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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NO. 1-14168

GLOBIX CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

|                                                                              |  |                                    
|----------------------------------------------------------------------------- |  | -----------------------------------
|DELAWARE                                                                      |  | 13-3781263                         
|(STATE OR OTHER JURISDICTION OFINCORPORATION OR ORGANIZATION)                 |  | (I.R.S. EMPLOYERIDENTIFICATION NO.)
|                                                                              |  |                                    
|139 CENTRE STREET, NEW YORK, NEW YORK(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |  | 10013(ZIP CODE)                    

REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 334-8500

Indicate by check mark whether 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. YesxNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

| | Large accelerated filero | Accelerated filerx | Non-accelerated filero | 
| | ------------------------ | ------------------ | ---------------------- | 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesoNox

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities and Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YesxNoo

Number of shares of the Registrants common stock outstanding as of May 10, 2006 was 48,697,465.



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GLOBIX CORPORATION AND SUBSIDIARIES


#### **TABLE OF CONTENTS**

|               |                                                                                                                 | PAGE
|-------------- | --------------------------------------------------------------------------------------------------------------- | ----
|Part
      I   | Financial
      Information                                                                                     |     
|Item
      1   | Consolidated
      Balance Sheets  As of March 31, 2006 (unaudited) and September 30,
      2005               | 1   
|               | Interim Consolidated
      Statements of Operations  For the Three and Six Months Ended                       
|               | March
      31, 2006 (unaudited) and for the Three and Six Months Ended March 31, 2005
      (unaudited)        | 2   
|               | Statements
      of Changes in Stockholders' Equity and Comprehensive                                          
|               | Loss
      for the Six Months Ended March 31, 2006 (unaudited)                                                  | 3   
|               | Interim Consolidated
      Statements of Cash-Flows  For the Six Months Ended March 31, 2006
      (unaudited)
|               | and
      for the Six Months Ended March 31, 2005 (unaudited)                                                   | 4   
|               | Notes to
      the Interim Unaudited Consolidated Financial Statements                                          | 5   
|Item
      2   | Management's
      Discussion and Analysis of Financial Condition and Results of Operations                     | 12  
|Item
      3   | Quantitative
      and Qualitative Disclosures About Market Risk                                                | 17  
|Item
      4   | Controls
      and Procedures                                                                                   | 17  
|               |                                                                                                                
|Part II        | Other Information                                                                                              
|Item
      1.  | Legal Proceedings                                                                                               | 18  
|Item
      1A. | Risk Factors                                                                                                    | 18  
|Item
      2.  | Unregistered
      Sales of Equity Securities and Use of Proceeds                                               | 18  
|Item
      3.  | Defaults
      Upon Senior Securities                                                                           | 18  
|Item
      4.  | Submission
      of Matters to a Vote of Security Holders                                                       | 18  
|Item
      5.  | Other Information                                                                                               | 18  
|Item
      6.  | Exhibits                                                                                                        | 19  
|               |                                                                                                                 |     
|Signatures     |                                                                                                                 | 20  
|Certifications |                                                                                                                
|              







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### GLOBIX CORPORATION AND SUBSIDIARIES

**CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)**



|                                                                       | MARCH 31,
      2006 | SEPTEMBER
      30,
      2005
|---------------------------------------------------------------------- | -------------------- | ------------------------------
|
|ASSETS                                                                 |                      |                               
|Current assets:                                                        |                      |                               
|Cash
      and cash equivalents                                        |                      |                               
|Short-term
      investments                                           |                      |                               
|Marketable
      securities                                            |                      |                               
|Accounts
      receivable, net of allowance for doubtful accounts      |                      |                               
|of
      $1,868 and $1,950, respectively                               |                      |                               
|Prepaid
      expenses and other current assets                        |                      |                               
|Restricted
      cash                                                  |                      |                               
|                                                                       |                      |                               
|Total
      current assets                                             |                      |                               
|Investments,
      restricted                                          |                      |                               
|Property,
      plant and equipment, net                               |                      |                               
|Intangible
      assets, net of accumulated amortization               |                      |                               
|of
      $6,469 and $5,598, respectively                               |                      |                               
|Other assets                                                           |                      |                               
|                                                                       |                      |                               
|Total
      assets                                                     |                      |                               
|                                                                       |                      |                               
|LIABILITIES
      AND STOCKHOLDERS' EQUITY                             |                      |                               
|Current
      liabilities:                                             |                      |                               
|Current portion
      of capital lease obligation and mortgage payable |                      |                               
|Accounts
      payable                                                 |                      |                               
|Accrued liabilities                                                    |                      |                               
|Current portion
      of deferred revenue                              |                      |                               
|                                                                       |                      |                               
|Total
      current liabilities                                        |                      |                               
|Capital lease
      obligations, net of current portion                |                      |                               
|Mortgage
      payable                                                 |                      |                               
|11% Senior
      Notes                                                 |                      |                               
|9% Senior
      Notes                                                  |                      |                               
|Accrued interest
      - 11% Senior Notes                              |                      |                               
|Deferred
      revenue                                                 |                      |                               
|Other long
      term liabilities                                      |                      |                               
|                                                                       |                      |                               
|Total
      liabilities                                                |                      |                               
|                                                                       |                      |                               
|Commitments
      and contingencies                                    |                      |                               
|                                                                       |                      |                               
|CUMULATIVE
      CONVERTIBLE PREFERRED STOCK                           |                      |                               
|                                                                       |                      |                               
|STOCKHOLDERS'
      EQUITY:                                            |                      |                               
|Common stock,
      $.01 par value; 500,000,000 shares authorized;     |                      |                               
|48,697,461
      issued and outstanding, as of                         |                      |                               
|March
      31, 2006 and September 30, 2005                            |                      |                               
|Additional
      paid-in capital                                       |                      |                               
|Accumulated
      other comprehensive income                           |                      |                               
|Accumulated
      deficit                                              |                      |                               
|                                                                       |                      |                               
|Total
      stockholders' equity                                       |                      |                               
|                                                                       |                      |                               
|Total
      liabilities, cumulative convertible preferred              |                      |                               
|stock
      and stockholders' equity                                   |                      |                               
|                                                                       |                      |                               

The accompanying
  notes are an integral part of these consolidated financial statements.





1





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### GLOBIX CORPORATION AND SUBSIDIARIES

**INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
  (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
  (UNAUDITED)**

|                                              | FOR THE THREE MONTHS ENDED | FOR THE SIX MONTHS ENDED
|--------------------------------------------- | -------------------------- | ------------------------
|
|Revenue,
      net                            |                            |                         
|Operating costs and expenses:                 |                            |                         
|Cost
      of revenue (excluding depreciation |                            |                         
|and
      amortization shown below)           |                            |                         
|Selling, general and administrative           |                            |                         
|Depreciation
      and amortization           |                            |                         
|                                              |                            |                         
|Total
      operating costs and expenses      |                            |                         
|                                              |                            |                         
|Loss from
      operations                    |                            |                         
|Interest and financing expense                |                            |                         
|Interest
      income                         |                            |                         
|Other (expense) income, net                   |                            |                         
|Gain
      (loss) on discharge of debt        |                            |                         
|                                              |                            |                         
|Net loss                                      |                            |                         
|Dividends and accretion on preferred stock    |                            |                         
|                                              |                            |                         
|Net loss attributable to common stockholders  |                            |                         
|                                              |                            |                         
|Basic and diluted loss per share              |                            |                         
|                                              |                            |                         
|Weighted average common shares outstanding    |                            |                         
|basic and diluted                            |                            |                         
|                                              |                            |                         

The accompanying
  notes are an integral part of these consolidated financial statements.





2





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### GLOBIX CORPORATION AND SUBSIDIARIES

**STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE (LOSS)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)**

|                                   | COMMON STOCK
|---------------------------------- | ------------
|
|Balance,
      September 30, 2005  |             
|Stock-based
      compensation     |             
|Amortization
      of warrants     |             
|Comprehensive
      Loss:          |             
|Net
      loss                     |             
|Accretion
      on preferred stock |             
|Foreign
      currency translation |             
|adjustments                        |             
|Total Comprehensive
      Loss     |             
|                                   |             
|Balance,
      December 31, 2005   |             
|Stock-based
      compensation     |             
|Amortization
      of warrants     |             
|Comprehensive
      Loss:          |             
|Net
      loss                     |             
|Accretion
      on preferred stock |             
|Foreign
      currency translation |             
|adjustments                        |             
|Total Comprehensive
      Loss     |             
|                                   |             
|Balance,
      March 31, 2006      |             
|                                   |             



The accompanying
  notes are an integral part of these consolidated financial statements.






3



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### GLOBIX CORPORATION AND SUBSIDIARIES

**INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
  (UNAUDITED)**



|                                                                    | FOR THE SIX MONTHS ENDED
|------------------------------------------------------------------- | ------------------------
|
|Cash
      Flows From Operating Activities                          |                         
|Net Loss                                                            |                         
|Operating
      activities:                                         |                         
|Depreciation and amortization                                       |                         
|Provision
      for uncollectible receivables                       |                         
|Loss (gain) on debt discharge                                       |                         
|Stock-based
      compensation                                      |                         
|Expense in connection with issuance of warrants                     |                         
|Loss
      on sale of marketable securities                         |                         
|Amortization of deferred compensation and issuance of               |                         
|common stock in litigation settlement                               |                         
|Loss
      on sale of equipment                                     |                         
|Changes in assets and liabilities (net of acquisition):             |                         
|Increase
      in accounts receivable                               |                         
|Decrease (increase) in prepaid expenses and other current assets    |                         
|Decrease
      (increase) in other assets                           |                         
|Increase in accounts payable                                        |                         
|Increase
      (decrease) in accrued liabilities                    |                         
|Increase in accrued interest                                        |                         
|Other                                                               |                         
|                                                                    |                         
|Net Cash
      Provided by (Used in) Operating Activities           |                         
|                                                                    |                         
|Cash
      Flows From Investing Activities                          |                         
|Proceeds from (investments in) short-term and long-term investments |                         
|Proceeds
      from (used in) restricted cash and investments       |                         
|Proceeds from sale of marketable securities                         |                         
|Proceeds
      from fiber optic exchange                            |                         
|Net cash proceeds from Neon acquisition                             |                         
|Purchase
      of property, plant and equipment                     |                         
|                                                                    |                         
|Net Cash
      Used in Investing Activities                         |                         
|                                                                    |                         
|Cash
      Flows From Financing Activities                          |                         
|Issuance
      of 9% Senior Notes                                   |                         
|Repayment of mortgage payable and capital lease obligation          |                         
|                                                                    |                         
|Net Cash Provided by (Used in) Financing Activities                 |                         
|                                                                    |                         
|Effect of Exchange Rates Changes on Cash and Cash Equivalents       |                         
|                                                                    |                         
|Decrease in Cash and Cash Equivalents                               |                         
|Cash and
      Cash Equivalents, Beginning of Period                |                         
|                                                                    |                         
|Cash and
      Cash Equivalents, End Period                         |                         
|                                                                    |                         
|Supplemental
      disclosure of cash flow information:             |                         
|Cash
      paid for interest                                        |                         
|                                                                    |                         
|Non cash
      financing activities:                                |                         
|Capital
      leases entered into                                   |                         
|                                                                    |                         





The accompanying
  notes are an integral part of these consolidated financial statements.






4



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GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)





NOTE 1GENERAL

Globix Corporation and its subsidiaries (Globix or the Company) is a provider of Internet services to businesses and, through its subsidiary Neon Communications, Inc. (NEON), the Company owns and operates a high bandwidth fiber optic network that supplies transport services to carriers and enterprise customers in the twelve-state Northeast and mid-Atlantic market. The Company currently offers services from facilities in New York City, New York, Westborough, Massachusetts, Fairfield, New Jersey, Santa Clara, California, and London, England. The Companys common stock is traded on the American Stock Exchange under the symbol GEX.

The Company has historically experienced negative cash flow from operations and has incurred net losses. For the six-month period ended March 31, 2006, the Company had a net loss attributable to common stockholders of $10,280 and an accumulated deficit of $128,975. The Companys ability to generate positive cash flows from operations and achieve profitability is dependent upon its ability to grow its revenue while maintaining its current cost structure and network efficiencies. However, there can be no assurance that we will be successful in achieving sufficient profitability, attracting new customers, maintaining our existing revenue levels or reducing our outstanding indebtedness. In addition, in the future, the Company may make acquisitions or other investments, which, in turn, may adversely affect the Companys liquidity. In such cases management will have to take drastic steps to reduce its
operating expenses to meet its liquidity needs. Such steps may include further reduction of our headcount, consolidation, elimination or sale of facilities, termination of low margin customers and negotiating with our creditors to restructure our indebtedness with, but not limited to, our 11% and 9% senior notes.

NOTE 2SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements of the Company have been prepared by the Company according to U.S. generally accepted accounting principles for interim financial information, and the rules and regulations of the Securities and Exchange Commission for interim consolidated financial statements. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all of the adjustments necessary for a fair presentation of the Companys financial position at March 31, 2006 and the six-month period then ended. All such adjustments are of a normal recurring nature. The consolidated financial statements should be read in conjunction with the consolidated financial statements and
notes thereto, contained in the 2005 Form 10-K. The results of operations for the six-month period ended March 31, 2006 are not necessarily indicative of the results for the entire fiscal year ending September 30, 2006.

MANAGEMENT ESTIMATES

The preparation of the Companys financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities.

Significant estimates include estimates of the allowance for doubtful accounts, credit reserve, the useful lives and ultimate realizability of property, equipment, intangible assets, deferred tax valuation allowance and payroll and occupancy cost allocations between cost of revenue and selling, general and administrative expenses. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. Actual results may vary from these estimates under different assumptions or conditions.

STOCK-BASED COMPENSATION

SFAS 123(R) requires that the cost resulting from all share based payment transactions be recognized in the financial statements. SFAS 123(R) establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for generally all share based payment transactions with employees.

On October 1, 2005 (the first day of our 2006 fiscal year), the Company adopted SFAS 123(R). The provisions of SFAS 123(R) became effective the first annual reporting period beginning after June 15, 2005. We adopted SFAS 123(R) using a modified prospective application, as permitted under SFAS 123(R). Accordingly, prior period amounts have not been restated. Under this application, we are required to



5



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GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)



record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.

Prior to the Companys adoption of SFAS No. 123(R), SFAS No. 123 required that the Company provide pro forma information regarding net earnings and net earnings per common share as if compensation cost for the Companys stock based awards had been determined in accordance with the fair value method prescribed therein. The Company had previously adopted the disclosure portion of SFAS No. 148, Accounting for Stock Based CompensationTransition and Disclosure, requiring quarterly SFAS No. 123 pro forma disclosure. The pro forma charge for compensation cost related to stock based awards granted was recognized over the service period. For stock options, the service period represents the period of time between the date of grant and the date each option becomes exercisable without consideration of acceleration provisions (e.g., retirement, change of control, etc.).

The following table illustrates the effect on net earnings per common share as if the fair value method had been applied to all outstanding awards for the three and six months ended March 31, 2005:



|                                                                                                                                            |   |                |   |   |                |  
|------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------- | - | - | -------------- | -
|                                                                                                                                            |   | For the Three  |   |   | For the Six    |  
|                                                                                                                                            |   | Months Ended   |   |   | Months Ended   |  
|                                                                                                                                            |   | March 31, 2005 |   |   | March 31, 2005 |  
|Net loss, as reported attributable to common stockholders                                                                                   | $ | (11,283        | ) | $ | (17,548        | )
|Add: Stock-based employee compensation expense included                                                                                     |   |                |   |   |                |  
|In reported net loss                                                                                                                        |   | 3              |   |   | 26             |  
|                                                                                                                                            |   |                |   |   |                |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |   | (122           | ) |   | (237           | )
|                                                                                                                                            |   |                |   |   |                |  
|Pro forma net loss attributable to common stockholders                                                                                      | $ | (11,402        | ) | $ | (17,759        | )
|                                                                                                                                            |   |                |   |   |                |  
|                                                                                                                                            |   |                |   |   |                |  
|Loss per share attributable to common stockholders                                                                                          |   |                |   |   |                |  
|Basic and diluted earnings per shareas reported                                                                                            | $ | (0.45          | ) | $ | (0.85          | )
|                                                                                                                                            |   |                |   |   |                |  
|Basic and diluted earnings per sharepro forma                                                                                              | $ | (0.46          | ) | $ | (0.86          | )
|                                                                                                                                            |   |                |   |   |                |  

Beginning with our 2006 fiscal year, with the adoption of SFAS 123(R), we included stock based compensation in selling, general and administrative expense for the cost of stock options. Stock based compensation expense for the six months ended March 31, 2006 was $1,932 which includes the expense of $1,608 associated with the hiring of Ted S. Lodge as Chairman of the Companys board of directors and as Executive Chairman of the Company (as previously disclosed in the form 8-K filed on November 3, 2005).  Stock based compensation expense for the quarter ended March 31, 2006 was $276.

Under SFAS No. 123(R) the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

The Company granted options with an exercise price of $2.75 to Mr. Lodge to purchase 1,000,000 shares of its common stock during the three-month period ended December 31, 2005. In addition, during the three-month period ended March 31, 2006 the Company granted approximately 143,000 options to various employees with exercise prices of $2.75.



RECENT ACCOUNTING PRONOUNCEMENTS



In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error CorrectionsA Replacement of APB Opinion
No. 20 and FASB Statement No. 3. SFAS No. 154 replaces APB Opinion No. 20, Accounting Changes and FASB Statement
No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and
reporting of a change in accounting principle. APB No. 20 previously required that most voluntary changes in accounting principle be
recognized by including in net income



6



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GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)





of the period of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to prior periods financial statements for voluntary changes in accounting principle.

SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 will depend on the accounting change, if any, in a future period.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instrumentsan amendment of FASB Statements No. 133 and 140. SFAS No. 155 allows companies to elect to measure at fair value entire financial instruments containing embedded derivatives that would otherwise have to be accounted for separately. It also requires companies to identify interests in securitized financial assets that are freestanding derivatives or contain embedded derivatives that would have to be accounted for separately, clarifies which interest- and principal-only strips are subject to SFAS No. 133, and amends SFAS No. 140 to revise the conditions of a qualifying special purpose entity due to the new requirement to identify whether interests in securitized financial assets are freestanding derivatives or contain embedded derivatives. SFAS No. 155 is effective for all financial instruments
acquired, issued or subject to a remeasurement event after the beginning of a companys first fiscal year that begins after September 15, 2006. The Company does not expect adoption of SFAS No. 155 to have a material effect on its results of operations or financial position.



In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140. SFAS No. 156 requires the recognition of a servicing asset or liability each time a company undertakes an obligation to service a financial asset in certain situations. It requires all separately recognized servicing assets and liabilities to be initially measured at fair value, if practical. SFAS No. 156 is effective as of the beginning of a companys first fiscal year that begins after September 15, 2006. The Company is currently evaluating the implementation of SFAS No. 156 and whether it will have a material impact on our financial position, results of operations or cash flows.



NOTE 3ACQUISITION OF NEON COMMUNICATIONS, INC.



On
  March 7, 2005, Globix completed its acquisition of NEON purchasing all of the
  capital stock of NEON. The purchase price of $112,862 consisted of $5,349 in
  cash, the issuance of 27,573 shares of common stock with a fair value of $83,507
  (based on the average share price during the three day period before and after
  the announcement of the merger), the issuance of 2,972 shares of cumulative
  convertible preferred stock with a fair market value of $12,639, the issuance
  of 3,381 shares of stock options and warrants with a fair value of $7,928 and
  approximately $3,439 of other direct acquisition costs. NEON owns and operates
  a high bandwidth fiber optic network, extending from Portland, ME to Washington,
  DC. Through this network NEON provides metro and intercity communications coverage,
  as well as co-location space, to local and long distance telecommunications
  carriers and a small number of non-carrier customers, including universities,
  colleges and financial institutions, in various markets in the Northeast and
  mid-Atlantic regions, including Boston, New York, Philadelphia, Newark, Baltimore,
  Washington, DC, Portland, Portsmouth, Springfield, Worcester, Albany, White
  Plains, Providence, Hartford, Hackensack, Reston, Virginia and smaller communities
  along our network routes. The final allocation of the purchase price is summarized
  below:









|Cash and cash equivalents acquired                   |  |  | $ | 8,116   |  
|---------------------------------------------------- |  |  | - | ------- | -
|Accounts receivable acquired                         |  |  |   | 1,976   |  
|Prepaid and other assets acquired                    |  |  |   | 1,228   |  
|Restricted cash and investments acquired             |  |  |   | 7,501   |  
|Fair value of property, plant and equipment acquired |  |  |   | 117,292 |  
|Identifiable intangible assets acquired              |  |  |   | 4,500   |  
|Other assets acquired                                |  |  |   | 3,625   |  
|Accounts payable and accrued liabilities assumed     |  |  |   | (11,949 | )
|Deferred revenue assumed                             |  |  |   | (17,363 | )
|Other liabilities assumed                            |  |  |   | (2,064  | )
|                                                     |  | 
|                                                     |  |  | $ | 112,862 |  
|                                                     |  | 









7



---



GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)







The following unaudited pro forma combined results of operations assume that the acquisition occurred on October 1, 2004. This unaudited information should not be relied upon as necessarily being indicative of future results.



|                                                    | FOR THE THREE
      MONTHS ENDED |  | FOR THE SIX
      MONTHS ENDED
|--------------------------------------------------- | -------------------------------- |  | ------------------------------
|
|
|
|Revenue                                             |                                  |  | $                             
|Net loss                                            |                                  |  |                               
|                                                    |                                  |  |                               
|Basic and
      diluted net income per common share |                                  | 
|Pro-forma                                           |                                  |  | $                             
|                                                    |                                  |  |                               
|Weighted
      average common shares                |                                  | 
|outstandingbasic and diluted                       |                                  |  |                               
|                                                    |                                  |  |                               





NOTE 4SEGMENT INFORMATION



Since the acquisition of NEON on March 7, 2005, the Company evaluates its results of operations based on two reportable segments in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Prior to March 7, 2005, the Company evaluated its operations based on one reportable segment.







Operating results and assets information by reportable segment:



|                      | FOR THE THREE
      MONTHS ENDED |  | FOR THE SIX
      MONTHS ENDED
|--------------------- | -------------------------------- |  | ------------------------------
|
|
|
|Revenues:             |                                  |  |                               
|Globix                |                                  |  | $                             
|NEON                  |                                  |  |                               
|Corporate             |                                  |  |                               
|                      |                                  |  |                               
|Consolidated          |                                  |  | $                             
|                      |                                  |  |                               
|Operating
      loss: |                                  | 
|Globix                |                                  |  | $                             
|NEON                  |                                  |  |                               
|Corporate             |                                  |  |                               
|                      |                                  |  |                               
|Consolidated          |                                  |  | $                             
|                      |                                  |  |                               







|                    | MARCH 31,
      2006 |  | MARCH 31,
      2005
|------------------- | -------------------- |  | --------------------
|
|Total
      assets: |                      |  |                     
|Globix              |                      |  | $                   
|NEON                |                      |  |                     
|                    |                      |  |                     
|Consolidated        |                      |  | $                   
|                    |                      |  |                     







|              | MARCH 31,
      2006 |  | MARCH 31,
      2005
|------------- | -------------------- |  | --------------------
|
|Fixed assets: |                      |  |                     
|Globix        |                      |  | $                   
|NEON          |                      |  |                     
|              |                      |  |                     
|Consolidated  |                      |  | $                   
|              |                      |  |                     





8



---



GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)











Operating results and assets information by geographic area:



|                             | FOR THE THREE MONTHS ENDED |  | FOR THE SIX MONTHS ENDED
|---------------------------- | -------------------------- |  | ------------------------
|
|
|
|Revenues:                    |                            |  |                         
|United States                |                            |  | $                       
|Substantially United Kingdom |                            |  |                         
|                             |                            |  |                         
|Consolidated                 |                            |  | $                       
|                             |                            |  |                         
|Operating loss:              |                            | 
|United States                |                            |  | $                       
|Substantially United Kingdom |                            |  |                         
|                             |                            |  |                         
|Consolidated                 |                            |  | $                       
|                             |                            |  |                         





|                             | MARCH 31,
      2006 |  | MARCH 31,
      2005
|---------------------------- | -------------------- |  | --------------------
|
|Total assets:                |                      |  |                     
|United States                |                      |  | $                   
|Substantially United Kingdom |                      |  |                     
|                             |                      |  |                     
|Consolidated                 |                      |  | $                   
|                             |                      |  |                     







|                             | MARCH 31,
      2006 |  | MARCH 31,
      2005
|---------------------------- | -------------------- |  | --------------------
|
|Fixed assets:                |                      |  |                     
|United States                |                      |  | $                   
|Substantially United Kingdom |                      |  |                     
|                             |                      |  |                     
|Consolidated                 |                      |  | $                   
|                             |                      |  |                     



Although the Company operates in two reportable segments, there are 6 major service lines as listed below with Co-location services being offered in both segments. The breakdown of revenues for each service line is as follows:





|                                      | FOR THE THREE MONTHS ENDED |  | FOR THE SIX MONTHS ENDED
|------------------------------------- | -------------------------- |  | ------------------------
|
|
|
|Internet Hosting and Co-Location      |                            |  | $                       
|Managed Services                      |                            |  |                         
|Network Services and Internet Access  |                            |  |                         
|Lit fiber services                    |                            |  |                         
|Dark fiber services                   |                            |  |                         
|Hardware and Software Sales and Other |                            |  |                         
|                                      |                            |  |                         
|Revenue, net                          |                            |  | $                       
|                                      |                            |  |                         







NOTE 5COMPREHENSIVE LOSS



|                                             | FOR THE THREE MONTHS ENDED |  | FOR THE SIX MONTHS ENDED
|-------------------------------------------- | -------------------------- |  | ------------------------
|
|
|
|Net loss attributable to common stockholders |                            |  | $                       
|Other comprehensive income (loss):           |                            | 
|Unrealized gain (loss) on marketable         |                            | 
|securities available for sale                |                            |  |                         
|Foreign currency translation adjustment      |                            |  |                         
|                                             |                            |  |                         
|Comprehensive loss                           |                            |  | $                       
|                                             |                            |  |                         





9



---



GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)





NOTE 6COMMITMENTS AND CONTINGENT LIABILITIES



From time to time, the Company is involved in legal proceedings in the ordinary course of our business operations. Although there can be no assurance as to the outcome or effect of any legal proceedings to which the Company is a party, the Company does not believe, based on currently available information, that the ultimate liabilities, if any, arising from any such legal proceedings would have a material adverse impact on our business, financial condition, results of operations or cash flows.



Globix has retained the investment banking firm of The Bank Street Group LLC to assist it in reviewing strategic and financing alternatives for the Company and its businesses. The Company is committed to pay The Bank Street Group LLC a set fee upon the successful completion of its contracted responsibilities.



On May 2, 2006 the Company entered into agreements for a 30 month equipment lease line with major leasing company for up to $3 million and a second agreement for a 24 month equipment lease for up to $1 million. As of the date of filing the company has not drawn down on either line.



There have been no developments in ongoing legal proceedings nor have any material litigations been commenced or threatened since the prior descriptions in Note 16 to the Consolidated Financial Statements in the 2005 Form 10-K, and the Legal Proceedings section thereto.





Note 7DEBT FINANCING





In order to obtain additional financing to meet the Companys needs for working capital, on December 13, 2005, the Company issued and sold $5 million in principal amount of its 9% senior notes to a group of investors. The notes mature on May 1, 2008. Interest on the notes is payable quarterly in arrears, beginning January 1, 2006. One percent of the proceeds of the notes was used to pay a one time origination fee to the note purchasers at closing. The notes are secured by a first priority security interest in domestic accounts receivable in the amount of 150% of the principal amount of the notes. Covenants and events of  default under the notes are generally no more onerous than those contained in the indenture relating to the the Companys outstanding 11% senior notes, except that the new notes limit the incurrence of additional senior debt that otherwise might be permitted under the 11% senior
notes.The new notes can be prepaid without penalty or premium at any time following 30 days notice.



Purchasers of the notes include: LC Capital Master Fund Ltd., an investment fund managed by an investment advisor with which one member of the Companys Board of Directors, Steven Lampe, is affiliated; Karen Singer, the sister-in-law of another Board member, Steven Singer; and Metronome LPC 1, Inc., an affiliate of Loeb Partners Corp., which (together with its affiliates) is the beneficial owner of approximately 7.9% of our common stock. LC Capital Corp. Ltd. is the beneficial owner of approximately 10.9% of the Companys common stock (including 462,462 shares that may be acquired upon conversion of our convertible preferred stock). Karen Singer is the sole trustee of the Singer Childrens Management Trust, which is the beneficial owner of approximately 8.8% of the Companys common stock (including 699,099 shares that may be acquired on conversion of the preferred stock). The principal
amounts purchased by these holders are $1 million for LC Capital Master Fund Ltd., $1 million for Karen Singer and $1 million for Metronome. Steven Singer disclaims any beneficial ownership interest in the 9% notes. The transaction was approved by all of the disinterested members of the board of directors.



Prior to commencing discussions with the purchasers of the notes, the Company approached and made presentations to a number of unaffiliated financial institutions in its efforts to locate working capital financing. The Company believes that the terms of the 9% notes are significantly better than the terms of any written proposal received by it, based on the financial terms of the loan and associated transactional costs, as well as better prepayment and other operational terms.





NOTE 8DEBT FOR EQUITY EXCHANGE





As a condition to the closing of the acquisition of NEON, Globix exchanged $12.5 million in principal and accrued interest on its 11% senior notes in exchange for 4,545,455 shares of its common stock in private transactions pursuant to separate securities exchange agreements with certain holders of the 11% senior notes. LC Capital Master Fund Ltd., an entity affiliated with Steven Lampe, a member of the Board of Directors of Globix, exchanged $1.25 million in 11% senior notes for 454,545 shares of common stock. This exchange resulted in a loss of $3.2 million in the quarter ended March 31, 2005. Globix has filed a registration statement covering the sale of the common stock issued in the debt for equity exchange. The debt-for-equity exchange agreements provide that the exchanging holders will have the right to purchase an additional 22,728 shares of common stock at $2.75 per share in the event that a
registration statement covering shares is not effective within 120 days following the closing of the merger, and an additional 22,728 shares at $2.75 per share if the registration statement is not effective for more than 90 days during the first twelve months commencing on the 90th day following the closing of the merger. At July 6, 2005, the exchanging holders had the right to purchase 22,728 additional shares in the aggregate as a result of the failure of the registration statement to become effective. The registration statement became effective on September 27, 2005.





NOTE 9PREFERRED STOCK





Globix has authorized 4,500,000 shares of 6% Series A Cumulative Convertible Preferred Stock (preferred stock), of which 2,971,753 shares were issued in the acquisition of NEON. Each share of preferred stock is convertible into one share of common stock at the option of the holder, is entitled to one vote, has a liquidation preference of $3.60 per share plus accrued dividends, and is senior to the common stock of Globix. Dividends are payable semi-annually at a rate of $0.11 per share when and if declared by the Board of Directors. At the option of Globix, dividends are payable in cash or additional shares of preferred stock. At the option of Globix, shares of preferred stock can be redeemed in whole or in part at $3.82 per share, plus accrued dividends, in 2006, $3.71 per share, plus accrued dividends, in 2007 and $3.60 per share, plus accrued dividends, thereafter. In the event of a change of
control, as defined, each holder of preferred stock can require Globix to purchase such holders shares of preferred stock for a price equal to $3.64 plus accrued and unpaid dividends to the purchase date. As of March 31, 2006, a dividend of $0.7 million in the aggregate, payable in either cash or additional shares of preferred stock at $3.60 per share, had accrued on the outstanding shares of preferred stock.





NOTE 10WARRANTS ISSUED





As of May 1, 2005, Globix issued a warrant to Further Lane Asset Management, LLC to purchase 250,000 shares at a purchase price of $4.00 per share in a private transaction exempt from registration under Section 4(2) of the Securities Act of 1933, in exchange for



10



---



GLOBIX CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)



financial advisory services to be provided to Globix by Further Lane. One twelfth of the warrants become exercisable in each month so that all warrants will be vested on May 1, 2006. The warrants expire on May 1, 2008.



NOTE 11FIBER OPTIC EXCHANGE



On December 30, 2005 the NEON subsidiary of Globix entered into a fiber optic exchange agreement with AT&T Corp. Globix provided fiber along its New York City to Washington, DC route in exchange for fiber principally located in northern New Jersey and greater Philadelphia and $1,960 in cash from AT&T. The Company treated this as a reduction of the fair value of the plant, property and equipment acquired in the NEON acquisition. No gain or loss resulted from the exchange.



11



---









**ITEM
  2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS**



**Cautionary
  Statement Regarding Forward-Looking Statements**



This
  Form 10-Q contains forward-looking statements within the meaning of the Private
  Securities Litigation Reform Act of 1995. These forward-looking statements are
  subject to various risks, uncertainties and other factors, some of which are
  beyond our control, which may cause our actual results to differ materially
  from our expectations. Forward-looking statements are generally identified by
  the use of forward-looking words or phrases such as anticipates,
  intends, expects, believes, estimates,
  or words or phrases of similar import. Among the factors that could cause our
  results to differ from those anticipated are our high degree of leverage and
  history of operating losses, our ability to retain existing customers and attract
  new customers, our ability to achieve cost-savings and generate positive cash
  flow, risks associated with potential acquisitions and divestitures and other
  factors affecting our business generally. Such factors are more fully described
  herein and in our Annual Report on Form 10-K for the year ended September 30,
  2005, which should be considered in connection with a review of this report.
  For a general discussion of risks affecting our business, see Risk Factors
  in our Annual Report on Form 10-K for the year ended September 30, 2005.



**OVERVIEW**



We
  are a provider of Internet services to businesses and, through our subsidiary
  NEON Communications, Inc. (NEON), we own and operate a high bandwidth
  fiber optic network that supplies transport services to carriers and enterprise
  customers in the twelve-state Northeast and mid-Atlantic market. We currently
  offer services from facilities in New York City, New York, Westborough, Massachusetts,
  Fairfield, New Jersey, Santa Clara, California and London, England. The Companys
  common stock is traded on the American Stock Exchange under the symbol GEX.



On
  March 7, 2005, we completed our acquisition of all of the capital stock of NEON
  valued at $112.9 million in exchange for common and convertible preferred stock
  of Globix worth approximately $96.2 million, options and warrants of Globix
  common stock worth approximately $7.9 million, direct closing costs of approximately
  $3.4 million and approximately $5.4 million in cash. Simultaneously with the
  closing of the acquisition, we exchanged $12.5 million in principal and interest
  on our 11% senior notes for 4,545,455 shares of common stock.

On
  December 13, 2005, we issued and sold $5 million in principal amount of our
  9% senior secured notes due May 1, 2008. For further information about the terms
  of this financing, see Note 7 of these financial statements.



OVERVIEW:
  OUR MAJOR SERVICE LINES



Although
  we operate in two reportable segments, there are 6 major service lines as follows:



INTERNET
  HOSTING AND CO-LOCATIONWe offer co-location solutions for customers who
  choose to own and maintain their own servers and or optronics, but require the
  physically secure, climate-controlled environment provided by our data centers
  and connectivity to our network. We offer hosting services in a dedicated server
  environment. This service includes providing integrated hardware usage, bandwidth
  and managed services to meet customer-specific needs.



MANAGED
  SERVICESWe provide managed application, system, network and media services
  to our hosting and co-location customers. Such services include a wide variety
  of maintenance, administration and problem resolution services for many popular
  operating systems, Internet network devices, software security solutions, web-based
  applications, as well as streaming media delivered in a streaming or continuous
  fashion over the Internet or over a companys intranet.



NETWORK
  SERVICES AND INTERNET ACCESSWe provide access to our network for our
  hosting and co-location customers located inside of our Internet data centers
  as well as Internet access services which provide businesses with high-speed
  continuous access to the Internet from their own premises. In addition, we provide
  other services, such as domain name registration, local loop provisioning, Internet
  address assignment, router configuration, e-mail configuration and management
  and technical consulting services.



LIT
  FIBER SERVICES (TRANSPORT SERVICES)We provide dedicated, point-to-point
  services provided over fiber optic transmission lines that have electronic or
  optronic equipment installed and maintained by NEON. Specific service offerings
  include: SONET Private Line services at bandwidth levels including DS-3, OC-3,
  OC-12 and OC-48; Wavelength (DWDM) services enabling flexible and scalable high
  capacity transport at 2.5 and 10 Gbps, configured as either protected or unprotected
  wavelengths; and Ethernet services via dedicated, point-to-point connectivity
  offered as Fast Ethernet (FastE) at 50 or 100 Mbps and Gigabit Ethernet (GigE)
  at 600 or 1000 Gbps.



DARK
  FIBER SERVICESWe lease fiber cable in our fiber optic network running
  from Portland, ME to Washington, DC. The fiber cable is leased without electronic
  or optronic equipment installed by NEON.



OTHER
Hardware and software sales and other non-recurring revenue from our Globix
  business segment. Hardware and software sales are typically tied to agreements
  to provide recurring services such as hosting, network services, managed services
  and etc.



Our
  Globix business segment includes all of our Internet services except for co-location
  services that are provided at various locations along our fiber optic network,
  which we include in our NEON business segment. Our NEON business segment includes
  lit and dark fiber services utilizing our fiber optic network, and co-location
  services along this network.



**OVERVIEW:  STRATEGY**



Our
  operational strategy is to seek to grow profitably by selling a more profitable
  mix of business, continuing our investment in revenue supporting infrastructure
  and making targeted acquisitions, where feasible. Our transport business has
  experienced consistent revenue growth and profitability improvement over the
  past year through success based investments to meet the growing needs of our
  customers. To the extent the company has the financial resources to continue
  making these investments it will do so. Our transport business will continue
  to focus on selling into the carrier and large enterprise markets. Within these
  segments our key customer



12



---





targets are wireless
  providers, competitive local exchange carriers (CLECs), inter-exchange carriers,
  financial services providers and universities.



In our hosting
  business we continue to be focused on improving the cost structure, selling
  a more profitable mix of services, and making limited infrastructure expansion
  investments. The target market for the hosting segment is small to medium size
  businesses, and the company seeks to optimize its profitability with each customer
  by offering them a package of services that includes co-location, internet access
  and managed services.



Growth through
  acquisition offers the possibility of revenue growth and the expansion of service
  territory and service offerings to enable us to compete more effectively, while
  providing a larger revenue base to support our existing indebtedness. The ability
  to achieve operating efficiencies by combining administrative or other functions
  is also a consideration in reviewing possible acquisitions. Because of our limited
  access to cash and to capital markets, we may not be able to pursue an acquisition
  strategy and, in fact, may be forced to divest some or all of our businesses.



Although the acquisition
  of NEON and the concurrent debt-for-equity exchange have increased our revenues
  and asset base and reduced the total amount of our indebtedness, we remain highly
  leveraged. Our board of directors has elected to pay annual accrued interest
  of approximately $7.4 million on the 11% senior notes through the issuance of
  additional notes effective on May 1, 2006.



**CRITICAL
  ACCOUNTING POLICIES AND ESTIMATES**



This Managements
  Discussion and Analysis of Financial Condition and Results of Operations is
  based upon our interim consolidated financial statements, which have been prepared
  in accordance with U.S. generally accepted accounting principles. The preparation
  of our financial statements requires us to make estimates that affect the reported
  amounts of assets, liabilities, revenue and expenses and related disclosures
  of contingent assets and liabilities. We base our accounting estimates on historical
  experience and other factors that are believed to be reasonable under the circumstances.
  However, actual results may vary from these estimates under different assumptions
  or conditions. The following is a summary of our critical accounting policies
  and estimates:



**REVENUE
  RECOGNITION**



Revenue consists
  primarily of Internet hosting, co-location, managed services, network services,
  internet access, lit fiber services and dark fiber services. We recognize revenue
  in accordance with the Securities and Exchange Commission's Staff Accounting
  Bulletin (SAB), No. 104 Revenue Recognition which revises and rescinds certain
  sections of SAB No. 101, Revenue Recognition. The changes noted in SAB 104
  did not have a material effect on Globixs consolidated financial statements.



The Globix business
  segment (Internet services) recognizes revenue when delivery has occurred, persuasive
  evidence of an agreement exists, the fee is fixed or determinable and collectability
  is probable. SAB No. 104 expresses the view of the Securities and Exchange Commissions
  staff in applying accounting principles generally accepted in the United States
  of America to certain revenue recognition issues. Under the provisions of SAB
  No. 104, set up and installation revenue are deferred and recognized over the
  estimated length of the customer relationship, which in the case of our Globix
  segment is approximately 36 months. Monthly service revenue under recurring
  agreements related to Internet hosting, co-location, network services, Internet
  access and managed services is recognized over the period that service is provided.
  Revenue derived from project or event type managed service engagements is recognized
  over the life of the engagement. Payments received in advance of providing services
  are deferred until the period that these services are provided.



The NEON business
  segment (primarily fiber optic network services) offers leases of lit fiber
  (fixed amounts of capacity on fiber optic transmission lines that use optronics
  equipment installed by us) and longer term leases of dark fiber (fiber optic
  transmission lines leased without optronics equipment installed by us) at fixed
  cost pricing over multi year terms. Revenues from fiber optic network services
  are recognized ratably over the term of the applicable lease agreements with
  customers, which range from one to 20 years, provided there exists persuasive
  evidence of an arrangement, the fee is fixed or determinable and collectability
  of the related receivables is reasonably assured. Amounts billed in advance
  of the service provided are recorded as deferred revenue. We also lease space
  to customers at our co-location facilities. Revenues from nonrecurring installation
  charges and design, engineering and construction services are recognized ratably
  over the multi-year network services terms to which the nonrecurring charges
  relate provided there exists persuasive evidence of an arrangement, the fee
  is fixed or determinable and collectability of the related receivables is reasonably
  assured.



**COST OF
  REVENUE**



Cost of revenue
  for Internet services consists primarily of telecommunications costs for Internet
  access and managed hosting, payroll and occupancy which we incur in support
  of our network operations, systems and customer services and the cost of hardware
  and software purchased for resale to customers. Payroll costs allocated to cost
  of revenue are based on the primary activity of the department such as maintaining
  the network, customer support and systems operations. Occupancy costs allocated
  to cost of revenue are based primarily on the square footage of our various
  facilities. Cost of revenue excludes depreciation and amortization. Telecommunications
  costs include the cost of providing local loop for connecting dedicated access
  customers to Globixs network, leased line and associated costs related to connecting
  with Globixs peering partners and costs associated with leased lines connecting
  Globixs facilities to its backbone and aggregation points of presence.



Cost of revenue
  for Fiber services consists primarily of right of way fees, dark fiber leases,
  real estate and collocation leases, last mile circuit leases and network operations
  and maintenance costs. Right of way fees are paid primarily to utilities and
  public and private entities for the right to place fiber optic cable on their
  structures and property. Fiber leases are fees paid to other telecommunications
  providers for the use of their dark fiber over which we provide transport services.
  We lease real estate and co-location space to allow placement of optronics equipment
  to power our network. Last mile circuit leases consist of services from other
  carriers and local phone companies to extend transport services beyond our network
  to a customer location. Network operations and maintenance
  consists primarily of labor, contractor services and utility costs.



**PROPERTY,
  PLANT, AND EQUIPMENT**



Property, plant
  and equipment are stated at depreciated historical cost adjusted for impairment
  and include fresh start adjustments. Depreciation is provided using the straight-line
  method for financial reporting purposes and accelerated methods for income tax
  purposes. The estimated useful lives of property are as follows:



|                                                             | **YEARS**
|------------------------------------------------------------ | ---------
|                                                             |          
|Buildings
        and buildings improvements                 | 10       
|Computer
        hardware and software and network equipment | 2        
|Office
        furniture and equipment                       | 3        



Leasehold
  improvements are amortized over the term of the lease or life of the asset,
  whichever is shorter. Maintenance and repairs are charged to expense as incurred.
  The cost of additions and betterments are capitalized. The cost and related
  accumulated depreciation of property retired or sold are removed from the applicable
  accounts and any gain or loss is taken into income.



13



---







Software
  obtained for internal use is stated at depreciated historical cost adjusted
  for impairments and fresh start adjustments and is depreciated using the straight-line
  method over its estimated useful life.



Our
  long-lived assets are reviewed for impairment in accordance with Statement of
  Financial Accounting Standard No. 144 Accounting for the Impairment or
  Disposal of Long-Lived Assets (SFAS No. 144) whenever events
  or changes in circumstances indicate that the carrying amount of an asset may
  not be recoverable. Recoverability of assets to be held and used is measured
  by a comparison of the carrying amount of an asset to the future undiscounted
  cash flows expected to be generated by the assets. If such assets are considered
  to be impaired, the impairment to be recognized is measured by the amount by
  which the carrying amount of the assets exceeds the fair value of the assets.



**INTANGIBLE
  ASSETS**



We
  adopted SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill
  and Other Intangible Assets when we emerged from bankruptcy in April 2002.
  SFAS 141 requires all business combinations to be accounted for using the purchase
  method of accounting and that certain intangible assets acquired in a business
  combination must be recognized as assets separate from goodwill. SFAS No. 142
  addresses the recognition and measurement of goodwill and other intangible assets
  subsequent to their acquisition. SFAS No. 142 also addresses the initial recognition
  and measurement of intangible assets acquired outside of a business combination
  whether acquired individually or with a group of other assets. SFAS No. 142
  provides that intangible assets with indefinite lives and goodwill will not
  be amortized but, will be tested at least annually for impairment. If an impairment
  is indicated then the asset will be written down to its fair value typically
  based upon its future expected discounted cash flows.



| | Our
        intangible assets are as follows:
| | ---------------------------------------------

| |  | Trademarks
        and trade name;
| | - | ----------------------------------

| |  | Network
        build-out/know-how; and
| | - | ---------------------------------------

| |  | Customer
        contracts.
| | - | ---------------------------



We
  amortize intangible assets by the straight-line method over their estimated
  useful lives. Trademarks and trade name are amortized over a period of 7-15
  years, network build-out/know-how is amortized over 8 years and the customer
  contracts are amortized over 2-10 years.



**ESTIMATES**



The
  preparation of financial statements in accordance with U.S. generally accepted
  accounting principles requires us to make estimates and assumptions that affect
  the reported amount of assets, liabilities, revenue and expenses and related
  disclosure of contingent assets and liabilities. Use of estimates and assumptions
  include, but is not limited to, purchase price allocation, allowance for
  doubtful accounts, credit reserve, the useful lives and ultimate reliability
  of property, equipment, intangible assets, deferred tax valuation allowance
  and payroll and occupancy cost allocation between cost of revenue and selling,
  general and administrative expenses. Estimates and assumptions are reviewed
  periodically and the effects of revisions are reflected in the period that they
  are determined to be necessary. Actual results may vary from these estimates
  under different assumptions or conditions.



**ALLOWANCE
  FOR DOUBTFUL ACCOUNTS AND CREDIT RESERVE**



At
  each reporting period we evaluate on a specific basis the economic condition
  of our customers and their ability and intent to pay their debt. If such evaluation
  shows that it is probable that a customer will not settle his full obligation,
  a reserve against accounts receivable in general and administrative expense
  is recorded for the questionable amount. We also maintain a general bad debt
  reserve, which is based on the aging of our customers receivables. In addition,
  during each reporting period we must make estimates of potential future credits,
  which will be issued in respect of current revenues. We analyze historical credits
  and changes in customer demands regarding our current billings when evaluating
  credit reserves. If such analysis shows that it is probable that a credit will
  be issued, we reserve the estimated credit amount against revenues in the current
  period. As of March 31, 2006 and September 30, 2005 the balance of bad debt
  reserve amounted to approximately $1.9 million and $2.0 million, respectively.



**ACCOUNTING
  FOR INCOME TAXES**



As
  part of the process of preparing our consolidated financial statements we are
  required to estimate our income tax expense in each of the jurisdictions in
  which we operate. This process involves us estimating our actual current tax
  exposure together with assessing temporary differences resulting from differing
  treatment of items, such as accruals and reserves, for tax and accounting purposes.
  These differences result in deferred tax assets and liabilities, which are included
  within our consolidated balance sheet. We must then assess the likelihood that
  our deferred tax assets will be recovered from future taxable income and to
  the extent we believe that recovery is not likely, we must establish a valuation
  allowance. Management currently estimates that it is more likely than not that
  these assets will not be realized in the foreseeable future and accordingly
  a 100% valuation allowance is recorded against the deferred tax assets.



**QUARTER
  ENDED MARCH 31, 2006 COMPARED TO THE QUARTER ENDED MARCH 31, 2005**



REVENUE,
  NET.  Revenue for the quarter ended March 31, 2006 increased 60.3%, or approximately
  $12.1 million, to $32.1 million from $20.0 million for the quarter ended March
  31, 2005. Excluding the $12.9 million impact to revenue from the NEON acquisition,
  revenue for the quarter ended March 31, 2006 decreased by 5.1% or approximately
  $0.8 million compared to the quarter ended March 31, 2005.



Revenue
  breakdown for the major service lines are as follows. Revenue from Internet
  Hosting and Co-Location increased by $1.5 million, or 23.7%, to $8.0 million
  in the three months ended March 31, 2006 compared to $6.4 million in the same
  period in fiscal quarter 2005. Revenue from Network Services and Internet Access
  decreased by $0.9 million, or 23.3%, to $3.1 million in the three months ended
  March 31, 2006 compared to $4.0 million in the same period of quarter 2005.
  The total increase of $0.6 million in these two major service lines are mainly
  due to negative churn. Negative churn is defined as contractual revenue increases
  as a percentage of total contractual revenue due to customer upgrades and additions
  of new services, net of customer cancellations and downgrades. Revenue from
  Hardware and Software Sales and Other decreased by $0.7 million to $0.2 million
  in the three month period ended March 31, 2006 compared to $0.9 million in the
  same period in 2005, which resulted primarily from a decrease in Hardware sales.
  Revenue from Managed Services was $5.2 million in the three month period ended
  March 31, 2006 compared to $5.5 million in the same period in 2005. Foreign
  exchange rates between the U.S. dollar and the British Pound did not have a
  material effect on the aforementioned analysis. Revenue from Lit and Dark Fiber
  Services, services newly offered in 2005 as a result of the acquisition of NEON,
  were $14.5 million and $1.2 million, respectively, compared to $2.8 million
  and $0.3 million for the three month period ended March 31, 2005. This increase
  is the result of a full quarter of operations in these service lines.



COST
  OF REVENUE.  Cost of revenue for the quarter ended March 31, 2006 increased
  to $17.2 million from $11.4 million in the quarter ended March 31, 2005. Excluding
  the $6.1 million impact of NEON, cost of revenues decreased by $0.3 million
  primarily attributable to



14



---





a
  decrease in hardware sales in the quarter ended March 31, 2006 over March 31,
  2005. Foreign exchange rates between the U.S. dollar and the British Pound did
  not have a material effect on the aforementioned analysis.



SELLING,
  GENERAL AND ADMINISTRATIVE.  Selling, general and administrative expenses
  were $11.2 million for the quarter ended March 31, 2006 as compared to $9.2
  million for the quarter ended March 31, 2005, an increase of $2.0 million or
  21.7%. Excluding the $2.5 million impact of NEON, selling, general and administrative
  expenses decreased by $0.5 million. The decrease is primarily the result of
  a decrease in salaries and benefits of $1.0 million for the quarter ended March
  31, 2006. Partially offsetting this was an increase in professional fees of
  $0.5 million. Included in selling, general and administrative expenses for the
  quarter ended March 31, 2006 was the recognition of $0.3 million of non-cash
  expenses related to the recognition of stock-based compensation required under
  SFAS 123 (revised). Foreign exchange rates between the U.S. dollar and the British
  Pound did not have a material effect on the aforementioned analysis.

DEPRECIATION
  AND AMORTIZATION.  Depreciation and amortization expenses for the quarter
  ended March 31, 2006 were $5.8 million compared to $4.5 million for the quarter
  ended March 31, 2005, or an increase of $1.3 million. The increase is primarily
  the result of the acquisition of NEON, which accounted for $1.9 million of the
  total increase, partially offset by a $0.6 million decrease in the depreciation
  related to the continued utilization of assets that have become fully depreciated.

INTEREST
  AND FINANCING EXPENSES:  Interest and financing expense for the quarter ended
  March 31, 2006 was $2.3 million, compared to $2.4 million for the quarter ended
  March 31, 2005.



INTEREST
  INCOME:  Interest income for the quarter ended March 31, 2006 of $0.1 million
  was flat compared to $0.1 million for the quarter ended March 31, 2005.



OTHER
  INCOME/EXPENSE, NET:  Other income for the quarter ended March 31, 2006 was $0.3
  million compared to other expense of $0.8 million for the quarter ended March
  31, 2005. The income in the quarter ended March 31, 2006 is primarily the result
  of the rental income from tenants at our 139 Centre Street building during the
  quarter.



NET
  LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS:  As a result of the factors described
  above, we reported net loss attributable to common stockholders of $4.1 million,
  or $0.08 basic and diluted loss attributable to common stockholders per share
  for the three month period ended March 31, 2006, as compared to a net loss attributable
  to common stockholders of $11.3 million, or $0.45 basic and diluted loss attributable
  to common stockholders per share for the same period in 2005.



**SIX
  MONTHS ENDED MARCH 31, 2006 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2005**



REVENUE,
  NET:  Revenue for the six-month period ended March 31, 2006 increased 74.5% or
  approximately $27.2 million to $63.8 million from $36.6 million for the six-month
  period ended March 31, 2005. Excluding the $28.3 million impact of the NEON
  acquisition, revenue for the six-month period ended March 31, 2006 decreased
  by 3.1% or approximately $1.1 million compared to the six-month period ended
  March 31, 2005.



Revenue
  breakdown for the major service lines are as follows. Revenue from Internet
  Hosting and Co-Location increased by $3.7 million, or 29.6%, to $16.2 million
  in the six months ended March 31, 2006 compared to $12.5 million in the same
  period of 2005. Revenue from Network Services and Internet Access decreased
  by $1.9 million, or 24.4%, to $6.1 million in the six months ended March 31,
  2006 compared to $8.0 million in the same period of 2005. The total increase
  of $1.8 million in these two major service lines is mainly due to negative churn.
  Negative churn is defined as contractual revenue increases as a percentage of
  total contractual revenue due to customer upgrades and additions of new services,
  net of cancellations and downgrades. Revenue from Hardware and Software Sales
  and Other decreased by $1.4 million to $0.5 million for the six months ended
  March 31, 2006 compared to $1.9 million in the same period in 2005, which resulted
  primarily from a decrease in Hardware sales. Revenue from Managed Services was
  $10.4 million in the six month period ended March 31, 2006 compared to $11.0
  million in the same period in 2005. Foreign exchange rates between the U.S.
  dollar and the British Pound did not have a material effect on the aforementioned
  analysis. Revenue from Lit and Dark Fiber Services, services newly offered in
  2005 as a result of the acquisition of NEON, were $28.2 million and $2.3 million,
  respectively, for the six months ended March 31, 2006 compared to $2.8 million
  and $0.3 million, respectively, for the same period in fiscal 2005. This increase
  is the result of a full period of operations in these service lines.



COST
  OF REVENUE:  Cost of revenue for the six-months ended March 31, 2006 increased
  $13.5 million, or 63.8%, to $34.6 million from $21.1 million in the six-months
  ended March 31, 2005. Excluding the $14.1 million impact of the NEON acquisition,
  cost of revenue for the six-months ended March 31, 2006 decreased $0.6 million,
  or 3.3%, to $18.7 million from $19.3 million for the six-months ended March
  31, 2005. This was primarily attributable to our decrease in hardware sales
  and network services and internet access provided period over period. Foreign
  exchange rates between the U.S. dollar and the British Pound did not have a
  material effect on the aforementioned analysis.



SELLING,
  GENERAL AND ADMINISTRATIVE:  Selling, general and administrative expenses increased
  $7.0 million, or 42.3%, to $23.5 million for the six-months ended March 31,
  2006 from $16.5 million for the six-months ended March 31, 2005. Excluding the
  $6.1 million impact of NEON, selling, general and administrative expenses increased
  by $0.9 million. The increase is primarily the result of an increase in professional
  fees. Included in selling, general and administrative expenses for the six-months
  ended March 31, 2006 was the recognition of $1.9 million of non-cash expenses
  related to the recognition of stock-based compensation required under SFAS 123
  (revised). Foreign exchange rates between the U.S. dollar and the British Pound
  did not have a material effect on the aforementioned analysis.



DEPRECIATION
  AND AMORTIZATION.  Depreciation and amortization expenses for the six-months
  ended March 31, 2006 were $11.6 million compared to $8.0 million for the quarter
  ended March 31, 2005, or an increase of $3.6 million. The increase is primarily
  the result of the acquisition of NEON, which accounted for $4.7 million of the
  total increase, partially offset by a $0.6 million decrease in the depreciation
  related to the continued utilization of assets that have become fully depreciated.



INTEREST
  AND FINANCING EXPENSES:  Interest and financing expense for the six months ended
  March 31, 2006 of $4.8 million was flat compared to $4.8 million for the six-months
  ended March 31, 2005.



INTEREST
  INCOME:  Interest income for the quarter ended March 31, 2006 of $0.2 million
  was flat compared to $0.2 million for the quarter ended March 31, 2005.



OTHER
  INCOME/EXPENSE, NET:  Other income for the six-months ended March 31, 2006 was
  $0.5 million compared to other expense of $0.7 million for the six-months ended
  March 31, 2005. The income in the six-months ended March 31, 2006 is primarily
  the result of the rental income from tenants at our 139 Centre Street building
  during the period.





15



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NET
  LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS:  As a result of the factors
  described above, we reported net loss attributable to common stockholders of
  $10.3 million, or $0.21 basic and diluted loss attributable to common stockholders
  per share for the six-month period ended March 31, 2006, as compared to a net
  loss attributable to common stockholders of $17.5 million, or $0.85 basic and
  diluted loss attributable to common stockholders per share for the same period
  in 2005.



**LIQUIDITY
  AND CAPITAL RESOURCES**



As
  of March 31, 2006, our negative working capital was $8,662 as compared to $8,378
  as of September 30, 2005. The decrease in working capital as of March 31, 2006
  was primarily due to the decrease in our cash and cash equivalents. Historically
  our cost structure in the Globix business segment exceeded our revenue base
  mainly due to high labor costs resulting from higher than necessary head count
  and a significant level of overhead due to numerous locations and overlapping
  within our network. This has led us to experience negative cash flows from operations
  and incur net losses. Our management believes that steps taken as part of our
  restructuring efforts to reduce facilities and personnel, combined with our
  ongoing efforts to derive efficiencies from our network have reduced our cash
  outflows, net of capital expenditures, to a level that approximates our cash
  inflows. Beginning in the second half of fiscal 2005, however, we experienced
  a demand for additional capital investment in the NEON business segment as well
  as unexpected operating costs and capital requirements in the Globix business
  segment. Our ability to generate positive cash flows from operations and achieve
  profitability is dependent upon our ability to grow our revenue while controlling
  costs and becoming more efficient. We believe we will ultimately be able to
  meet our revenue and profitability targets by:



| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | maintaining
        a monthly positive change in contract rate (negative churn),                                                                                         
| |   |                                                                                                                                                                          
| |  | pursuing
        long term contracts that take advantage of market demand for fiber optic
        network services,                                                      
| |   |                                                                                                                                                                          
| |  | focusing
        on the most profitable business lines within our existing capital and
        infrastructure constraints, including the provision of services solutions,
| |   |                                                                                                                                                                          
| |  | increasing
        prices, where possible and within current industry trends, for services
        such as power and space and                                           
| |   |                                                                                                                                                                          
| |  | increasing
        the efficiency of our operations                                                                                                                      



There
  can be no assurance that we will be successful in achieving sufficient profitability,
  attracting new customers, maintaining our existing churn levels or reducing
  our outstanding indebtedness. In addition, in the future, we may make acquisitions
  or investments, which, in turn, may adversely affect our liquidity. In such
  cases we will have to take drastic steps to reduce our operating expenses to
  meet our revenue base and liquidity needs. Such steps may include sales of assets,
  further reduction of our headcount, consolidation or elimination of facilities,
  termination of low margin customers, reduction of capital expenditures and negotiating
  with our creditors to restructure our indebtedness, mainly but not limited to
  our 11% and 9% senior notes.



As
  a result of the acquisition of NEON, we assumed commitments under standby letters
  of credit, issued primarily to secure certain leases, totaling approximately
  $7.1 million at March 31, 2006. We have no financial guarantees or other arrangements
  securing the obligations of any third parties or related parties other than
  our subsidiaries. Because of our limited availability to cash and our limited
  access to capital markets, we may not be able to pursue an acquisition strategy
  and, in fact, may be forced to divest some or all of our businesses.



The
  indenture governing the 11% senior notes and the terms of the 9% senior notes
  contain a number of covenants that impose significant operating and financial
  restrictions on us and our subsidiaries. These restrictions significantly limit,
  and in some cases prohibit, among other things, the ability of our company and
  certain of our subsidiaries to incur additional indebtedness, create liens on
  assets, enter into business combinations or engage in certain activities with
  our subsidiaries.



**SIX-MONTH
  PERIOD ENDED MARCH 31, 2006**



As
  of March 31, 2006, we had cash and cash equivalents totaling approximately $8.7
  million compared to approximately $9.1 million on March 31, 2005. This decrease
  was mainly attributable to operating activities, investing activities and financing
  activities as described below.



**OPERATING
  ACTIVITIES:**



During
  the six month period ended March 31, 2006, net cash provided by operating activities
  was approximately $7.4 million in comparison to $1.7 million, which was used
  in operating activities during the same period in 2005. The improvement in our
  cash outflow is due mainly to the decrease in our loss from operations excluding
  depreciation and amortization and loss on impairment of assets. As part of our
  normal course of doing business we experienced changes in our accounts receivable,
  accounts payable, accrued liabilities and accrued interest, which in the aggregate
  did not have a material effect on our first six months of fiscal 2006 operating
  cash-flow.



**INVESTING
  ACTIVITIES:**



Net
  cash used in investing activities during the six month period ended March 31,
  2006 was $12.1 million. Approximately $13.9 million was used for capital expenditures,
  offset by proceeds received from AT&T from the fiber optic exchange of $2.0
  million.



**FINANCING
  ACTIVITIES:**



Net
  cash provided by financing activities during the six month period ended March
  31, 2006 was $4.4 million. This was the result of proceeds of $5.0 million from
  the issuance of our 9% senior notes and was partially offset by $0.6 million
  used for paying our scheduled mortgage and capital lease payments.







16



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**ITEM
  3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**



At
  March 31, 2006, investments consisted of primarily a limited partnership that
  invests in fixed income securities and fixed rate investment grade and government
  securities denominated in U.S. dollars. At March 31, 2006, the majority of our
  investments were due to mature within twelve months and the carrying value of
  these investments approximated fair value.



At
  March 31, 2006, $12.5 million of our cash and investments were restricted in
  accordance with the terms of certain collateral obligations.



We
  are also subject to market risk associated with foreign currency exchange rates.
  To date, we have not utilized financial instruments to minimize our exposure
  to foreign currency fluctuations. We will continue to analyze risk management
  strategies to minimize foreign currency exchange risk in the future. The Company
  believes that an immediate increase or decrease of 5% of the U.S. Dollar
  in comparison to the British Pound would not have a material impact on its operating
  results or cash flows.



We
  believe that we have limited exposure to financial market risks, including changes
  in interest rates. The fair value of our investment portfolio or related income
  would not be significantly impacted by changes in interest rates due mainly
  to the short-term nature of the majority of our investment portfolio. An increase
  or decrease in interest rates would not significantly increase or decrease interest
  expense on debt obligations, due to the fixed nature of the substantial majority
  of our debt obligations.



**ITEM
  4:  CONTROLS AND PROCEDURES**



EVALUATION
  OF DISCLOSURE CONTROLS AND PROCEDURES.  We maintain disclosure controls
  and procedures that are designed to ensure that information required to be disclosed
  in our report under the Securities Exchange Act of 1934, as amended, is recorded,
  processed, summarized and reported within the time periods specified in the
  Securities and Exchange Commissions rules and forms, and that such information
  is accumulated and communicated to our management, including our Chief Executive
  Officer and Principal Financial Officer, as appropriate, to allow timely decisions
  regarding required disclosures. Any controls and procedures, no matter how well
  designed and operated, can provide only reasonable assurance of achieving the
  desired control objectives. Our management, with the participation of our Chief
  Executive Officer and Principal Financial Officer, has evaluated the effectiveness
  of the design and operation of our disclosure controls and procedures as of
  March 31, 2006. Based upon that evaluation and subject to the foregoing, our
  Chief Executive Officer and Principal Financial Officer concluded that the design
  and operation of our disclosure controls and procedures provided reasonable
  assurance that the disclosure controls and procedures are effective to accomplish
  their objectives.



INTERNAL
  CONTROLS. There were no changes in the Companys internal control over
  financial reporting that occurred during the Companys most recent fiscal
  quarter that materially affected, or are reasonably likely to materially affect,
  the Companys internal control over financial reporting.



17



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**PART
  IIOTHER INFORMATION**



**ITEM
  1.  LEGAL PROCEEDINGS**



From
  time to time, the Company is involved in legal proceedings in the ordinary course
  of our business operations. Although there can be no assurance as to the outcome
  or effect of any legal proceedings to which the Company is a party, the Company
  does not believe, based on currently available information, that the ultimate
  liabilities, if any, arising from any such legal proceedings would have a material
  adverse impact on our business, financial condition, results of operations or
  cash flows.



There
  have been no developments in ongoing legal proceedings nor have any material
  litigations been commenced or threatened since the prior descriptions in Note
  16 to the Consolidated Financial Statements in the 2005 Form 10-K, and the Legal
  Proceedings section thereto.



ITEM
  1A.  RISK FACTORS



Except
  as otherwise disclosed herein, there have been no material changes since the
  2005 Form 10-K.



We may not be able to use some of our net operating losses for U.S. federal income tax purposes, which may increase our tax liability.



We are currently undertaking a review of the net operating loss carry forwards, or NOLs, of each of Globix and NEON and changes in ownership of each of Globix and NEON since the effective date of Globixs and NEONs respective plans of reorganization (including as a result of Globixs acquisition of NEON) to determine whether some or all of such NOLs are further limited under Section 382 of the Internal Revenue Code and related regulations, or Section 382, beyond the limitations resulting from the changes in ownership of each of Globix and NEON in connection with each of Globixs and NEONs respective plans of reorganization.  Previously, changes in the ownership of Globixs securities as a result of our plan of reorganization have caused there to be an annual limitation on the use of Globix NOLs that arose prior to the effective date of Globixs plan of reorganization.
Similarly, prior to our acquisition of NEON, changes in the ownership of NEON securities as a result of NEONs plan of reorganization have caused there to be an annual limitation on the use of NEON NOLs that arose prior to the effective date of NEONs plan of reorganization.



Based on the information available to us and reviewed by our management as of May 10, 2006, we believe that Globix experienced another ownership change as a result of Globixs acquisition of NEON, thus further limiting the use of our NOLs that arose prior to the acquisition.  In addition, based on the information available to us and reviewed by our management as of May 10, 2006, we currently believe that NEON did not experience a cumulative change of more than 50% in ownership for purposes of Section 382 on the date of Globixs acquisition of NEON.  However, events subsequent to the acquisition have resulted in additional changes to the ownership of NEON for purposes of Section 382.  As a result, if NEON experiences sufficient additional changes in ownership, the amount of NEONs NOLs available to offset any future taxable income or gains will be further and substantially restricted. Events
that could trigger such additional changes in ownership include sales by historic NEON shareholders of Globix securities, acquisitions of Globix securities that cause new or existing Globix shareholders to be treated as owning 5% or more (by value) of our stock for purposes of Section 382 or that cause existing 5% owners of our stock to increase their ownership interest, or other trading activity in (or issuances of) Globix securities.  Additional limitations on our ability to use net operating losses as a result of any further ownership changes could significantly increase our future U.S. federal income tax liability.



**ITEM 2.  UNREGISTERED
  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**



Not
  Applicable.



**ITEM
  3.  DEFAULTS UPON SENIOR SECURITIES**



Not
  Applicable.



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



During
  the second quarter of Globixs fiscal year ending September 30, 2006, the
  2006 Annual Meeting of the Stockholders was held. At the meeting, nine directors
  of the Company were elected and our shareholders ratified the appointment of
  Amper, Politziner & Mattia, P.C. as our independent accountants for the
  fiscal year ending September 30, 2006.

1.
  The stockholders elected the following directors to serve until the next annual
  meeting of stockholders or until their successors are duly elected and qualified:



|                           | **Number
        of Shares Voted For** | **Number
        of Shares Withheld** | **Number
        of Shares Abstained**
|-------------------------- | -------------------------------------- | ------------------------------------- | --------------------------------------
|Peter
        K. Stevenson | 35,917,491                             | 857,408                               |                                       
|Ted
        S. Lodge       | 35,917,791                             | 857,108                               |                                       
|José
        A. Cecin      | 34,673,602                             | 2,101,297                             |                                       
|Stephen
        E. Courter | 35,917,141                             | 857,408                               |                                       
|John
        Forsgren      | 35,917,491                             | 857,408                               |                                       
|Peter
        L. Herzig    | 21,741,614                             | 15,033,285                            |                                       
|Steven
        Lampe       | 34,869,143                             | 1,905,756                             |                                       
|Steven
        G. Singer   | 34,869,143                             | 1,905,756                             |                                       
|Raymond
        L. Steele  | 35,917,491                             | 857,408                               |                                       



2.  The stockholders ratified the amendments to the Companys 2003 Stock Option
  Plan:



|**Number
        of Shares Voted For** | **Number
        of Shares Voted Against** | **Number
        of Shares Abstained**
|-------------------------------------- | ------------------------------------------ | --------------------------------------
|26,412,293                             | 6,943,751                                  | 2,590                                 

3.  The
  stockholders ratified that the option grants during fiscal year 2005 and the
  first quarter of fiscal year 2006 that exceeded the number of shares available
  under the 2003 Stock Option Plan are approved:



|**Number
        of Shares Voted For** | **Number
        of Shares Voted Against** | **Number
        of Shares Abstained**
|-------------------------------------- | ------------------------------------------ | --------------------------------------
|26,391,809                             | 6,944,751                                  | 21,984                                

4.  The stockholders ratified the appointment of Amper, Politziner & Mattia,
  P.C.:



|**Number
        of Shares Voted For** | **Number
        of Shares Voted Against** | **Number
        of Shares Abstained**
|-------------------------------------- | ------------------------------------------ | --------------------------------------
|36,772,718                             | 2,151                                      | 30                                    



ITEM
  5.  OTHER INFORMATION

Not
  Applicable.



18



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ITEM
  6.  EXHIBITS

(a)  Exhibits

|        |  |                                                                                                                |  | 
|------- |  | -------------------------------------------------------------------------------------------------------------- |  | 
|Exhibit |  | Description                                                                                                   
|        |  |                                                                                                               
|31.1    |  | Certification of Chief Executive
        Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002    
|        |  |                                                                                                               
|31.2    |  | Certification of Principal Financial
        Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                               
|32.1    |  | Certification of Chief Executive
        Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002    
|        |  |                                                                                                               
|32.2    |  | Certification of Principal Financial
        Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





**SIGNATURES**



Pursuant
  to the requirements 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.

|                   |                             |                             
|------------------ | --------------------------- | ----------------------------
|                   | GLOBIX CORPORATION         
|                   |                            
|                   | By:  /S/ Peter K. Stevenson
|                   |                             |                             
|                   |                             | Peter K. Stevenson,         
|                   |                             | Chief Executive Officer     
|                   |                            
|Date: May 10, 2006 |                            
|                   | By:  /S/ Henry J. Conicelli
|                   |                             |                             
|                   |                             | Henry J. Conicelli          
|                   |                             | Principal Accounting Officer
|                   |                            
|Date: May 10, 2006 |                            
|                   | By:  /S/ Eric J. Sandman   
|                   |                             |                             
|                   |                             | Eric J. Sandman             
|                   |                             | Principal Financial Officer 
|                   |                            
|Date: May 10, 2006 |                            





19



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