In 2010, although there have been mixed reports on the results of the economic recovery efforts, one thing that’s remained stable has been Spacenet’s focus on expanding capabilities and providing highly reliable networking solutions across both our core and expanding markets. This busy year included new customer deployments at thousands of sites across the U.S., product roll-outs and technology enhancements, merger and acquisition activities as well as a major grant award for broadband to home Internet access. Although it will take time for the economic situation to completely recover, Spacenet is taking initiative across all facets of our business including the enterprise, government and residential/small office markets.

In the government sector, Spacenet increased its efforts to meet the demands of federal and civilian agencies and state and local government clients with the launch of new products and services. Coverage of our satellite services was expanded to numerous agencies to support high-speed satellite based links for critical data and voice communications. Spacenet’s recently formed subsidiary company, Spacenet Integrated Government Solutions (SIGS), has been making progress to meet the mission-critical requirements of the Department of Defense, Homeland Security, the Intelligence Community and other government agencies. A core executive team has been installed, and in 2010, Raysat Antenna Systems, a leading provider of Satcom On The Move (SOTM) antenna solutions, was integrated into the company. Comms-on-the-move capabilities are increasing in demand and Spacenet is providing more advanced satellite options for military and civilian government organizations. In addition, a new emergency communications service was introduced for first responders and public safety.

Raysat Antenna Systems (RAS), US Division, is now operating under Spacenet Integrated Government Solutions (SIGS) Management. RAS was acquired by Gilat Satellite Network Ltd. (NASDAQ: GILT), Spacenet’s parent company, in 2010, and its US operations have been integrated into SIGS. RAS provides low profile and light-weight antennas and complete system solutions to the rapidly growing SOTM market. Low profile antennas are critical in meeting the stringent requirements of the U.S. DoD and other government and military markets around the globe. The RAS family offers high speed, highly mobile communications for the military, emergency response organizations, and other markets that have a need for fast, flexible, on the move communications.

In October of 2010, Spacenet entered into a definitive agreement to acquire all of the outstanding stock of Wavestream Corporation. Wavestream’s family of Ka-, Ku-, X- and C-band Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC) provide systems integrators with field-proven solutions designed for mobile and fixed satellite communication (SATCOM) systems worldwide. The company’s products have been selected as key components in a number of DoD programs. The acquisition, which is expected to close by the end of the year, will further expand the product portfolio of Gilat/Spacenet, better positioning us to compete in the satcom market.

Spacenet also debuted a new Emergency Communications Service (ECS) via Satellite with ‘Pay-as-you-use’ service plan options. ECS is designed to provide a more cost-effective and flexible satellite solution with dedicated satellite bandwidth for readily available and reliable emergency communications. It is ideal for public safety and first responder agencies such as police, fire departments, and medical emergency teams as well as federal agencies such as FEMA and the Department of Homeland Security who require network continuity for disaster planning, but also face the reality of budget limitations.

SIGS and EchoStar Satellite Services L.L.C. worked together to deliver two-way satellite communications involving space and ground equipment to the American Red Cross to aid in relief efforts following the devastating earthquake. The satellite services supported four relief sites with wireless Internet access, which allowed the 250 International Red Cross teams in Haiti to communicate their medical and personnel needs and requisition supplies. Spacenet and Echostar were presented a plaque and recognized for their contributions by the American Red Cross at their headquarters in Washington D.C.

In 2010, Spacenet continued adapting to a rapidly changing competitive landscape, and responded to the evolving needs of core enterprise customers with new innovative products, including Prysm Pro, and comprehensive managed network services. Managed network services were deployed at thousands of new enterprise locations in North America and abroad.

SkyEdge II’s advanced technology enables Spacenet to offer an even broader range of service options for clients with high multi-megabit per second bandwidth requirements. The SkyEdge II platform is optimized for IP applications, VoIP networks and two way video; offers faster speeds than previous generations; provides higher availability (99.9 percent or better); and supports high-speed mesh services.

During 2010, Spacenet’s CEO, Andreas Georghiou, accepted a Circle of Excellence award from Washington SmartCEO in recognition of the Company’s product innovation. This followed the successful launch of the Spacenet Prysm Pro, a modular, scalable, off-the-shelf IP network appliance that provides support for managed network services.

Prysm Pro helps multi-site organizations meet custom application requirements, streamline corporate-wide network management processes, and provide centralized network security with automatic network failover in the case of a primary network outage. The Prysm Pro network appliance, which enables a fully PCI compliant managed network services solution, is also being provided to more than 7,000 Regis Corporation North American locations. Regis, the beauty industry’s global leader in beauty salons, hair restoration centers and cosmetology education, is using Spacenet’s managed network services and Prysm Pro network management appliance to provide integrated support and management for its business communication infrastructure. This infrastructure includes DSL, 3G, analog and digital voice, Wi-Fi and VPN networking at its beauty salon stores.

Spacenet announced in August 2010 that it signed a contract with Valero, the largest independent refiner in North America, to serve as a provider for broadband network managed services and offer connectivity to its nationwide branded wholesale locations. Valero will be offering Spacenet’s broadband communications services to support their primary retail applications and network backup.

In addition to introducing our lowest price points for the StarBand line of broadband Internet services, Spacenet won an award of $7.5 Million from the Rural Utilities Service to provide broadband Internet services to rural unserved areas of Hawaii and Alaska. Spacenet was awarded federal grant funding from the Rural Utilities Service (RUS) under the American Recovery and Reinvestment Act. The grant enables it to provide broadband service to rural unserved markets in Alaska and Hawaii through its “StarBand Open Skies” initiative, offering StarBand broadband-over-satellite service to these regions for $0 down, including equipment and installation, and an entry-level monthly service fee of $50, using custom versions of the Nova 1000 and 1500 products.

Spacenet announced in August 2010 the introduction of a new offer, called StarBundle, for its StarBand satellite Internet services. The new StarBundle program currently offers satellite equipment and installation for $0 after a $150 mail-in rebate is applied, and is available with all new StarBand Nova services, including Nova 500, 1000 and 1500 purchases. The $0 down offer after a $150 mail-in rebate is applied eliminates the initial upfront equipment and installation cost, enabling more customers across the country to have access to affordable broadband Internet service via satellite.

The Company is very optimistic about the changes made in 2010 and remains focused on keeping up this momentum in 2011. In the upcoming year, Spacenet plans to continue with the focus on managed services for the enterprise market, including enhancements to our award winning Prysm Pro product. In addition, we will continue to build on the significant milestones made within the government division to serve the needs of federal, state and local, and civilian agencies.