets, we
compete with other satellite communication companies who provide similar
services, like Loral CyberStar, Inc. and PanAmSat Corporation and Verestar, as
well as other ISPs. In addition, we may compete with other communications
service providers, MCI WorldCom Inc., and satellite owners like New Skies
Satellites N.V. and Intelsat. We anticipate that our competitors may develop or
acquire services that provide functionality that is similar to that provided by
our services and that those services may be offered at significantly lower
prices or bundled with other services. These competitors may have the financial
resources to withstand substantial price competition and may be in a better
position to endure difficult economic conditions in international markets, and
may be able to respond more quickly than we can to new or emerging technologies
and changes in customer requirements. Moreover, many of our competitors have
more extensive customer bases, broader customer relationships and broader
industry alliances than we do that they could use to their advantage in
competitive situations.

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


                                       32
<PAGE>


IF THE SATELLITE COMMUNICATIONS INDUSTRY FAILS TO CONTINUE TO DEVELOP OR NEW
TECHNOLOGY MAKES IT OBSOLETE OUR BUSINESS AND FINANCIAL CONDITION WILL BE
HARMED.

         Our business is dependent on the continued success and development of
satellite communications technology, which competes with terrestrial
communications transport technologies like terrestrial microwave, coaxial cable
and fiber optic communications systems. During the fiscal year ended June 30,
2002, fiber optic communications systems penetrated areas in which we have
traditionally provided services. If the satellite communications industry fails
to continue to develop, or any technological development significantly improves
the cost or efficiency of competing terrestrial systems relative to satellite
systems, then our business and financial condition would be materially harmed.

WE MAY BE UNABLE TO RAISE ADDITIONAL FUNDS TO MEET OUR CAPITAL REQUIREMENTS IN
THE FUTURE.

         We have incurred negative cash flows from operations in each year since
our inception. We believe that our available cash resources will be sufficient
to meet our working capital and capital expenditure requirements through June
30, 2003. However, our future liquidity and capital requirements are difficult
to predict, as they depend on numerous factors, including the success of our
existing product and service offerings, as well as competing technological and
market developments. In particular, NetSat has had significant cost
requirements, which are expected to continue in the future. We may need to raise
additional funds in order to meet additional working capital requirements and to
support additional capital expenditures. Should this need arise, additional
funds may not be available when needed and, even if additional funds are
available, we may not find the terms favorable or commercially reasonable. If
adequate funds are unavailable, we may be required to delay, reduce or eliminate
some of our operating activities, including marketing programs, hiring of
additional personnel and research and development programs. If we raise
additional funds by issuing equity securities, our existing stockholders will
own a smaller percentage of our capital stock and new investors may pay less on
average for their securities than, and could have rights superior to, existing
stockholders.

WE RELY ON OUR RELATIONSHIPS WITH RESELLERS IN DEVELOPING COUNTRIES WITH
EMERGING MARKETS FOR SALES OF OUR PRODUCTS AND SERVICES AND THE LOSS OR FAILURE
OF ANY OF THESE RELATIONSHIPS MAY HARM OUR ABILITY TO MARKET AND SELL OUR
PRODUCTS AND SERVICES.

         We intend to provide our products and services and NetSat's services
almost entirely in developing countries where we have little or no market
experience. We intend to rely on resellers in those markets to provide their
expertise and knowledge of the local regulatory environment in order to make
access to customers in emerging markets easier. If we are unable to maintain
these relationships, or develop new ones in other emerging markets, our ability
to enter into and compete successfully in developing countries would be
adversely affected.

A LIMITED NUMBER OF CUSTOMER CONTRACTS ACCOUNT FOR A HIGH PERCENTAGE OF OUR
REVENUES, AND THE INABILITY TO REPLACE A KEY CUSTOMER CONTRACT WOULD ADVERSELY
AFFECT OUR RESULTS OF OPERATIONS, BUSINESS AND FINANCIAL CONDITION.

         We rely on a small number of customer contracts for a large portion of
our revenues and expect that a significant portion of our revenues will continue
to be derived from a limited number of customer contracts. We anticipate that
our operating results in any given period will continue to depend to a
significant extent upon revenues from large contracts with a small number of
customers. As a result of this concentration of our customer base, an inability
to replace one or more of these large customer contracts would materially
adversely affect our results of operations and financial condition.

WE ANTICIPATE SIGNIFICANT REVENUES FROM FIVE CONTRACTS AND A MODIFICATION OR
TERMINATION OF ALL OR ANY OF THESE CONTRACTS WOULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.


                                       33
<PAGE>


         We have agreements with five customers to provide equipment and
services, which we expect to generate substantial revenues. If any of these
customers are unable to implement their business plans, the market for their
services declines, or all or any of the customers modifies or terminates its
agreement with us, our results of operations and financial condition would be
harmed.

WE ARE PAID A FIXED PRICE IN MOST OF OUR CUSTOMER CONTRACTS, AND ANY VARIATION
BETWEEN THE FIXED PRICE AND THE ACTUAL COST OF PERFORMANCE MAY HARM OUR
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

         A majority of our customer contracts are on a fixed-price basis. The
profitability of these contracts is subject to inherent uncertainties in the
cost of performance, including costs related to unforeseen obstacles and
unexpected problems encountered in engineering, design and testing of our
products and services. Because a significant portion of our revenues is
dependent upon a small number of customers, if the fixed price is significantly
less than the actual cost of performance on any one contract, our results of
operations and financial condition could be adversely affected.

IF OUR PRODUCTS AND SERVICES ARE NOT ACCEPTED IN DEVELOPING COUNTRIES WITH
EMERGING MARKETS, OUR REVENUES WILL BE IMPAIRED.

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

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

         o    the effectiveness of our local value-added resellers and sales
              representatives in marketing and selling our products and
              services; and

         o    the acceptance of our products and services by customers.

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

WE DEPEND UPON CERTAIN KEY PERSONNEL AND MAY NOT BE ABLE TO RETAIN THESE
EMPLOYEES.

         Our future performance depends on the continued service of our key
technical, managerial and marketing personnel; in particular, David Hershberg,
Kenneth Miller, Patrick Flemming, Stephen Yablonski and Donald Woodring. The
employment of any of our key personnel could cease at any time subject to prior
notice.

UNAUTHORIZED USE OF OUR INTELLECTUAL PROPERTY BY THIRD PARTIES MAY DAMAGE OUR
BUSINESS.

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


                                       34
<PAGE>


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

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

DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE TIME
CONSUMING AND EXPENSIVE, AND IF WE ARE NOT SUCCESSFUL, COULD CAUSE SUBSTANTIAL
EXPENSES AND DISRUPT OUR BUSINESS.

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

WE MAY NOT BE ABLE TO KEEP PACE WITH TECHNOLOGICAL CHANGES, WHICH WOULD MAKE OUR
PRODUCTS AND SERVICES BECOME NON-COMPETITIVE AND OBSOLETE.

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

WE DEPEND ON OUR SUPPLIERS, SOME OF WHICH ARE OUR SOLE OR A LIMITED SOURCE OF
SUPPLY, AND THE LOSS OF THESE SUPPLIERS WOULD MATERIALLY ADVERSELY AFFECT OUR
BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         We currently obtain most of our critical components and services from
single or limited sources and generally do not maintain significant inventories
or have long-term or exclusive supply contracts with our source vendors. We have
from time to time experienced delays in receiving products from vendors due to
lack of availability, quality control or manufacturing problems, shortages of
materials or components or product design difficulties. We may experience delays
in the future and replacement services or products may not be available when
needed, or at all, or at commercially reasonable rates or prices. If we were to



                                       35
<PAGE>


change some of our vendors, we would have to perform additional testing
procedures on the service or product supplied by the new vendors, which would
prevent or delay the availability of our products and services. Furthermore, our
costs could increase significantly if we need to change vendors. If we do not
get timely deliveries of quality products and services, or if there are
significant increases in the prices of these products or services, it could have
a material adverse effect on our business, results of operations and financial
condition.

WE RELY ON NETSAT, OUR WHOLLY-OWNED SUBSIDIARY, FOR OUR MAIN SUPPLY OF SPACE
SEGMENT ON SATELLITES. IF ITS BUSINESS FAILS OR WE ARE OTHERWISE UNABLE TO
CONTINUE TO RELY ON NETSAT FOR THIS SUPPLY, OUR BUSINESS MAY BE HARMED.

         We currently depend on NetSat for a majority of our transponder
space on satellites. We do not have a long-term agreement in place with NetSat,
as most of our needs are filled on a purchase order basis. If NetSat is unable
to develop its business or if we are unable to continue to rely on their supply
for space segment, then we will have to find alternative suppliers. If we are
unable to find another supplier of transponder space or if we are unable to find
one on terms favorable to us, then our business may be harmed.

OUR NETWORK MAY EXPERIENCE SECURITY BREACHES, WHICH COULD DISRUPT OUR SERVICES.

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

SATELLITES UPON WHICH WE RELY MAY BE DAMAGED OR LOST, OR MALFUNCTION.

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

OUR STOCK PRICE IS HIGHLY VOLATILE.

         Our stock price has fluctuated substantially since our initial public
offering, which was completed in August 1997. The market price for our common
stock, like that of the securities of many telecommunications and high
technology industry companies, is likely to remain volatile based on many
factors, including the following:

         o    quarterly variations in operating results;

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

         o    acceptance of satellite-based communication services and Internet
              access services in developing countries with emerging markets;

         o    changes in financial estimates or recommendations by security
              analysts; or



                                       36
<PAGE>


         o    general market conditions, including, but not limited to, results
              of the terrorist attacks on September 11, 2001.

         In the past, following periods of volatility in the market price of a
particular company's securities, securities class action litigation has often
been brought against that company. We may become involved in this type of
litigation in the future. Litigation of this type is often extremely expensive
and diverts management's attention and resources, which could significantly harm
our business.

A THIRD PARTY COULD BE PREVENTED FROM ACQUIRING YOUR SHARES OF STOCK AT A
PREMIUM TO THE MARKET PRICE BECAUSE OF OUR ANTI-TAKEOVER PROVISIONS.

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


RISKS RELATED TO GOVERNMENT APPROVALS

WE ARE SUBJECT TO MANY GOVERNMENT REGULATIONS, AND FAILURE TO COMPLY WITH THEM
WILL HARM OUR BUSINESS.

     OPERATIONS AND USE OF SATELLITES

         We are subject to various federal laws and regulations, which may have
negative effects on our business. We operate FCC licensed earth stations in
Hauppauge, New York, subject to the FCC Act and the rules and regulations of
FCC. Pursuant to the Act and rules, we have obtained and are required to
maintain radio transmission licenses from the FCC for both domestic and foreign
operations of our earth stations. These licenses should be renewed by the FCC in
the normal course as long as we remain in compliance with FCC rules and
regulations. However, we cannot guarantee that the FCC will grant additional
licenses when our existing licenses expire, nor are we assured that the FCC will
not adopt new or modified technical requirements that will require us to incur
expenditures to modify or upgrade our equipment as a condition of retaining our
licenses. We are also required to comply with FCC regulations regarding the
exposure of humans to radio frequency radiation from our earth stations. These
regulations, as well as local land use regulations, restrict our freedom to
choose where to locate our earth stations.

     FOREIGN OWNERSHIP

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

     FOREIGN REGULATIONS

         Regulatory schemes in countries in which we may seek to provide our
satellite-delivered data communications services may impose impediments on our
operations. Some countries in which we intend to operate have telecommunications
laws and regulations that do not currently contemplate technical advances in
telecommunications technology like Internet/intranet transmission by satellite.
We cannot assure you that the present regulatory environment in any of those
countries will not be changed in a manner, which may have a material adverse
impact on our business. Either we or our local partners



                                       37
<PAGE>


typically must obtain authorization for each country in which we provide our
satellite-delivered data communications services. The regulatory schemes in each
country are different, and thus there may be instances of noncompliance of which
we are not aware. We cannot assure you that our licenses and approvals are or
will remain sufficient in the view of foreign regulatory authorities, or that
necessary licenses and approvals will be granted on a timely basis in all
jurisdictions in which we wish to offer our products and services or that
restrictions applicable thereto will not be unduly burdensome.

     REGULATION OF THE INTERNET

         Due to the increasing popularity and use of the Internet it is possible
that a number of laws and regulations may be adopted at the local, national or
international levels with respect to the Internet, covering issues including
user privacy and expression, pricing of products and services, taxation,
advertising, intellectual property rights, information security or the
convergence of traditional communication services with Internet communications.
It is anticipated that a substantial portion of our Internet operations will be
carried out in countries, which may impose greater regulation of the content of
information coming into the country than that which is generally applicable in
the United States; for example, privacy regulations in 35 countries in Europe
and content restrictions in countries including the Republic of China. To the
extent that we provide content as a part of our Internet services, it will be
subject to laws regulating content. Moreover, the adoption of laws or
regulations may decrease the growth of the Internet, which could in turn
decrease the demand for our Internet services or increase our cost of doing
business or in some other manner have a material adverse effect on our business,
operating results and financial condition. In addition, the applicability to the
Internet of existing laws governing issues including property ownership,
copyrights and other intellectual property issues, taxation, libel and personal
privacy is uncertain. The vast majority of these laws were adopted prior to the
advent of the Internet and related technologies and, as a result, do not
contemplate or address the unique issues of the Internet and related
technologies. Changes to these laws intended to address these issues, including
some recently proposed changes, could create uncertainty in the marketplace
which could reduce demand for our products and services, could increase our cost
of doing business as a result of costs of litigation or increased product
development costs, or could in some other manner have a material adverse effect
on our business, financial condition and results of operations.

     TELECOMMUNICATIONS TAXATION, SUPPORT REQUIREMENTS, AND ACCESS CHARGES

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

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

     EXPORT OF TELECOMMUNICATIONS EQUIPMENT

         The sale of our ground segment systems, networks, and communications
services outside the United States is subject to compliance with the regulations
of the United States Export Administration Regulations. The absence of
comparable restrictions on competitors in other countries may adversely affect
our


                                       38
<PAGE>



competitive position. In addition, in order to ship our products into other
countries, the products must satisfy the technical requirements of that
particular country. If we were unable to comply with such requirements with
respect to a significant quantity of our products, our sales in those countries
could be restricted, which could have a material adverse effect on our business,
results of operations and financial condition.



                                       39
<PAGE>



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are subject to a variety of risks, including foreign currency
exchange rate fluctuations relating to certain purchases from foreign vendors.
In the normal course of business, we assess these risks and have established
policies and procedures to manage our exposure to fluctuations in foreign
currency values.

         Our objective to managing our exposure to foreign currency exchange
rate fluctuations is to reduce the impact of adverse fluctuations in earnings
and cash flows associated with foreign currency exchange rates for certain
purchases from foreign vendors, if applicable. Accordingly, we utilize from time
to time foreign currency forward contracts to hedge our exposure on firm
commitments denominated in foreign currency. During the fiscal years ended June
30, 2000, 2001 and 2002, we had no such foreign currency forward contracts.

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required by this item is incorporated by reference to
the Consolidated Financial Statements listed in Item 14(a) of Part IV of this
Annual Report on Form 10-K.

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

         None




                                       40
<PAGE>




                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

ITEM 11. EXECUTIVE COMPENSATION

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

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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



                                       41
<PAGE>




                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(A)      (1)  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Auditors.........................................   F-1
Consolidated Balance Sheets as of June 30, 2001 and 2002...............   F-2
Consolidated Statements of Operations for the years ended
June 30, 2000, 2001 and 2002...........................................   F-3
Consolidated Statements of Changes in Stockholders' Equity
for the years ended June 30, 2000, 2001 and 2002.......................   F-4
Consolidated Statements of Cash Flows for the years ended
June 30, 2000, 2001 and 2002...........................................   F-5
Notes to Consolidated Financial Statements.............................   F-6

         (2)  INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

         Schedule II- Valuation and Qualifying Accounts................   S-1


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

         (3)  LISTING OF EXHIBITS


Exhibit No.

3.1      Amended and Restated Certificate of Incorporation (incorporated by
         reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K
         for the fiscal year ended June 30, 1999).

3.2      Amended and Restated By-laws of the Registrant (incorporated by
         reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K
         for the fiscal year ended June 30, 1999).

4.2      See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
         Certificate of Incorporation and Amended and Restated By-laws of the
         Registrant defining rights of holders of Common Stock of the Registrant
         (incorporated by reference to Exhibit 4.2 of the Registrant's
         Registration Statement on Form S-1, File No. 333-22425 (the
         "Registration Statement")).

10.1     Form of Registration Rights Agreement dated as of February 1997
         (incorporated by reference to Exhibit 10.1 of the Registration
         Statement).

10.2     Form of Registration Rights Agreement dated May 30, 1996 (incorporated
         by reference to Exhibit 10.2 of the Registration Statement).

10.3     Form of Registration Rights Agreement dated December 31, 1996, as
         amended (incorporated by reference to Exhibit 10.3 of the Registration
         Statement).

10.4     Letter Agreement for purchase and sale of 199,500 shares of Common
         Stock dated November 9, 1995 between the Registrant and Thomson-CSF
         (incorporated by reference to Exhibit 10.4 of the Registration
         Statement).


                                       42
<PAGE>


10.5     Investment Agreement dated February 12, 1996 by and between Shiron
         Satellite Communications (1996) Ltd. and the Registrant (incorporated
         by reference to Exhibit 10.5 of the Registration Statement).

10.6*    Stock Purchase Agreement dated as of August 30, 1996 by and between
         C-Grams Unlimited Inc. and the Registrant (incorporated by reference to
         Exhibit 10.6 of the Registration Statement).

10.7     Memorandum of Understanding dated December 18, 1996 by and between
         NetSat Express, Inc. and Applied Theory Communications, Inc.
         (incorporated by reference to Exhibit 10.7 of the Registration
         Statement).

10.8     Stock Purchase Agreement dated as of August 23, 1996 by and between
         NetSat Express, Inc. and Hughes Network Systems, Inc. (incorporated by
         reference to Exhibit 10.8 of the Registration Statement).

10.9     Employment Agreement dated as of January 27, 1997 between the
         Registrant and David E. Hershberg (incorporated by reference to Exhibit
         10.9 of the Registration Statement).

10.10    Employment Agreement dated as of January 27, 1997 between the
         Registrant and Kenneth A. Miller (incorporated by reference to Exhibit
         10.10 of the Registration Statement).

10.11    Purchase and Sale Agreement, 45 Oser Avenue, Hauppauge, New York, dated
         December 12, 1996 by and between Eaton Corporation and the Registrant
         (incorporated by reference to Exhibit 10.13 of the Registration
         Statement).

10.12    1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.14
         of the Registration Statement).

10.13    Investment Agreement dated August 21, 1998 by and between McKibben
         Communications LLC and the Registrant (incorporated by reference to
         Exhibit 10.13 of the Company's Annual Report on Form 10-K for the year
         ended June 30, 1998).

10.14    1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit
         99.8 of the S-8 of the S-8 Registration Statement).

10.15    Rights Agreement, dated as of December 3, 1998, between the Company and
         American Stock Transfer and Trust Company, which includes the form of
         Certificate of Designation for the Series A Junior Participating
         Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit
         B and the Summary of Rights to Purchase Series A Preferred Shares as
         Exhibit C (incorporated by reference to Exhibit 4 of Company's Current
         Report on Form 8-K dated December 3, 1998).

10.16    Common Stock Purchase Agreement dated August 11, 1999 between NetSat
         Express, Inc. and Globix Corporation (incorporated by reference to
         Exhibit 10.16 of the Company's Annual Report on Form 10-K for the year
         ended June 30, 1999).

10.17    Series A Preferred Stock Purchase Agreement dated August 11, 1999
         between NetSat Express, Inc. and George Soros (incorporated by
         reference to Exhibit 10.17 of the Company's Annual Report on Form 10-K
         for the year ended June 30, 1999).

10.18    Common Stock Purchase Agreement dated October 28, 1999 between NetSat
         Express, Inc., Globecomm Systems Inc. and Reuters Holdings Switzerland
         SA (incorporated by reference to Exhibit 10.18 of the Company's
         Quarterly Report on Form 10-Q, for the quarter ended September 30,
         1999).


                                       43
<PAGE>


10.19    Negotiable Promissory Note, dated April 1, 2001, between the Registrant
         and Donald Woodring (incorporated by reference to Exhibit 10.19 of the
         Company's Annual Report on Form 10-K for the year ended June 30, 2001).

10.20    Employment Agreement, dated as of October 9, 2001, by and between
         Stephen C. Yablonski and the Company (incorporated by reference to
         Exhibit 10.20 of the Company's Quarterly Report on Form 10-Q, for the
         quarter ended September 30, 2001).

10.21    Employment Agreement, dated as of October 9, 2001, by and between
         Andrew C. Melfi and the Company (incorporated by reference to Exhibit
         10.21 of the Company's Quarterly Report on Form 10-Q, for the quarter
         ended September 30, 2001).

10.22    Employment Agreement, dated as of October 9, 2001, by and between
         Donald G. Woodring and the Company (incorporated by reference to
         Exhibit 10.22 of the Company's Quarterly Report on Form 10-Q, for the
         quarter ended September 30, 2001).

10.23    Employment Agreement, dated as of October 9, 2001, by and between Paul
         J. Johnson and the Company (incorporated by reference to Exhibit 10.23
         of the Company's Quarterly Report on Form 10-Q, for the quarter ended
         September 30, 2001).

10.24    Employment Agreement, dated as of October 9, 2001, by and between Paul
         Eterno and the Company (incorporated by reference to Exhibit 10.24 of
         the Company's Quarterly Report on Form 10-Q, for the quarter ended
         September 30, 2001).

10.25    Promissory Note Secured By Stock Pledge Agreement, dated September 4,
         2001, by and between David E. Hershberg and the Company (incorporated
         by reference to Exhibit 10.25 of the Company's Quarterly Report on
         Form 10-Q, for the quarter ended September 30, 2001).

10.26    Promissory Note Secured By Stock Pledge Agreement, dated September 4,
         2001, by and between Kenneth A. Miller and the Company (incorporated by
         reference to Exhibit 10.26 of the Company's Quarterly Report on Form
         10-Q, for the quarter ended September 30, 2001).

10.27    Employment Agreement, dated as of January 25, 2002, by and between G.
         Patrick Flemming and the Company (incorporated by reference to Exhibit
         10.27 of the Company's Quarterly Report on Form 10-Q, for the quarter
         ended December 31, 2001).

21       Subsidiaries of the Registrant (filed herewith).

23       Consent of Independent Auditors (filed herewith).

99.1     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

99.2     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

* Confidential treatment granted for portions of this agreement.



                                       44
<PAGE>




(B) REPORTS ON FORM 8-K

         The Company filed no reports on Form 8-K during the fiscal quarter
ended June 30, 2002.

(C) EXHIBITS

         The response to this portion of Item 14 is submitted as a separate
section of this report.

(D) FINANCIAL STATEMENT SCHEDULES

         The response to this portion of Item 14 is submitted as a separate
section of this report.



                                       45
<PAGE>



                                   SIGNATURES

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


                                             GLOBECOMM SYSTEMS INC.
                Date: 9/30/02
                                             By:  /s/ David E. Hershberg
                                             -----------------------------------
                                             David E. Hershberg,
                                             Chairman of the Board and
                                             Chief Executive Officer

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

<TABLE>
<CAPTION>

                 SIGNATURE                                       TITLE                              DATE
                 ---------                                       -----                              ----
<S>                                                 <C>                                            <C>
/s/     David E. Hershberg                         Chairman of the Board and                       9/30/02
---------------------------------------------      Chief Executive Officer
        David E. Hershberg                         (Principal Executive Officer)


/s/     Andrew C. Melfi                            Vice President, Chief Financial                 9/30/02
---------------------------------------------      Officer and Treasurer (Principal Financial
        Andrew C. Melfi                            and Accounting Officer)

s/      Kenneth A. Miller                          President and Director                          9/30/02
---------------------------------------------
        Kenneth A. Miller

/s/     Stephen C. Yablonski                       Vice President, General Manager                 9/30/02
---------------------------------------------      and Director
        Stephen C. Yablonski

/s/     Richard E. Caruso                          Director                                        9/30/02
---------------------------------------------
        Richard E. Caruso

/s/     Benjamin Duhov                             Director                                        9/30/02
---------------------------------------------
        Benjamin Duhov

/s/     Brian T. Maloney                           Director                                        9/30/02
---------------------------------------------
        Brian T. Maloney

/s/     A. Robert Towbin                           Director                                        9/30/02
---------------------------------------------
        A. Robert Towbin

/s/     C.J. Waylan                                Director                                        9/30/02
---------------------------------------------
        C.J. Waylan

</TABLE>




                                       46
<PAGE>



                           CERTIFICATION FOR FORM 10-K
                       FOR FISCAL YEAR ENDED JUNE 30, 2002


I, David E. Hershberg, certify that:

1. I have reviewed this annual report on Form 10-K of Globecomm Systems Inc.;

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

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


Date: September 30, 2002


                                          /s/ David E. Hershberg
                                          --------------------------------------
                                          David E. Hershberg
                                          Chairman of the Board and
                                          Chief Executive Officer




                                       47
<PAGE>



                           CERTIFICATION FOR FORM 10-K
                       FOR FISCAL YEAR ENDED JUNE 30, 2002



I, Andrew C. Melfi, certify that:

1. I have reviewed this annual report on Form 10-K of Globecomm Systems Inc.;

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

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


Date: September 30, 2002

                                        /s/ Andrew C. Melfi
                                        ----------------------------------------
                                        Andrew C. Melfi
                                        Vice President, Chief Financial Officer
                                        and Treasurer






                                       48
<PAGE>



                         REPORT OF INDEPENDENT AUDITORS



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

         We have audited the accompanying consolidated balance sheets of
Globecomm Systems Inc. (the "Company") as of June 30, 2001 and 2002 and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended June 30, 2002.
Our audits also included the financial statement schedule listed in the Index at
Item 14(a). These consolidated financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Globecomm Systems Inc. at June 30, 2001 and 2002, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended June 30, 2002, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

         As discussed in Note 7 to the consolidated financial statements, the
Company changed its method of accounting for goodwill and other indefinite-lived
intangible assets effective July 1, 2001 to conform with the provisions of
Financial Accounting Standards Board Statement No. 142, "Goodwill and Other
Intangible Assets".


                                          /s/ Ernst & Young LLP



Melville, New York
August 26, 2002


                                      F-1


<PAGE>




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

<TABLE>
<CAPTION>

                                                                                          JUNE 30,             JUNE 30,
                                                                                           2001                  2002
                                                                                      ---------------      ----------------
<S>                                                                                   <C>                  <C>
ASSETS
Current assets:
   Cash and cash equivalents..................................................        $     45,038          $     38,708
   Restricted cash............................................................                 588                   588
   Accounts receivable, net...................................................              25,089                14,999
   Inventories................................................................              15,285                 8,594
   Prepaid expenses and other current assets..................................                 811                 1,239
   Deferred income taxes......................................................                   -                   138
                                                                                      ---------------       ---------------
Total current assets..........................................................              86,811                64,266

Fixed assets, net.............................................................              30,456                28,484
Goodwill......................................................................               7,441                 7,204
Other assets..................................................................                 291                   343
                                                                                      ---------------       ---------------
Total assets                                                                          $    124,999          $    100,297
                                                                                      ===============       ===============

 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable...........................................................        $    15,317          $     12,918
    Deferred revenues..........................................................              5,825                 3,541
    Accrued payroll and related fringe benefits................................                931                   957
    Other accrued expenses.....................................................              3,609                 2,076
    Deferred liabilities.......................................................                300                   600
    Capital lease obligation...................................................                430                   472
                                                                                      ---------------       ---------------
 Total current liabilities.....................................................             26,412                20,564
 Deferred liabilities, less current portion....................................              3,341                 3,060
 Capital lease obligation, less current portion................................             10,105                 9,633

 Commitments and contingencies

 Stockholders' equity:
    Series A Junior Participating, shares authorized, shares issued and
       outstanding: none in 2001 and 2002......................................                  -                     -
    Common stock, $.001 par value, 22,000,000 shares authorized, shares issued
       12,865,591 in 2001 and 12,933,062 in 2002...............................                 13                    13
    Additional paid-in capital.................................................            123,276               123,598
    Accumulated deficit........................................................            (36,997)              (54,260)
    Accumulated other comprehensive loss.......................................                (57)                  (44)
    Treasury stock, at cost, 147,745 shares in 2001 and 349,745 shares
       in 2002 ................................................................             (1,094)               (2,267)
                                                                                      ---------------       ---------------
 Total stockholders' equity....................................................             85,141                67,040
                                                                                      ---------------       ---------------
 Total liabilities and stockholders' equity....................................       $    124,999          $    100,297
                                                                                      ===============       ===============

</TABLE>

                             See accompanying notes.


                                      F-2

<PAGE>


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

<TABLE>
<CAPTION>

                                                                                     YEARS ENDED JUNE 30,
                                                                -----------------------------------------------------------------
                                                                       2000                   2001                  2002
                                                                       ----                   ----                  ----
<S>                                                             <C>                        <C>                 <C>
Revenues from ground segment systems, networks and
      enterprise solutions...............................        $  69,584               $  78,744             $  64,101
Revenues from data communications services................           8,987                  24,170                22,478
                                                                 ---------------         --------------        -------------
Total revenues............................................          78,571                 102,914                86,579
                                                                 ---------------         --------------        -------------

Costs and operating expenses:
      Costs from ground segment systems, networks and
           enterprise solutions...........................          60,634                  70,907                57,083
      Costs from data communications services.............          10,101                  22,661                26,705
      Selling and marketing...............................           6,139                   7,235                 6,735
      Research and development............................             784                     850                 1,185
      General and administrative..........................           8,797                   9,822                11,970
      Asset impairment charge.............................               -                   2,857                   237
      Restructuring charge................................               -                   1,950                     -
                                                                 ---------------         --------------        -------------
Total costs and operating expenses........................          86,455                 116,282               103,915
                                                                 ---------------         --------------        -------------
Loss from operations......................................          (7,884)                (13,368)              (17,336)

Other income (expense):
      Interest income.....................................           1,727                   3,194                 1,030
      Interest expense....................................          (2,522)                 (6,579)                 (957)
      Gain on sale of consolidated subsidiary's
           common stock...................................           2,353                       -                     -
      Gain on sale of investment..........................               -                     304                     -
                                                                 ---------------         --------------        -------------
Loss before income taxes and minority interests
     in operations of consolidated subsidiary.............          (6,326)                (16,449)              (17,263)
Provision for income taxes................................               -                  (1,600)                    -
                                                                 ---------------         --------------        -------------
Loss before minority interests in operations of
     consolidated subsidiary..............................          (6,326)                (18,049)              (17,263)
Minority interests in operations of
     consolidated subsidiary..............................           2,745                    (650)                    -
                                                                 ---------------         --------------        -------------
Net loss..................................................       $  (3,581)              $ (18,699)            $ (17,263)
                                                                 ===============         ==============        =============

Basic and diluted net loss per common share...............       $   (0.36)              $   (1.55)            $   (1.36)
                                                                 ===============         ==============        =============
Weighted-average shares used in the calculation of
     basic and diluted net loss per common share..........          10,016                  12,060                12,707
                                                                 ===============         ==============        =============
</TABLE>


                             See accompanying notes.


                                      F-3

<PAGE>


                             GLOBECOMM SYSTEMS INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2000, 2001 AND 2002
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                            ACCUMULATED
                                                 COMMON STOCK     ADDITIONAL                   OTHER
                                             --------------------   PAID-IN   ACCUMULATED  COMPREHENSIVE    DEFERRED
                                                SHARES    AMOUNT    CAPITAL     DEFICIT         LOSS      COMPENSATION
                                             ----------  -------- ----------  -----------  -------------  ------------
<S>                                             <C>        <C>     <C>         <C>            <C>            <C>
Balance at June 30, 1999.....................   9,365      $ 9     $ 52,061    $(14,717)      $   -          $(293)
Proceeds from seondary offering, net of
  issuance cost of $3,903....................   2,000        2       50,095           -           -              -
Proceeds from issuance of consolidated
  subsidiary's common stock and stock
  options, net of issuing costs of $1,002...        -        -        4,012           -           -              -
Minority interests reslting from issuance
  of consolidated subsidiary's common
  stock and stock options...................        -        -       (2,197)          -           -              -
Proceeds from exercise of stock options.....      577        1        3,569           -           -              -
Tax benefit from exercise of non-qualified
  stock options.............................        -        -        1,942           -           -              -
Proceeds from exercise of warrants..........        2        -           12           -           -              -
Exercise of stock options in exchange for
  shares of common stock....................       54        -          291           -           -              -
Issuance of common stock in connection
  with employee stock purchase plan.........       26        -          252           -           -              -
Options granted to employees and directors..        -        -           24           -           -              -
Options of consolidated subsidiary's
  common stock granted to consultants.......        -        -           44           -           -              -
Amortization of deferred compensation.......        -        -            -           -           -             75
Comprehensive loss:
  Net loss..................................        -        -            -      (3,581)          -              -
  Gain from foreign currency translation....        -        -            -           -          17              -

Total comprehensive loss....................        -        -            -           -           -              -
                                             ----------  -------- ----------  -----------  -------------  ------------
Balance at June 30, 2000....................   12,024       12      110,105     (18,298)         17           (218)
Proceeds from exercise of stock options.....       69        -          358           -           -              -
Issuance of common stock in connection with
  employee stock purchase plan..............       55        -          328           -           -              -
Issuance of common stock in connection with
  acquisition of minority interests in
  consolidated subsidiary...................      718        1        6,582           -           -              -
Issuance of warrants in connection with
  acquisition of minority interests in
  consolidated subsidiary...................        -        -        5,043           -           -              -
Issuance of options in connection with
  acquisition of minority interests in
  consolidated subsidiary...................        -        -          309           -           -              -
Acquisition of minority interests in
  consolidated subsidiary...................        -        -          907           -           -              -
Forfeiture of consolidated subsidiary's
  employee stock options....................        -        -         (225)          -           -            218
Minority interests resulting from issuance
  of consolidated subsidiary's common
  stock.....................................        -        -         (131)          -           -              -
Comprehensive loss:
  Net loss..................................        -        -            -     (18,699)          -              -
  Loss from foreign currency translation....        -        -            -           -         (55)             -
  Loss from available-for-sale securities...        -        -            -           -         (19)             -

Total comprehensive loss....................        -        -            -           -           -              -
                                             ----------  -------- ----------  -----------  -------------  ------------
Balance at June 30, 2001....................   12,866       13      123,276     (36,997)        (57)             -
Proceeds from exercise of stock options.....       10        -           38           -           -              -
Issuance of common stock in connection with
  employee stock purchase plan..............       57        -          247           -           -              -
Purchases of treasury stock (see Note 13)...        -        -            -           -           -              -
Issuance of stock options for services......        -        -           37           -           -              -
Comprehensive loss:
  Net loss..................................        -        -            -     (17,263)          -              -
  Gain from foreign currency translation....        -        -            -           -         128              -
  Gain from available-for-sale securities...        -        -            -           -        (115)             -

Total comprehensive loss....................        -        -            -           -           -              -
                                             ----------  -------- ----------  -----------  -------------  ------------
Balance at June 30, 2002....................   12,933      $13     $123,598    $(54,260)       $(44)          $  -
                                             ==========  ======== ==========  ===========  =============  ============




<CAPTION>
                                                TREASURY STOCK        TOTAL
                                              ------------------  STOCKHOLDERS'
                                                SHARES   AMOUNT       EQUITY
                                              --------- --------  -------------
<S>                                              <C>    <C>         <C>
Balance at June 30, 1999.....................    140    $  (803)    $ 36,257
Proceeds from seondary offering, net of
  issuance cost of $3,903....................      -          -       50,097
Proceeds from issuance of consolidated
  subsidiary's common stock and stock
  options, net of issuing costs of $1,002...       -          -        4,012
Minority interests reslting from issuance
  of consolidated subsidiary's common
  stock and stock options...................       -          -       (2,197)
Proceeds from exercise of stock options.....       -          -        3,570
Tax benefit from exercise of non-qualified
  stock options.............................       -          -        1,942
Proceeds from exercise of warrants..........       -          -           12
Exercise of stock options in exchange for
  shares of common stock....................       8       (291)           -
Issuance of common stock in connection
  with employee stock purchase plan.........       -          -          252
Options granted to employees and directors..       -          -           24
Options of consolidated subsidiary's
  common stock granted to consultants.......       -          -           44
Amortization of deferred compensation.......       -          -           75
Comprehensive loss:
  Net loss..................................       -          -       (3,581)
  Gain from foreign currency translation....       -          -           17
                                                                  -------------
Total comprehensive loss....................       -          -       (3,564)
                                              --------- --------  -------------
Balance at June 30, 2000....................     148     (1,094)      90,524
Proceeds from exercise of stock options.....       -          -          358
Issuance of common stock in connection with
  employee stock purchase plan..............       -          -          328
Issuance of common stock in connection with
  acquisition of minority interests in
  consolidated subsidiary...................       -          -        6,583
Issuance of warrants in connection with
  acquisition of minority interests in
  consolidated subsidiary...................       -          -        5,043
Issuance of options in connection with
  acquisition of minority interests in
  consolidated subsidiary...................       -          -          309
Acquisition of minority interests in
  consolidated subsidiary...................       -          -          907
Forfeiture of consolidated subsidiary's
  employee stock options....................       -          -           (7)
Minority interests resulting from issuance
  of consolidated subsidiary's common
  stock.....................................       -          -         (131)
Comprehensive loss:
  Net loss..................................       -          -      (18,699)
  Loss from foreign currency translation....       -          -          (55)
  Loss from available-for-sale securities...       -          -          (19)
                                                                  -------------
Total comprehensive loss....................       -          -      (18,773)
                                              --------- --------  -------------
Balance at June 30, 2001....................     148     (1,094)      85,141
Proceeds from exercise of stock options.....       -          -           38
Issuance of common stock in connection with
  employee stock purchase plan..............       -          -          247
Purchases of treasury stock (see Note 13)...     202     (1,173)      (1,173)
Issuance of stock options for services......       -          -           37
Comprehensive loss:
  Net loss..................................       -          -      (17,263)
  Gain from foreign currency translation....       -          -          128
  Gain from available-for-sale securities...       -          -         (115)
                                                                  -------------
Total comprehensive loss....................       -          -      (17,250)
                                              --------- --------  -------------
Balance at June 30, 2002....................     350    $(2,267)     $67,040
                                              ========= ========  =============
</TABLE>




                             See accompanying notes.

                                      F-4

<PAGE>



                             GLOBECOMM SYSTEMS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                        YEARS ENDED JUNE 30,
                                                                       --------------------------------------------------------
                                                                              2000               2001                2002
                                                                              ----               ----                ----
<S>                                                                      <C>                <C>                <C>
OPERATING ACTIVITIES:
Net loss..............................................................   $    (3,581)       $   (18,699)       $     (17,263)
Adjustments to reconcile net loss to net cash used in operating
  activities:
    Depreciation and amortization.....................................         3,347              7,229                3,661
    Stock compensation expense........................................           143                  -                   37
    Provision for doubtful accounts...................................           360              1,753                3,951
    Loss on disposal of fixed assets and other........................             -                280                    -
    Asset impairment charge...........................................             -              2,857                  237
    Change in deferred liabilities....................................         2,047                  -                   19
    Minority interests in operations of consolidated subsidiary.......        (2,745)               650                    -
    Interest on capital lease obligations.............................           186                  -                    -
    Gain on sale of consolidated subsidiary's common stock............        (2,353)                 -                    -
    Gain on sale of investment........................................             -               (304)                   -
    Deferred income taxes............................................         (1,942)             1,942                 (138)
    Changes in operating assets and liabilities:
       Accounts receivable............................................        (4,935)            (3,047)               6,308
       Inventories....................................................        (3,273)            (1,950)               6,714
       Prepaid expenses and other current assets......................          (364)               588                 (443)
       Other assets...................................................          (727)                35                  247
       Accounts payable...............................................        (2,255)            (1,177)              (2,449)
       Deferred revenues..............................................         1,996               (462)              (2,308)
       Accrued payroll and related fringe benefits....................          (179)               251                   26
       Other accrued expenses.........................................         5,350             (1,769)              (1,541)
                                                                         -----------------  -----------------  -----------------

Net cash used in operating activities.................................        (8,925)           (11,823)              (2,942)
                                                                         -----------------  -----------------  -----------------

INVESTING ACTIVITIES:
Purchases of fixed assets.............................................        (6,926)            (5,350)              (1,687)
Purchases of investments..............................................             -               (100)                   -
Proceeds from sale of investments.....................................             -                204                    -
Purchases of consolidated subsidiary's common stock...................             -             (1,212)                   -
Purchase of consolidated subsidiary's preferred stock.................             -               (581)                   -
Proceeds from sale of consolidated subsidiary's common stock..........         3,500                  -                    -
Restricted cash.......................................................         3,065               (167)                   -
Issuance of promissory notes to related parties.......................             -               (240)                (700)
                                                                         -----------------  -----------------  -----------------
Net cash used in investing activities.................................          (361)            (7,446)              (2,387)
                                                                         -----------------  -----------------  -----------------



FINANCING ACTIVITIES:
Proceeds from sale of common stock, net...............................        50,097                  -                    -
Proceeds from sale of consolidated subsidiary's common stock, net ....         3,398                  -                    -
Proceeds from sale of consolidated subsidiary's preferred stock.......         5,000                  -                    -
Proceeds from exercise of stock options...............................         3,570                358                   38
Proceeds from exercise of consolidated subsidiary's stock options.....           614                  -                    -
Proceeds from exercise of warrants....................................            12                  -                    -
Proceeds from sale of common stock in connection with employee stock
   purchase plan......................................................           252                328                  247
Purchases of treasury stock...........................................             -                  -                 (873)
Payments under capital leases.........................................          (329)            (1,668)                (430)
                                                                         -----------------  -----------------  -----------------
Net cash provided by (used in) financing activities...................        62,614               (982)              (1,018)
                                                                         -----------------  -----------------  -----------------
Effect of foreign currency translation on cash .......................            17                  -                   17
                                                                         -----------------  -----------------  -----------------
Net increase (decrease) in cash and cash equivalents..................        53,345            (20,251)              (6,330)

Cash and cash equivalents at beginning of year........................        11,944             65,289               45,038
                                                                         -----------------  -----------------  -----------------
Cash and cash equivalents at end of year..............................   $    65,289        $    45,038        $      38,708
                                                                         =================  =================  =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest................................................   $       769        $     8,145        $         957
                                                                         =================  =================  =================
</TABLE>

                             See accompanying notes.

                                      F-5

<PAGE>


                             GLOBECOMM SYSTEMS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2002


1. ORGANIZATION AND DESCRIPTION OF BUSINESS

         Globecomm Systems Inc. ("Globecomm") was incorporated in the State of
Delaware on August 17, 1994. The Company is an end-to-end satellite
communications solutions provider. The Company's core business provides
end-to-end value-added satellite-based enterprise communications solutions. This
business supplies ground segment systems and networks for satellite-based
communications including hardware and software to support a wide range of
satellite systems. The Company's wholly-owned subsidiary, NetSat Express, Inc.
("NetSat") provides network services solutions including Internet backbone
connectivity, content delivery network applications, back-office capabilities,
POP infrastructure and other network management services.

         The Company has incurred operating losses since its inception and has
an accumulated deficit at June 30, 2002 of approximately $54,260,000. Such
losses have resulted principally from costs related to data communications
services, general and administrative and selling and marketing expenses
associated with the Company's operations. Management believes that its existing
capital resources will be sufficient to meet its working capital needs through
June 30, 2003.


2. SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

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

     Sale of Stock by Subsidiary

         The Company recognizes changes in the ownership percentage of its
subsidiaries caused by issuances of the subsidiary's stock as an adjustment to
additional paid-in capital in the consolidated statements of changes in
stockholders' equity.

     Accounting Estimates

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


                                      F-6

<PAGE>


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


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Revenue Recognition

         The Company recognizes revenue in accordance with Staff Accounting
Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial Statements, for
its production-type contracts that are sold separately as standard satellite
ground segment systems when persuasive evidence of an arrangement exists, the
selling price is fixed or determinable, collectibility is reasonably assured,
delivery has occurred and the contractual performance specifications have been
met. The Company's standard satellite ground segment systems produced in
connection with these contracts are typically short-term (less than twelve
months in term) and manufactured using a standard modular production process.
Such systems require less engineering, drafting and design efforts than the
Company's long-term complex production-type projects. Revenue is recognized on
the Company's standard satellite ground segment systems upon shipment and
acceptance of factory performance testing which is when title transfers to the
customer. The amount of revenues recorded on each standard production-type
contract is reduced by the customers' contractual holdback amount, which
typically requires 10% to 30% of the contract value to be retained by the
customer until installation and final acceptance is complete. The customer
generally becomes obligated to pay 70% to 90% of the contract value upon
shipment and acceptance of factory performance testing. Installation is not
deemed to be essential to the functionality of the system since installation
does not require significant changes to the features or capabilities of the
system, does not require complex software integration and interfacing and the
Company has not experienced any difficulties installing such equipment. In
addition, the customer or other third party vendors can install the system. The
estimated relative fair value of the installation services is determined by
management, which is typically less than the customer's contractual holdback
percentage. If the holdback is less than the fair value of installation, the
Company will defer recognition of revenues, determined on a contract-by-contract
basis equal to the fair value of the installation services. Payments received in
advance by customers are deferred until shipment and are presented as deferred
revenues in the accompanying consolidated balance sheets.

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

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

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


                                      F-7

<PAGE>


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


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Costs from Ground Segment Systems, Networks and Enterprise Solutions

         Costs from ground segment systems, networks and enterprise solutions
consist primarily of the costs of purchased materials, direct labor and related
overhead expenses, project-related travel, living costs and subcontractor
salaries. Costs associated with hardware and equipment sales consist primarily
of the purchase of the related products.

     Costs from Data Communications Services

         Costs from data communications services relating to Internet access
service fees consist primarily of satellite space segment charges and Internet
connectivity fees. Satellite space segment charges consist of the costs
associated with obtaining satellite bandwidth (the measure of capacity) used in
the transmission of services to and from leased satellites, depreciation
relating to capitalized satellite transponder leases and network operations
expenses which consist primarily of costs associated with the operation of the
Network Operation Center (the "NOC"), including teleport services and
maintaining a twenty-four hour a day, seven-day a week staff to monitor the
operations of the NOC.

     Research and Development

         Research and development expenditures are expensed as incurred.

     Inventories

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

     Cash Equivalents

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

     Fixed Assets

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


                                      F-8

<PAGE>


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


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Fair Value of Financial Instruments

         The recorded amounts of the Company's cash and cash equivalents,
accounts receivable, accounts payable, and accrued liabilities approximate their
fair values principally because of the short-term nature of these items. The
fair value of the Company's obligation under its capital lease is estimated
based on the current rates offered to the Company for obligations of similar
terms and maturities. The fair value of obligations under the Company's capital
lease was not significantly different than the carrying value at June 30, 2001
and 2002.

     Stock-Based Compensation

         The Company accounts for stock option grants in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and complies with the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation
("SFAS No. 123").

     Goodwill and Other Intangible Assets

         Goodwill represents excess of the purchase price over the fair value of
the net assets acquired. Beginning in fiscal 2002 with the adoption of SFAS No.
142, Goodwill and Other Intangible Assets, goodwill and other indefinite life
intangible assets are no longer amortized, but instead tested for impairment at
least annually. Prior to fiscal 2002, goodwill and such other intangibles were
amortized using the straight-line method over periods ranging from five-to-ten
years (see Note 7).

     Long-Lived Assets

         For other than goodwill and indefinite life intangibles, when
impairment indicators are present, the Company reviews the carrying value of its
assets in determining the ultimate recoverability of their unamortized values
using future undiscounted cash flows expected to be generated by the assets. If
such assets are considered impaired, the impairment recognized is measured by
the amount by which the carrying amount of the asset exceeds the future
discounted cash flows. Assets to be disposed of are reported at the lower of the
carrying amount or fair value, less cost to sell.

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


                                      F-9

<PAGE>


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


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Recently Issued Accounting Standards

         In August 2001, SFAS No. 144,  Accounting for the Impairment or
Disposal of Long-Lived Assets ("SFAS No. 144"), was issued, which supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of ("SFAS No. 121"). SFAS No. 144 addresses the
financial accounting and reporting for the impairment or disposal of long-lived
assets. The Company does not expect the adoption of this statement to have a
material impact on the Company's consolidated financial position, results of
operations or liquidity.

     Reclassifications

         Certain balances in the prior years have been reclassified to conform
to the current year presentation. During fiscal 2002, the Company changed the
presentation of its consolidated statement of operations to better represent
current industry reporting practices.

3. ACCOUNTS RECEIVABLE

         At June 30, 2001, the Company had billed and unbilled accounts
receivable balances outstanding for contracts in progress of $19,543,000 and
$795,000, respectively, and had billed and unbilled accounts receivable
balances outstanding for completed contracts of $4,751,000 and $0,
respectively.

         At June 30, 2002, the Company had billed and unbilled accounts
receivable balances outstanding for contracts in progress of $11,350,000 and
$408,000, respectively, and billed and unbilled accounts receivable balances
outstanding for completed contracts of $3,241,000 and $0, respectively.

         Accounts receivable include amounts billed but not paid by customers
pursuant to retainage provisions in connection with ground segment systems,
networks and enterprise solutions contracts. At June 30, 2001 and 2002, there
was $5,862,000 and $448,000, respectively, billed but not paid by customers
under retainage provisions in connection with long-term contracts. Such balances
are included in accounts receivable in the accompanying consolidated balance
sheets. Based on the Company's experience with similar contracts in recent
years, billed receivables relating to long-term contracts are expected to be
collected in one year.

         Unbilled amounts relating to long-term contracts include recoverable
costs and accrued profit on progress completed, which have not been billed. Such
amounts are billed in accordance with the contract terms, typically upon
shipment of the product, achievement of contractual milestones, or completion of
the contract. At June 30, 2001 and 2002, there were no unbilled amounts relating
to long-term contracts included in the accompanying consolidated balance sheets.

4. INVENTORIES

<TABLE>
<CAPTION>

         Inventories consist of the following:


                                                                                  JUNE 30,          JUNE 30,
                                                                                   2001               2002
                                                                              ---------------    --------------
                                                                                         (IN THOUSANDS)
         <S>                                                                 <C>                 <C>
         Raw materials and component parts...............................     $       608        $      876
         Work-in-progress................................................          14,677             7,718
                                                                              ----------------   --------------
                                                                              $    15,285        $    8,594
                                                                              ================   ==============

</TABLE>

         At June 30, 2001 and 2002, there was no progress payments to net
against inventories under long-term contracts.


                                      F-10

<PAGE>


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


5. FIXED ASSETS

         Fixed assets consist of the following:

<TABLE>
<CAPTION>

                                                                       JUNE 30,            JUNE 30,
                                                                         2001               2002
                                                                     -------------     ---------------
                                                                             (IN THOUSANDS)
<S>                                                                  <C>               <C>
Land..............................................................   $    1,750        $      1,750
Building and improvements.........................................        5,914               5,992
Computer equipment................................................        2,740               2,943
Machinery and equipment...........................................        2,414               2,441
Network Operations Center.........................................        5,137               5,600
Satellite earth station equipment.................................        8,554               9,356
Furniture and fixtures............................................        1,189               1,308
Leasehold improvements............................................           29                  29
Satellite transponders............................................       11,256              11,256
                                                                     -------------     ---------------
                                                                         38,983              40,675
Less accumulated depreciation and amortization....................        8,527              12,191
                                                                     -------------     ---------------
                                                                      $  30,456        $     28,484
                                                                     =============     ===============
</TABLE>


6. INVESTMENTS

         The Company has various investments in strategic alliance companies
that were accounted for under the cost method of accounting, as the Company does
not have the ability to exercise significant influence and there are no readily
determinable market values for such investments. The Company periodically
evaluates the carrying value of these investments to determine that they are
recorded at the lower of cost or estimated net realizable value. Due to the
significant decline in the public equity markets and the financial uncertainty
of such investments, during fiscal 2001 the Company's management evaluated these
investments and determined it would be appropriate to write-down these
investments to net realizable value. Accordingly, during the fourth quarter of
fiscal 2001, the Company recorded an asset impairment charge of approximately
$2,857,000, which is included in costs and operating expenses in the
accompanying consolidated statement of operations for the fiscal year ended June
30, 2001, and reduced the carrying value of these investments to zero.

         During December 2000, the Company sold its interest in one of its
investments, which was being accounted for under the cost method of accounting,
and recorded a gain on sale of investments of approximately $304,000 during
fiscal 2001. Such gain was included in the consolidated statement of operations
for the fiscal year ended June 30, 2001.


                                      F-11

<PAGE>


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


7. GOODWILL

         On July 1, 2001, the Company adopted the new rules on accounting for
goodwill and other intangible assets. The Company completed its annual goodwill
impairment tests during the fourth quarter of fiscal 2002 for both its ground
segment systems, networks and enterprise solutions and data communications
services reporting units. Based upon the estimated fair market values, the
Company recognized an impairment charge of approximately $237,000 in connection
with its ground segment systems, networks and enterprise solutions reporting
unit, representing the net carrying value of goodwill relating to the
acquisition of a wireless local loop telephone network solutions business in
fiscal 1999. This charge is included in costs and operating expenses in the
accompanying consolidated statement of operations for the fiscal year ended June
30, 2002.

         The net carrying value of goodwill is approximately $7,441,000 and
$7,204,000, respectively, at June 30, 2001 and 2002 which primarily relates to
the data communications solutions reporting unit.

         Had the Company been accounting for its goodwill under SFAS No. 142
for all periods presented, the Company's net loss and basic and diluted net loss
per common share would have been as follows:

<TABLE>
<CAPTION>


                                                                   YEARS ENDED JUNE 30,
                                                       ------------------------------------------------
                                                           2000             2001             2002
                                                           ----             ----             ----
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
          <S>                                          <C>              <C>               <C>

          Reported net loss..................          $   (3,581)     $   (18,699)     $   (17,263)
          Add back goodwill amortization, net
             of tax..........................                 160              291                -
                                                       ------------------------------------------------
          Adjusted net loss..................          $   (3,421)     $   (18,408)     $   (17,263)
                                                       ================================================
          Basic and diluted net loss per
             common share:
          As reported .......................          $    (0.36)     $     (1.55)     $     (1.36)
          Goodwill amortization..............                0.02             0.02                -
                                                       ------------------------------------------------
          Adjusted basic and diluted net loss
             per common share................          $    (0.34)      $    (1.53)     $     (1.36)
                                                       ================================================
</TABLE>


                                      F-12

<PAGE>


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


8. COMMON STOCK

     Sale of Common Stock

         On April 4, 2000, the Company completed a secondary public offering of
2,000,000 shares of its common stock for an aggregate offering price of
$54,000,000. The Company incurred total expenses in the offering of
approximately $3,903,000 of which approximately $3,240,000 represented
underwriting discounts and commissions and approximately $663,000 represented
other expenses. The net proceeds to the Company after deducting the total
expenses were approximately $50,097,000.

     Stock Issued to Consultants

         During November 1996, the Company issued a ten-year warrant to five
consultants for services to purchase an aggregate of 64,125 shares of common
stock at a price per share of $8.07, equal to the fair market value of the
shares at the date of issuance. At June 30, 2002, warrants to purchase 55,825
shares of the Company's common stock noted above are outstanding and
exercisable.

     Treasury Stock

         During March 2000, an employee of the Company surrendered 8,107 shares
of the Company's common stock, with a fair market value at time of surrender of
$35.88 per share, in exchange for the exercise of 54,338 stock options with
exercise prices ranging from $4.68 to $8.07. Accordingly, the Company recorded
8,107 shares in treasury stock, with a fair value of approximately $291,000, and
issued 46,231 shares of the Company's common stock to the employee.

         On November 7, 2001, the Company's Board of Directors authorized a
stock repurchase program whereby the Company can repurchase up to $2.0 million
of the Company's outstanding stock, representing approximately 3.7% of the total
shares outstanding on that date. On November 15, 2001, the Company repurchased
2,000 shares at a fair market price of $4.45 per share on such date. On May 7,
2002, the Company repurchased 200,000 shares at a fair market price of $5.82 per
share on such date from the Company's Chief Executive Officer (see Note 13). The
repurchase program allows for the purchase to be made intermittently, through
open market and privately negotiated transactions. Timing, price, quantity and
manner of purchases are at the discretion of the Company's management, depending
on market conditions and other factors, subject to compliance with the
applicable securities laws.

9. NETSAT'S EQUITY TRANSACTIONS AND RESTRUCTURING

         On August 11, 1999, NetSat issued and sold 2,000,000 shares of its
Series A Participating Preferred Stock ("Preferred Stock") for $2.50 per share
and 2,000,000 shares of its common stock for $2.50 per share in a private
offering yielding net proceeds of approximately $6,963,000, net of offering
costs of approximately $937,000. The Company's common stock ownership percentage
in NetSat was reduced from approximately 95% to approximately 81% following the
issuance and sale of the common stock. Accordingly, the Company recorded a
credit to stockholders' equity of approximately $1,700,000 during fiscal 2000
reflecting the increase in its share of the net equity of NetSat as a result of
the common stock offering.



                                      F-13
<PAGE>

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


9. NETSAT'S EQUITY TRANSACTIONS AND RESTRUCTURING (CONTINUED)

         During October 1999, the Company and NetSat entered into a common stock
purchase agreement with an investor to purchase 2,000,000 shares of NetSat's
common stock for $2.50 per share, of which 1,400,000 shares were purchased
directly from the Company and 600,000 shares were issued and sold directly by
NetSat, yielding net proceeds of approximately $4,935,000, net of offering costs
of $65,000. As a result, the Company recorded a gain of approximately $2,353,000
from the sale of its 1,400,000 shares of NetSat's common stock during fiscal
2000. The Company's common stock ownership percentage in NetSat was reduced from
approximately 81% to approximately 69% following the issuance and sale of the
NetSat common stock. Accordingly, the Company recorded a credit to stockholders'
equity of approximately $830,000 during fiscal 2000 reflecting the increase in
its share of the net equity of NetSat as a result of the common stock offering.

         During April 2001, in connection with management's plan to reduce costs
and to improve NetSat's operating efficiencies, the Company recorded a
restructuring charge of approximately $2,490,000 (of which $540,000 was charged
to costs from data communications services) during fiscal 2001. The
restructuring was primarily associated with the discontinuance of certain NetSat
product lines to enhance the Company's strategic redeployment of its
consolidated operating activities, enabling the Company to offer its customers
end-to-end satellite communications solutions while integrating operations and
reducing costs. As a result of this restructuring, the Company terminated 31
employees including executive management, marketing, administration and
operations support personnel. The major components of the restructuring charge
included severance payments to terminated NetSat employees of approximately
$850,000, fees incurred in connection with the termination of certain leased
satellite transponders of approximately $540,000 (charged to costs from data
communications services), the write-off of certain capitalized costs in the
amount of approximately $620,000 associated with NetSat's terminated financing
activities and the write-off of the estimated book value of equipment in the
amount of approximately $480,000 in connection with NetSat's discontinuance of
certain product lines. At June 30, 2001, approximately $500,000 of the
restructuring charge was accrued and included in other accrued expenses in the
accompanying consolidated balance sheet. During fiscal 2002, the restructuring
plan was completed whereby $250,000 was charged against the restructuring
accrual for charges relating to space segment cancellation fees, and $250,000
was reversed into income (credited to costs from data communications services)
due to the resolution of liabilities for less than originally estimated.

         In connection with the Company's restructuring plan, the Company also
acquired the following minority interests in NetSat:

a)       On March 30, 2001, the Company acquired 2,000,000 shares of NetSat's
         Preferred Stock and 333,334 shares of NetSat's common stock from a
         minority stockholder for approximately $581,000 in cash, the issuance
         of 233,334 shares of the Company's common stock and the issuance of a
         five-year warrant to purchase 262,501 shares of the Company's common
         stock.

b)       During April and May 2001, the Company acquired 4,845,704 shares of
         NetSat's common stock from minority stockholders for approximately
         $1,212,000 in cash, the issuance of 484,570 shares of the Company's
         common stock and the issuance of warrants to purchase 545,142 shares of
         the Company's common stock.

c)       In connection with the acquisition of the minority interests of NetSat,
         on May 25, 2001, the Company exchanged all of the current employees
         outstanding NetSat common stock options for an equal value of the
         Company's common stock options. As a result, 1,188,808 of NetSat common
         stock options were exchanged for 50,588 common stock options of the
         Company.


                                      F-14

<PAGE>


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


9. NETSAT'S EQUITY TRANSACTIONS AND RESTRUCTURING (CONTINUED)

         In connection with these transactions, the Company wholly owns NetSat
and, accordingly, recorded goodwill of approximately $7,001,000 during fiscal
2001, which represents the excess of the value of the Company's securities
issued over the recorded minority interests at the time of the transactions. In
accordance with the provisions of SFAS No. 142, effective July 1, 2001, the
Company ceased amortizing the goodwill associated with these transactions, which
at such time had a remaining balance of $6,913,000 and was being amortized over
ten years. Such goodwill was tested for impairment upon the adoption of SFAS No.
142 as of July 1, 2001 and again in connection with the annual asset impairment
test during the fourth quarter of fiscal 2002 whereby no impairment was
identified.

10. STOCK OPTION AND STOCK PURCHASE PLANS

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

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

         Employee options generally vest annually in equal installments over a
four-year period and expire on the tenth anniversary of the date of grant.
Director options generally vest annually in equal installments over a three-year
period commencing on the date of grant and expire the earlier of ten years from
the date of grant or one year from concluding service as a director of the
Company.

         The 1997 Plan provides for an automatic increase to the number of
options authorized for grant by an amount equal to 1% of the shares of common
stock outstanding on the last trading day of each calendar year. During fiscal
2000, 2001 and 2002, the Company increased the number of options authorized for
grant under the 1997 Plan pursuant to the automatic 1% provision by 95,623,
119,505 and 127,529, respectively. At June 30, 2002, the remaining options
available for grant under the 1997 Plan was 558,382.

         On September 23, 1998, the Board of Directors adopted, and the
stockholders subsequently approved, the 1999 Employee Stock Purchase Plan ("1999
Plan"). Pursuant to the 1999 Plan, 400,000 shares of the Company's common stock
will be reserved for issuance. The 1999 Plan is intended to provide eligible
employees of the Company, and its participating affiliates, the opportunity to
acquire an interest in the Company at 85% of fair market value at date of
issuance through participation in the payroll-deduction based employee stock
purchase plan. During the years ended June 30, 2000, 2001 and 2002, the Company
issued 25,733, 54,905 and 56,821 shares of its common stock to participating
employees in connection with the 1999 Plan. At June 30, 2002, the remaining
shares available for issuance under the 1999 Plan was 244,012.


                                      F-15

<PAGE>


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


10. STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED)

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


                                                                     YEARS ENDED JUNE 30,
                                      --------------------------------------------------------------------------------------
                                                2000                         2001                          2002
                                      ---------------------------  ---------------------------   ---------------------------
                                                     WEIGHTED-                     WEIGHTED-                     WEIGHTED-
                                        SHARES        AVERAGE         SHARES        AVERAGE         SHARES        AVERAGE
                                        UNDER        EXERCISE          UNDER       EXERCISE         UNDER        EXERCISE
                                        OPTION         PRICE          OPTION         PRICE          OPTION         PRICE
                                        ------       --------        --------       -------         ------       ---------
<S>                                    <C>          <C>             <C>            <C>               <C>         <C>
Balance, beginning of year....           2,007      $    7.32          1,578       $  10.10          2,382       $    9.28
Grants........................             353          18.54            944           7.78            734            4.79
Exercised.....................            (631)          6.11            (69)          5.22            (10)           3.56
Canceled......................            (151)          9.58            (71)         11.24           (192)          10.86
                                       -----------                   ------------                 ------------
Balance, end of year..........           1,578          10.10          2,382           9.28          2,914            8.07
                                       ===========                   ============                 ============

Exercisable, end of year......             863      $    7.19          1,170       $   8.61          1,401       $    8.87
                                       ===========  ===========      ============  =============  ============   =============

Weighted-average fair value
   of options granted during
   the year...................                      $   12.38                      $   5.21                      $    3.05
                                                    ===========                    =============                 =============
</TABLE>

         As a result of stock options granted during fiscal 1997, the Company
recorded stock compensation expense of approximately $24,000 during the year
ended June 30, 2000, based on the difference between the fair market value of
the shares and the option exercise price at the date of grant. As of June 30,
2000, there was no additional stock compensation expense to be recorded relating
to these grants.

         The following table summarizes information about stock options
outstanding at June 30, 2002 (In thousands, except per share amounts):

<TABLE>
<CAPTION>

                                       OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
                         --------------------------------------------------        ---------------------------------
                                                   WEIGHTED-
                                                    AVERAGE          WEIGHTED-                              WEIGHTED-
           RANGE OF                                REMAINING          AVERAGE                                AVERAGE
           EXERCISE                 NUMBER        CONTRACTUAL        EXERCISE           NUMBER              EXERCISE
            PRICE                OUTSTANDING     LIFE (YEARS)          PRICE          EXERCISABLE             PRICE
            -----                -----------     ------------          ------         -----------             -----
<S>                             <C>              <C>                 <C>             <C>                    <C>
    $3.51   -  $5.06.........       935               6.9             $ 4.52             398              $     4.61
    $5.31   -  $7.90.........       946               8.5             $ 6.72             252              $     6.99
    $8.07   - $11.75.........       690               6.2             $ 9.35             519              $     8.95
   $12.75   - $18.88.........       153               5.8             $14.82             135              $    14.88
   $21.00   - $28.00.........       190               7.4             $22.12              97              $    22.27
                                -----------                                          -------------
                                  2,914               7.2             $ 8.07           1,401              $     8.87
                                ===========                                          =============
</TABLE>



                                      F-16

<PAGE>


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


10. STOCK OPTION AND STOCK PURCHASE PLANS (CONTINUED)

         The Company has reserved approximately 4,336,000 shares of its common
stock for issuance upon exercise of all available and outstanding options and
warrants at June 30, 2002.

         In connection with the acquisition of the minority interests of NetSat
in fiscal 2001, the Company cancelled the NetSat 1999 Stock Incentive Plan
during the fourth quarter of fiscal 2001.

     Fair Value Disclosures

         Pro-forma information regarding net loss and net loss per common share
is required by SFAS No. 123, which also requires that the information be
determined as if the Company has accounted for its stock options granted
subsequent to July 1, 1995 under the fair value method of that Statement. The
fair value of options granted under the Company's 1997 Plan was estimated at
date of grant using a Black-Scholes option pricing model with the following
assumptions for the years ended June 30, 2000, 2001 and 2002: risk-free interest
rate of 6.1% (2000), 5.4% (2001) and 4.2% (2002), volatility factor of the
expected market price of the Company's common stock of .92 (2000), .81 (2001),
and .75 (2002), a weighted-average expected life of the option of five years and
no dividend yields.

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

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

<TABLE>
<CAPTION>

                                                                               YEARS ENDED JUNE 30,
                                                                --------------------------------------------------------
                                                                     2000                2001                 2002
                                                                     ----                ----                 ----
<S>                                                              <C>                 <C>                  <C>
Pro-forma net loss (In thousands).........................         $(5,445)           $(21,515)             $(19,953)
                                                                   =======            ========              ========
Basic and diluted pro-forma net loss per common share.....         $  (.54)           $  (1.78)             $  (1.57)
                                                                   =======            ========              ========
</TABLE>


11. BASIC AND DILUTED NET LOSS PER COMMON SHARE

         The Company computes net loss per share in accordance with the
provisions of SFAS No. 128, Earnings Per Share. Basic and diluted net loss per
common share is computed by dividing the net loss for the period by the
weighted-average number of common shares outstanding for the period. Common
equivalent shares consist of the incremental common shares issuable upon the
conversion of preferred stock (using an if-converted method) and incremental
shares issuable upon the exercise of stock options and warrants (using the
treasury stock method). Incremental common equivalent shares are excluded from
the calculation of diluted net loss per share as their effect is anti-dilutive.
Diluted net loss per share for the years ended June 30, 2000, 2001 and 2002,
excludes the effect of approximately 951,000, 415,000 and 172,000 stock options,
respectively, and approximately 32,000 and 10,000 warrants in 2000 and 2001,
respectively, as their effect would have been anti-dilutive.



                                      F-17

<PAGE>


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


12. PENSION PLAN

         The Company maintains a 401(k) plan, which covers substantially all
employees of the Company. Participants may elect to contribute from 1% to 100%
of their pre-tax compensation, subject to elective deferral limitations under
Section 403 of the Internal Revenue Code. Participant contributions up to 4% of
pre-tax compensation were fully matched by the Company during the years ended
June 30, 2000, 2001, and 2002. The plan also provides for discretionary
contributions by the Company. The Company contributed approximately $259,000,
$539,000 and $470,000 to the 401(k) plan during the years ended June 30, 2000,
2001, and 2002, respectively. There were no discretionary contributions made by
the Company during the years ended June 30, 2000, 2001, and 2002.

13. RELATED PARTY TRANSACTIONS

         During fiscal 2001, the Company advanced $200,000 and $40,000 to two
officers of the Company. The Company received two promissory notes payable on
December 31, 2002 for such advances, which bear interest at an annual rate of
5.0% payable quarterly. During fiscal 2002, the Company increased the $200,000
loan to $300,000 and amended the promissory note accordingly. At June 30, 2001,
principal amounts outstanding under these promissory notes are included in other
assets and accrued interest receivable is included in other current assets in
the accompanying consolidated balance sheet. At June 30, 2002, principal amounts
and accrued interest outstanding under these promissory notes are included in
other current assets in the accompanying consolidated balance sheet.

         During fiscal 2002, the Company advanced $300,000 to an officer of the
Company. The Company received a promissory note payable on September 30, 2004,
which bears interest at an annual rate of 5.0% payable quarterly, and secured by
a stock pledge agreement. On May 7, 2002, the officer sold 200,000 shares of the
Company's common stock at a fair market price of $5.82 per share on such date to
the Company in connection with its stock repurchase program. The Company
deducted amounts outstanding on the promissory note together with accrued
interest thereon from the gross proceeds paid to the officer in connection with
this transaction.

         During fiscal 2002, the Company advanced $300,000 to an officer of the
Company. The Company received a promissory note payable on September 30, 2004,
which bears interest at an annual rate of 5.0% payable quarterly, and secured by
a stock pledge agreement. At June 30, 2002, principal amounts outstanding under
this promissory note are included in other assets and accrued interest
receivable thereon is included in other current assets in the accompanying
consolidated balance sheet.

14. INCOME TAXES

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


                                      F-18

<PAGE>


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

14. INCOME TAXES (CONTINUED)

         The income tax provision (benefit) for the years ended June 30, 2000,
2001 and 2002 calculated under the provisions of SFAS No.109, Accounting for
Income Taxes, are as follows:

<TABLE>
<CAPTION>

                                                                                     YEARS ENDED JUNE 30,
                                                                        --------------------------------------------------
                                                                             2000              2001                2002
                                                                             ----              ----                ----
                                                                                             (IN THOUSANDS)
<S>                                                                      <C>              <C>               <C>
Current:
   Federal.........................................................    $       1,635        $        -          $        -
   State and local.................................................              307              (342)                  -
   Foreign ........................................................                -                 -                 138
                                                                       -------------        ----------          ----------
                                                                               1,942              (342)                138
Deferred, net of valuation allowance...............................           (1,942)            1,942                (138)
                                                                       -------------        ----------          ----------
                                                                       $           -        $    1,600          $        -
                                                                       =============        ==========          ==========
</TABLE>


         During fiscal 2001 and 2002, the Company recorded approximately
$342,000 and $372,000 of state investment tax credits. During fiscal 2002,
approximately $75,000 of the tax benefit was recorded as an offset to state and
local capital taxes, approximately $138,000 was recorded as an offset to the
foreign income tax provision recorded by Globecomm Systems Europe Limited and
the remaining $159,000 was recorded as a reduction in general and administrative
expenses.

         In the fourth quarter of fiscal 2001, the Company acquired the
remaining minority interests in NetSat from certain minority shareholders.
Accordingly, for federal income tax purposes the Company and NetSat will file a
consolidated income tax return.

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

<TABLE>
<CAPTION>

                                                                                JUNE 30, 2001      JUNE 30, 2002
                                                                                -------------      -------------
                                                                                         (IN THOUSANDS)
<S>                                                                             <C>                <C>
 Deferred tax assets:
   Net operating loss carryforwards........................................      $     14,772          $  21,476
   Projects in progress....................................................               175                135
   Accruals and reserves...................................................             1,659              1,292
   Write-down of investments...............................................             1,280              1,280
   State investment tax credit carryforwards...............................                 -                138
                                                                               -------------------   ---------------
                                                                                       17,886             24,321
 Valuation allowance for deferred tax assets...............................           (17,401)           (23,157)
                                                                               -------------------   ---------------
                                                                                          485              1,164
 Deferred tax liability:
   Depreciation and amortization...........................................              (485)            (1,026)
                                                                               -------------------   ---------------
 Net deferred tax assets..................................................       $          -          $     138
                                                                               ===================   ===============
</TABLE>



                                      F-19

<PAGE>


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


14. INCOME TAXES (CONTINUED)

         In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income prior to the
expiration of any net operating loss carryforwards. Due to the uncertainty
regarding the Company's ability to utilize its net operating losses in the
future, the Company has provided a valuation allowance against its operating
losses and temporary differences except for approximately $138,000 representing
state investment tax credit carryforwards that will be utilized during fiscal
2003 to offset state capital taxes on the Company's consolidated state tax
return.

         For the years ended June 30, 2000, 2001 and 2002, the valuation
allowance increased approximately $3,282,000, $7,743,000 and $5,756,000,
respectively. Approximately $2,046,000 of the remaining valuation allowance, if
recognized, will be allocated directly to stockholders' equity relating to
non-qualified dispositions of stock option exercises.

         The Company has available net operating loss carryforwards of
approximately $53,691,000 ($17,339,000 and $36,352,000 for the Company and
NetSat, respectively), which are due to expire through 2022. Utilization of the
NetSat net operating loss carryforwards may be subject to an annual limitation
pursuant to the ownership change limitations provided by the Internal Revenue
Code and similar state provisions.

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

<TABLE>
<CAPTION>

                                                                             YEARS ENDED JUNE 30,
                                                               ---------------------------------------------------
                                                                  2000                2001                2002
                                                                  ----                ----                ----
<S>                                                            <C>                  <C>               <C>
Tax at U.S. Federal statutory rate........................         (34) %              (34) %             (34) %
Expenses not deductible for income tax purposes ..........           6                   -                  -
Losses for which no tax benefit was received..............          28                  45                 34
State taxes...............................................           -                  (1)                 -
                                                               -------------        --------------     ------------
                                                                     -  %               10  %               -  %
                                                               =============        ==============     ============

</TABLE>


15. SEGMENT INFORMATION

         The Company operates through two business segments. Its ground segment
systems, networks and enterprise solutions segment, through Globecomm Systems
Inc. and Globecomm Systems Europe Limited, is engaged in the design, assembly
and installation of ground segment systems, networks and enterprise solutions.
Its data communications services segment, through NetSat, is engaged in
providing high-speed, satellite-delivered data communications to developing
markets worldwide. NetSat also provides Internet access to customers who have
limited or no access to terrestrial network infrastructure capable of supporting
the economical delivery of such services.

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

         The following is the Company's business segment information as of and
for the years ended June 30, 2000, 2001 and 2002:


                                      F-20

<PAGE>


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


15. SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       YEARS ENDED
                                                                 ------------------------------------------------------
                                                                      2000                 2001            2002
                                                                      ----                 ----            ----
                                                                                      (IN THOUSANDS)
<S>                                                              <C>                    <C>              <C>
Revenues:

Ground segment systems, networks and enterprise solutions...        $  69,584            $  78,744       $  64,101
Data communications services................................            8,987               24,170          22,478
                                                                    ------------         -----------     -----------
Total revenues..............................................        $  78,571            $ 102,914       $  86,579
                                                                    ============         ===========     ===========
Loss from operations:
  Ground segment systems, networks and enterprise solutions.        $    (137)           $  (4,865)      $  (7,149)
  Data communications services..............................           (7,193)              (8,538)        (10,155)
Interest income.............................................            1,727                3,194           1,030
Interest expense............................................           (2,522)              (6,579)           (957)
Gain on sale of consolidated subsidiary's common stock......            2,353                    -               -
Gain on sale of investment..................................                -                  304               -
Intercompany eliminations...................................             (554)                  35             (32)
                                                                    ------------         -----------     -----------
Loss before income taxes and minority interests in
  operations of consolidated subsidiary.....................        $  (6,326)           $ (16,449)      $ (17,263)
                                                                    ============         ===========     ===========
Depreciation and amortization:
  Ground segment systems, networks and enterprise solutions.        $   1,370            $   1,695       $   1,598
  Data communications services..............................            1,977                5,543           2,075
  Intercompany eliminations.................................                -                   (9)            (12)
                                                                    ------------         -----------     -----------
Total depreciation and amortization.........................        $   3,347            $   7,229       $   3,661
                                                                    ============         ===========     ===========


 Expenditures for long-lived assets:
  Ground segment systems, networks and enterprise solutions.        $   2,482            $   2,054       $     935
  Data communications services..............................          101,249                3,428             752
  Intercompany eliminations.................................             (444)                (132)              -
                                                                    ------------         -----------     -----------
Total expenditures for long-lived assets....................        $ 103,287            $   5,350       $   1,687
                                                                    ============         ===========     ===========

</TABLE>

<TABLE>
<CAPTION>

                                                                     JUNE 30,            JUNE 30,          JUNE 30,
                                                                       2000                2001             2002
                                                                       ----                ----             ----
                                                                                     (IN THOUSANDS)
<S>                                                                 <C>                  <C>             <C>
Assets:
  Ground segment systems, networks and enterprise solutions.        $ 125,106            $ 136,103       $ 123,484
  Data communications services..............................          109,624               21,985          20,106
  Intercompany eliminations.................................          (11,976)             (33,089)        (43,293)
                                                                    ------------         -----------     -----------
Total assets................................................        $ 222,754            $ 124,999       $ 100,297
                                                                    ============         ===========     ===========
</TABLE>



                                      F-21

<PAGE>


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


16. SIGNIFICANT CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

         The Company designs, assembles and installs satellite ground segment
systems, networks and enterprise solutions for customers in diversified
geographic locations. Concentration of credit risk with respect to accounts
receivable is limited due to the limited number of customers and that a
substantial portion of accounts receivable are related to balances owed by major
satellite communication companies. The timing of cash realization is determined
based upon the contract or service agreements with the customers. The Company
performs ongoing credit evaluations of its customers' financial condition and in
most cases requires a letter of credit or cash in advance for foreign customers.
Allowances related to accounts receivable at June 30, 2000, 2001 and 2002, are
approximately $467,000, $1,065,000 and $4,683,000, respectively.

         Two major customers accounted for approximately 27% (16% and 11%) of
the Company's consolidated revenues for the year ended June 30, 2000. One major
customer accounted for approximately 11% of the Company's consolidated revenues
for the years ended June 30, 2001 and 2002.

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

<TABLE>
<CAPTION>


                                                                      YEARS ENDED JUNE 30,
                                                   --------------------------------------------------------------
                                                           2000               2001               2002
                                                           ----               ----               ----
       <S>                                          <C>                      <C>              <C>
        Africa.................................             5 %                 2 %               3 %
        South America..........................             2 %                 8 %               9 %
        Asia...................................            12 %                10 %              16 %
        Europe (15% in the UK in 2002).........            24 %                21 %              31 %
        Middle East............................            10 %                13 %              14 %
        Australia..............................             2 %                 2 %               2 %
                                                         -------             -------            -------
                                                           55 %                56 %              75 %
                                                         =======             =======            =======

</TABLE>


         Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash and trade
receivables. The Company places its cash and cash equivalents with high quality
financial institutions. Substantially all cash and cash equivalents are held in
three financial institutions at June 30, 2001 and 2002, respectively. Cash
equivalents are comprised of short-term debt instruments and certificates of
deposit of direct or guaranteed obligations of the United States, which are held
to maturity and approximate fair market value. At times, cash may be in excess
of Federal Deposit Insurance Company insurance limits.


                                      F-22

<PAGE>

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


17. COMMITMENTS AND CONTINGENCIES

     Line of Credit

         Effective April 11, 2002, the Company amended its bank agreement and
established a $5,000,000 working capital line of credit. The modified credit
facility bears interest at the prime rate (4.75% at June 30, 2002) and is
collateralized by a first security interest on most of the Company's assets. The
credit facility, which expires on April 10, 2003, contains certain financial
covenants, with which the Company was in compliance at June 30, 2002. As of June
30, 2002, no amounts are outstanding under this credit facility, however, there
are outstanding standby letters of credit, bid proposals and performance
guarantees of approximately $1,977,000 which are applied against and reduce the
amounts available under the working capital line of credit.

     Letters of Credit

         The Company utilizes standby letters of credit to secure certain bid
proposals, performance guarantees, and service agreements with third party
vendors in the normal course of business. As of June 30, 2001 and 2002, the
Company had standby letters of credit, bid proposals and performance guarantees
outstanding of approximately $1,850,000 and $1,977,000, respectively, which were
secured by the Company's working capital line of credit. The Company provides
cash collateral for certain letters of credit. As of June 30, 2001 and 2002, the
Company had no cash collateral related to bid proposals, and had approximately
$588,000 of cash collateral related to performance guarantees. These amounts are
included in restricted cash in the accompanying consolidated balance sheets.

     Lease Commitments

         The Company currently leases satellite space segment services, office
space, teleport services and other equipment under a capital and various
operating leases, which expire in various years through 2014. As leases expire,
it can be expected that in the normal course of business they will be renewed or
replaced. Most lease agreements contain renewal options.

         During the year ended June 30, 2000, NetSat signed a 15-year and a
14-year capital lease for certain satellite space segment transponders. On April
1, 2001, the Company renegotiated the 15-year satellite space segment
transponder lease which changed the terms and economics of the agreement and
resulted in a change in accounting for such lease from capital to operating.
Accordingly, the change in accounting reduced the Company's capital lease
obligations by approximately $84,261,000 with a corresponding reduction in net
fixed assets of approximately $80,620,000, resulting in a deferred liability of
approximately $3,641,000, which is being amortized into income over the
remaining term of the lease. During the year ended June 30, 2002, NetSat
amortized $300,000 of the deferred liability into income which is included as a
credit to costs from data communications services, resulting in a balance of
approximately $3,341,000 in deferred liabilities in the accompanying
consolidated balance sheets at June 30, 2002.

         During the fourth quarter of fiscal 2002, NetSat amended a satellite
space segment transponder lease to reduce the short-term cash commitment under
such agreement in exchange for a twelve-month extension of the lease term. As a
result of this modification, the Company will record the remaining lease
commitment on a straight-line basis over the remaining term of the transponder
lease. Accordingly, during 2002, the Company recorded a deferred liability of
$319,000, to reflect the straight-lining of such lease payments. Such amount is
included in deferred liabilities in the accompanying consolidated balance sheets
at June 30, 2002.


                                      F-23
<PAGE>


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

17. COMMITMENTS AND CONTINGENCIES (CONTINUED)

         At June 30, 2002, future minimum lease payments under the
non-cancelable capital lease agreement is as follows (in thousands):

               2003..................................     $     1,387
               2004..................................           1,387
               2005..................................           1,387
               2006..................................           1,387
               2007..................................           1,387
               Thereafter............................           9,936
                                                          ------------
               Total minimum lease payments..........     $    16,871
               Less amount representing interest.....          (6,766)
                                                          ------------
               Present value of minimum lease
                   payments, net.....................     $    10,105
                                                          ============

         The satellite space segment transponders under the capital lease are
included in fixed assets with a capitalized cost of approximately $11,256,000
and accumulated amortization of approximately $1,158,000 and $1,930,000, at June
30, 2001 and 2002, respectively.

         Future minimum lease payments under non-cancelable operating leases for
satellite space segment services, Internet access services, teleport services,
office space and other equipment with terms of one year or more consist of the
following at June 30, 2002 (in thousands):

               2003..................................     $    15,489
               2004..................................          15,542
               2005..................................          13,835
               2006..................................          12,756
               2007..................................          12,676
               Thereafter............................           6,258
                                                          ---------------
                                                          $    76,556
                                                          ===============

         Rent expense for satellite space segment services, Internet access
services, teleport services, office space and other equipment was approximately
$5,990,000, $11,051,000 and $17,082,000 for the years ended June 30, 2000, 2001
and 2002, respectively.

         In May 2002, the Company entered into a lease agreement as the lessor
of satellite earth station equipment, which is being classified as an operating
lease and expires in May 2006. Equipment under this operating lease has a net
book value of approximately $562,000 and is included in fixed assets in the
accompanying consolidated balance sheet at June 30, 2002. At June 30, 2002,
future minimum lease payments to be received from equipment under this operating
lease are as follows: $111,000 in 2003, $186,000 in 2004, $186,000 in 2005 and
$155,000 in 2006.

         Pursuant to several of NetSat's Internet access service agreements,
NetSat is the lessor of satellite earth station equipment that are classified as
operating leases and expire at various dates through fiscal 2004. Equipment
under these operating leases are included in fixed assets in the accompanying
consolidated balance sheets and have a net book value of approximately $289,000
and $274,000 at June 30, 2001 and 2002, respectively. At June 30, 2002, future
minimum lease payments to be received from equipment under these various
operating leases are nominal.


                                      F-24

<PAGE>


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

17. COMMITMENTS AND CONTINGENCIES (CONTINUED)

         During fiscal 2001, the Company entered into two thirty-six month
operating lease agreements for satellite space segment transponders on two
satellites that are expected to be launched and become operational during fiscal
2004. Future payments due on such agreements through fiscal 2007 are
approximately $6,000,000. Such satellite space segment services will begin when
the satellite transponders are commercially operational, as defined in the
agreements.

         Employment Agreements

         During January 1997, the Company entered into three-year employment
agreements with two of its officers for an aggregate amount of $325,000 per
year. Effective November 1998, 1999 and 2000, such employment agreements
increased to an aggregate amount of $400,000, $423,000 and $516,000,
respectively, per year. During October 2001, the Company entered into new
three-year employment agreements with the two officers for an aggregate amount
of $516,000 per year. The Company will have certain obligations to the two
officers if they are terminated for disability or following a change in control.
Each employment agreement renews automatically for additional terms of one year,
unless either party provides written notice to the other party of its intention
to terminate the agreement.

         During October 2001, the Company entered into three-year employment
agreements with five other officers for an aggregate amount of approximately
$698,000 per year. The Company will have certain obligations to these officers
if they are terminated for disability or following a change in control. Each
employment agreement renews automatically for additional terms of one year,
unless either party provides written notice to the other party of its intention
to terminate the agreement.

         During January 2002, the Company entered into a three-year employment
agreement with another officer for an amount of $275,000 per year. The Company
will have certain obligations to this officer if terminated for disability or
following a change in control. The employment agreement renews automatically for
additional terms of one year, unless either party provides written notice to the
other party of its intention to terminate the agreement.





                                      F-25

<PAGE>




                             GLOBECOMM SYSTEMS INC.

                  SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>


                                                                             ADDITIONS
                                                           ------------------------------------------
                                            BALANCE AT         CHARGED TO      CHARGED TO OTHER
                                           BEGINNING OF        COSTS AND          ACCOUNTS-           DEDUCTIONS-     BALANCE AT
             DESCRIPTION                      PERIOD           EXPENSES           DESCRIBE             DESCRIBE      END OF PERIOD
             -----------                  -------------       --------           --------             --------      -------------
<S>                                     <C>                <C>              <C>                  <C>               <C>
Year ended June 30, 2000:
  Reserves and allowances
   deducted from asset accounts:
  Reserve for estimated
   doubtfull accounts receivable...     $   107,000        $   360,000       $            -       $           -      $    467,000
  Valuation allowance on
   deferred tax assets.............       6,376,000                  -            3,282,000(a)                -         9,658,000
                                        ----------------   ---------------   ------------------   -----------------  ---------------
                                        $ 6,483,000        $   360,000       $    3,282,000       $           -      $ 10,125,000
                                        ================   ===============   ==================   =================  ===============

Year ended June 30, 2001:
  Reserves and allowances
   deducted from asset accounts:
  Reserve for estimated
   doubtful accounts receivable....     $   467,000        $   680,000       $            -       $     (82,000)(b)  $  1,065,000
  Valuation allowance on
    deferred tax assets............       9,658,000                  -            7,743,000(a)                -        17,401,000
  Valuation allowance on leased
    receivables....................               -          1,073,000                    -          (1,073,000)(c)             -
                                        ----------------   ---------------   ------------------   -----------------  ---------------
                                        $10,125,000        $ 1,753,000       $    7,743,000       $  (1,155,000)     $ 18,466,000
                                        ================   ===============   ==================   =================  ===============

Year ended June 30, 2002:
  Reserves and allowances
    deducted from asset accounts:
  Reserve for estimated
    doubtful accounts receivable...     $ 1,065,000        $ 3,951,000       $            -       $    (333,000)(b)  $  4,683,000
  Valuation allowance on
    deferred tax assets............      17,401,000                  -            5,756,000(a)                -        23,157,000
                                        ----------------   ---------------   ------------------   -----------------  ---------------
                                        $18,466,000        $ 3,951,000       $    5,756,000       $    (333,000)     $ 27,840,000
                                        ================   ===============   ==================   =================  ===============
</TABLE>


         (a) Increase in valuation allowance for net deferred tax assets.
         (b) Reduction in allowance due to write-off of accounts receivable
             balances.
         (c) Reduction in reserve due to write-off of leased receivables.



                                      S-1

<PAGE>


INDEX TO EXHIBITS:
------------------
Exhibit No.

3.1      Amended and Restated Certificate of Incorporation (incorporated by
         reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K
         for the fiscal year ended June 30, 1999).

3.2      Amended and Restated By-laws of the Registrant (incorporated by
         reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K
         for the fiscal year ended June 30, 1999).

4.2      See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
         Certificate of Incorporation and Amended and Restated By-laws of the
         Registrant defining rights of holders of Common Stock of the Registrant
         (incorporated by reference to Exhibit 4.2 of the Registrant's
         Registration Statement on Form S-1, File No. 333-22425 (the
         "Registration Statement")).

10.1     Form of Registration Rights Agreement dated as of February 1997
         (incorporated by reference to Exhibit 10.1 of the Registration
         Statement).

10.2     Form of Registration Rights Agreement dated May 30, 1996 (incorporated
         by reference to Exhibit 10.2 of the Registration Statement).

10.3     Form of Registration Rights Agreement dated December 31, 1996, as
         amended (incorporated by reference to Exhibit 10.3 of the Registration
         Statement).

10.4     Letter Agreement for purchase and sale of 199,500 shares of Common
         Stock dated November 9, 1995 between the Registrant and Thomson-CSF
         (incorporated by reference to Exhibit 10.4 of the Registration
         Statement).

10.5     Investment Agreement dated February 12, 1996 by and between Shiron
         Satellite Communications (1996) Ltd. and the Registrant (incorporated
         by reference to Exhibit 10.5 of the Registration Statement).

10.6*    Stock Purchase Agreement dated as of August 30, 1996 by and between
         C-Grams Unlimited Inc. and the Registrant (incorporated by reference to
         Exhibit 10.6 of the Registration Statement).

10.7     Memorandum of Understanding dated December 18, 1996 by and between
         NetSat Express, Inc. and Applied Theory Communications, Inc.
         (incorporated by reference to Exhibit 10.7 of the Registration
         Statement).

10.8     Stock Purchase Agreement dated as of August 23, 1996 by and between
         NetSat Express, Inc. and Hughes Network Systems, Inc. (incorporated by
         reference to Exhibit 10.8 of the Registration Statement).

10.9     Employment Agreement dated as of January 27, 1997 between the
         Registrant and David E. Hershberg (incorporated by reference to Exhibit
         10.9 of the Registration Statement).

10.10    Employment Agreement dated as of January 27, 1997 between the
         Registrant and Kenneth A. Miller (incorporated by reference to Exhibit
         10.10 of the Registration Statement).

10.11    Purchase and Sale Agreement, 45 Oser Avenue, Hauppauge, New York, dated
         December 12, 1996 by and between Eaton Corporation and the Registrant
         (incorporated by reference to Exhibit 10.13 of the Registration
         Statement).

10.12    1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.14
         of the Registration Statement).

10.13    Investment Agreement dated August 21, 1998 by and between McKibben
         Communications LLC and the Registrant (incorporated by reference to
         Exhibit 10.13 of the Company's Annual Report on Form 10-K for the year
         ended June 30, 1998).

10.14    1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit
         99.8 of the S-8 Registration Statement).




<PAGE>



10.15   Rights Agreement, dated as of December 3, 1998, between the Company and
        American Stock Transfer and Trust Company, which includes the form of
        Certificate of Designation for the Series A Junior Participating
        Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit
        B and the Summary of Rights to Purchase Series A Preferred Shares as
        Exhibit C (incorporated by reference to Exhibit 4 of Company's Current
        Report on Form 8-K dated December 3, 1998).

10.16   Common Stock Purchase Agreement dated August 11, 1999 between NetSat
        Express, Inc. and Globix Corporation (incorporated by reference to
        Exhibit 10.16 of the Company's Annual Report on Form 10-K for the year
        ended June 30, 1999).

10.17   Series A Preferred Stock Purchase Agreement dated August 11, 1999
        between NetSat Express, Inc. and George Soros (incorporated by reference
        to Exhibit 10.17 of the Company's Annual Report on Form 10-K for the
        year ended June 30, 1999).

10.18    Common Stock Purchase Agreement dated October 28, 1999 between NetSat
         Express, Inc., Globecomm Systems Inc. and Reuters Holdings Switzerland
         SA (incorporated by reference to Exhibit 10.18 of the Company's
         Quarterly Report on Form 10-Q, for the quarter ended September 30,
         1999).

10.19    Negotiable Promissory Note, dated April 1, 2001, between the Registrant
         and Donald Woodring (incorporated by reference to Exhibit 10.19 of the
         Company's Annual Report on Form 10-K for the year ended June 30, 2001).

10.20   Employment Agreement, dated as of October 9, 2001, by and between
        Stephen C. Yablonski and the Company (incorporated by reference to
        Exhibit 10.20 of the Company's Quarterly Report on Form 10-Q, for the
        quarter ended September 30, 2001).

10.21    Employment Agreement, dated as of October 9, 2001, by and between
         Andrew C. Melfi and the Company (incorporated by reference to Exhibit
         10.21 of the Company's Quarterly Report on Form 10-Q, for the quarter
         ended September 30, 2001).

10.22    Employment Agreement, dated as of October 9, 2001, by and between
         Donald G. Woodring and the Company (incorporated by reference to
         Exhibit 10.22 of the Company's Quarterly Report on Form 10-Q, for the
         quarter ended September 30, 2001).

10.23    Employment Agreement, dated as of October 9, 2001, by and between Paul
         J. Johnson and the Company (incorporated by reference to Exhibit 10.23
         of the Company's Quarterly Report on Form 10-Q, for the quarter ended
         September 30, 2001).

10.24    Employment Agreement, dated as of October 9, 2001, by and between Paul
         Eterno and the Company (incorporated by reference to Exhibit 10.24 of
         the Company's Quarterly Report on Form 10-Q, for the quarter ended
         September 30, 2001).

10.25    Promissory Note Secured By Stock Pledge Agreement, dated September 4,
         2001, by and between David E. Hershberg and the Company (incorporated
         by reference to Exhibit 10.25 of the Company's Quarterly Report on Form
         10-Q, for the quarter ended September 30, 2001).

10.26    Promissory Note Secured By Stock Pledge Agreement, dated September 4,
         2001, by and between Kenneth A. Miller and the Company (incorporated by
         reference to Exhibit 10.26 of the Company's Quarterly Report on Form
         10-Q, for the quarter ended September 30, 2001).

10.27    Employment Agreement, dated as of January 25, 2002, by and between G.
         Patrick Flemming and the Company (incorporated by reference to Exhibit
         10.27 of the Company's Quarterly Report on Form 10-Q, for the quarter
         ended December 31, 2001).

<PAGE>


21       Subsidiaries of the Registrant (filed herewith).

23       Consent of Independent Auditors (filed herewith).

99.1     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

99.2     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).


* Confidential treatment granted for portions of this agreement.