YEAR-END REPORT FOR THE PERIOD 1 JANUARY 2009 TO 31 DECEMBER 2009

• Net sales for the fourth quarter amounted to SEK 3.5 million (SEK 3.2 million)

• The net loss for the fourth quarter amounted to SEK -9.8 million (SEK -18.8 million)

• Net sales for 2009 amounted to SEK 13.6 million (SEK 4.9 million)

• The net loss for 2009 amounted to SEK -34.3 million (SEK -35.1 million)

• Order bookings in the fourth quarter included 3 antennas, 2 of which were delivered during the quarter.

• In 2009 the Company signed orders for a total of 24 antennas. During the same period the Company delivered 17 antennas.

• In 2009 the Company finalised two issues totalling SEK 74.5 million before expenses.

• In 2009 the Company opened a subsidiary in Singapore and a representative office in China.

• In 2009 the Company increased production capacity by establishing external production units in Singapore and China.

• During the year the Company signed a cooperation agreement with Orange Business Services and won an order from Thales for a total of 9 antennas, which will be delivered in 2010.

• After the conclusion of the period the Company signed orders for 10 antennas, including 8 to Orange.

Statement from the CEO

2009 was a year of major changes for C2SAT, both strategically and operationally. We remain committed to the plan we established last spring, and the operating objectives announced at the Annual General Meeting have largely been met. During the year the Company experienced setbacks as well as success, but in my opinion C2SAT is now much better prepared to face the future than it was at this point a year ago.

During the year C2SAT began to build an efficient sales organisation, which is already beginning to produce visible results in the form of increased order bookings and sales. Prior to 2009 the Company had sold 8 antennas. In 2009 a total of 17 antennas were sold and delivered, and the Company now has a significantly better order backlog at the start of 2010 than ever before.

C2SAT expects to deliver more antennas during the first quarter of 2010 than in all of 2009. The goal in the year ahead is to sell around 120 antennas. This is an aggressive goal, but higher sales volumes are needed to establish profitability and positive cash flows in the long term. The sales goal is therefore the most important individual goal for 2010.

At last year's Annual General Meeting we announced our objective to grow sales by 50% per quarter, which has been achieved on a cumulative level. This goal remains in effect for 2010. Fourth-quarter sales suffered from delays on the part of end-customers, due to which a portion was reported in the first quarter of 2010 instead. Accrual effects will gradually subside as sales volumes increase.

To accommodate higher sales, it has been important to build long-term production capacity. C2SAT recruited personnel in Söderhamn during the year. It is important that C2SAT has a production facility located close to product development in order to develop products, coordinate strategic quality and development work, and utilise production technology, as well as rationalise product costs.

High-volume production is eventually expected to be situated in Singapore. By establishing production in Southeast Asia, C2SAT can better coordinate logistics and rationalise manufacturing costs. Proximity to C2SAT’s most important markets also reduces lead times as well as shipping and delivery costs.

Antenna assembly and final delivery to customers is now taking place in Singapore with very good results. To date this has been on a limited scale, however, since production requires material kits delivered from Söderhamn. C2SAT recently placed an initial turnkey order for 10 antennas with Fong’s, our production partner in Singapore, for delivery in May. Essentially this means that production has been fully established in Singapore.

Additional staff has been recruited to help develop the Company, and an independent sales company has been established in Singapore, along with a BSO in Shanghai. At the start of the year C2SAT had a staff of 9. After recruitments in every area, there were 19 employees at year-end. The increase in personnel expenses to some extent offsets lower consulting costs. It is important that the organisation reaches a critical mass with the redundancy necessary to reduce vulnerability and risks in operations.

Establishing C2SAT as a credible global supplier with stable operations will require the recruitment of additional specialists. C2SAT is vulnerable in certain technological segments and will have to build an efficient service and support organisation as it delivers more antennas.

During the year C2SAT reached agreements with a number of important reference customers. Thales, one of Europe's leading technology and defence groups, evaluated C2SAT’s products and conducted extensive tests as part of an ongoing project – tests that C2SAT has now passed. Further, Thales increased its order to 9 antennas in the fourth quarter.

Four of them will be delivered in the first quarter and five in the second quarter. The first antenna was previously scheduled for delivery in the fourth quarter of 2009.

In December PT AJN Solucindo in Indonesia ordered and took delivery of two additional C-band antennas, one of which replaces an antenna from another supplier. In total, C2SAT has delivered 8 C-band antennas to Indonesia. Additional deliveries are expected in 2010.

The single most important contract for C2SAT in 2009 was signed in November with Orange Business Services, the global business communications provider owned by France Telecom. Orange has now set its sights on becoming a leader in marine solutions. For C2SAT, the agreement gives us the opportunity to supply antennas as Orange builds its maritime business. The two parties have already launched joint marketing activities.

To date Orange has ordered 8 antennas as part of two separate projects, four of which were delivered in January. The remainder will be delivered by the end of the first quarter. Additional suborders are placed as needed.

During the year an exclusive distribution and production agreement was signed with Xingou IT for the Chinese market. C2SAT delivered 7 Ku-band antennas from its inventory during the year, including upgrade kits for C-band, and maintained personnel on location to help launch production. Xingou IT has exclusive rights to the Chinese market. From previous experience with partnerships in China, C2SAT accepts that it will have limited insight into business relations with end-customers and will not be able to influence the timing of orders from Xingou. Any sales in the Chinese market will be on a licensing basis without investments in working capital, and will therefore be cash flow positive once sales in China ramp up.

Whereas new customers were a positive surprise, C2SAT’s previous distributors and customers did not live up to expectations. Two examples were the framework agreement with SeaNet and a development project with TracID, each of which ran into difficulties for different reasons. Moreover, C2SAT has written off the previous partnership with DRS, which was formed to combine the two companies’ products for a military tender. When the tender was finalised, the agreement had little value and in reality had run its course.

At the start of 2009 C2SAT’s products were practically prototypes. During the year extensive work was devoted to quality assuring products, preparing documentation and manuals, obtaining the necessary certification and rationalising costs. Integration work was done on the most common communication and modem protocols, so that C2SAT’s products are now compatible with key standards. Quality-assurance work continued throughout the fall and demanded considerable resources.

C2SAT is now gradually transitioning to a new phase with considerably higher volumes, where quality assurance, delivery capabilities and cost cuts are the priorities. It is critical, therefore, that the industrialisation of the product and related cost cuts are a success, so that the goal of a sustainable gross margin of at least 30% can be reached by year-end 2010.

Development work – general and customer-specific – will continue in 2010 to increase software functionality and user friendliness, and to obtain formal certification. Work is also under way to broaden C2SAT’s product range.

The expansion requires additional working capital in the form of software and parts inventories to meet the volumes and delivery schedules C2SAT is expected to face in 2010. To date the Company has been able to supply the needed volume with its existing working capital, but this will change as delivery volumes grow.

The goal is to secure financing through a combination of outside capital and owner financing within the framework of the share capital stipulated by the articles of association. Preparations are being made to obtain additional capital. The Company will present a finished proposal to shareholders shortly.

Solna, Sweden, 24 February 2010

Fredrik Nygren, CEO