**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-Q**





**|X|
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**





**FOR
      THE QUARTERLY PERIOD ENDED JUNE 30, 2005**





OR





**|_|
      TRANSITION 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 OF
              INCORPORATION
                OR ORGANIZATION)
            (I.R.S.
                EMPLOYER
              IDENTIFICATION
                NO.)139
                CENTRE STREET, NEW YORK, NEW YORK
            10013(ADDRESS
                OF PRINCIPAL EXECUTIVE
                OFFICES)
            (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. Yes X No |_|





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Securities Exchange Act). Yes |_| No X





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 Exchange
      Act
      of 1934 subsequent to the distribution of securities under a plan confirmed
      by a
      court. Yes X No |_|





Number
      of
      shares of the Registrant's common stock outstanding as of August 11, 2005 was
      48,678,461.







GLOBIX
      CORPORATION AND SUBSIDIARIES


PAGE




Part
                  I
              Financial
                  InformationItem
                  1
              Consolidated
                  Balance Sheets -- As of June 30, 2005 and September 30, 2004
              1Interim
                  Consolidated Statements of Operations (unaudited) -- For the Three
                  and Six
                  Months EndedJune
                  30, 2005 and
                for
                  the Three and Nine Months Ended June 30, 2004
              2Interim
                  Statements of Changes in Stockholders' Equity (Deficit) and Comprehensive
                  Income (Loss)(unaudited)
                  for the
                Nine
                  Months Ended June 30, 2005
              3Interim
                  Consolidated Statements of Cash-Flows (unaudited) -- For the Nine
                  Months
                  Ended June 30, 2005and
                  for the
                Nine
                  Months Ended June 30, 2004
              4Notes
                  to the Interim Unaudited Consolidated Financial Statements
              6Item
                  2
              Management's
                  Discussion and Analysis of Financial Condition and Results of Operations
              15Item
                  3
              Quantitative
                  and Qualitative Disclosures About Market Risk
              24Item
                  4
              Controls
                  and Procedures
              24Part
                  II
              Other
                  InformationItem
                  1.
              Legal
                  Proceedings
              25Item
                  2.
              Changes
                  in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
              25Item
                  3.
              Defaults
                  Upon Senior Securities
              25Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              25Item
                  5.
              Other
                  Information
              26Item
                  6.
              Exhibits
              26Signatures
              26Certifications





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





JUNE
                  30,
                2005
              
              SEPTEMBER
                  30,
                2004(Unaudited)ASSETSCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              4,427
              
              $
              12,075Short-term
                  investments
              
              
              4,589
              
              
              7,625Marketable
                  securities
              
              
              1
              
              
              458Accounts
                  receivable, net of allowance for doubtful accounts of $1,834 and
                  $2,248,
                  respectively
              
              
              11,983
              
              
              6,157Prepaid
                  expenses and other current assets
              
              
              5,433
              
              
              5,101Restricted
                  cash
              
              
              2,165
              
              
              2,413Total
                  current assets
              
              
              28,598
              
              
              33,829Investments
              
              
              985
              
              
              1,988Investments,
                  restricted
              
              
              9,858
              
              
              2,324Property,
                  plant and equipment, net
              
              
              207,695
              
              
              90,822Intangible
                  assets, net of accumulated amortization of $5,119 and $3,699, respectively
              
              
              10,673
              
              
              7,656Other
                  assets
              
              
              4,305
              
              
              1,923Total
                  assets
              
              $
              262,114
              
              $
              138,542LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities:Current
                  portion of capital lease obligation and mortgage payable
              
              $
              628
              
              $
              555Accounts
                  payable
              
              
              10,687
              
              
              6,599Accrued
                  liabilities
              
              
              17,706
              
              
              8,357Deferred
                  revenue
              
              
              5,430
              
              
              2,852Total
                  current liabilities
              
              
              34,451
              
              
              18,363Capital
                  lease obligations, net of current portion
              
              
              173
              
              
              121Mortgage
                  payable
              
              
              19,353
              
              
              19,60611%
                  Senior Notes
              
              
              67,455
              
              
              72,202Accrued
                  interest - 11% Senior Notes
              
              
              1,240
              
              
              3,349Other
                  long term liabilities
              
              
              24,795
              
              
              8,026Total
                  liabilities
              
              
              147,467
              
              
              121,667Commitments
                  and contingencies (Note 7)CUMULATIVE
                  CONVERTIBLE PREFERRED STOCK (NOTE 9)
              
              
              12,841
              
              
              --STOCKHOLDERS'
                  EQUITY:Common
                  stock, $.01 par value; 500,000,000 shares authorized; 48,678,461
                  and
                  16,460,000
                issued
                  and outstanding, as of June 30, 2005 and September 30, 2004
              
              
              487
              
              
              165Additional
                  paid-in capital
              
              
              207,214
              
              
              100,012Deferred
                  compensation
              
              
              --
              
              
              (8
              )Accumulated
                  other comprehensive income
              
              
              5,718
              
              
              4,498Accumulated
                  deficit
              
              
              (111,613
              )
              
              (87,792
              )Total
                  stockholders' equity
              
              
              101,806
              
              
              16,875Total
                  liabilities, cumulative convertible preferred stock and stockholders'
                  equity
              
              $
              262,114
              
              $
              138,542




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




1


**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 NINE MONTHS ENDEDJUNE
                  30,
                2005
              
              JUNE
                  30,
                2004
                  (*)
              
              JUNE
                  30,
                2005
              
              JUNE
                  30,
                2004
                  (*)Revenue,
                  net
              
              $
              29,215
              
              $
              15,729
              
              $
              65,776
              
              $
              45,143Operating
                  costs and expenses:Cost
                  of revenue (excluding depreciation and amortization
                shown
                  below)
              
              
              16,751
              
              
              8,554
              
              
              37,869
              
              
              25,681Selling,
                  general and administrative
              
              
              10,490
              
              
              7,251
              
              
              26,996
              
              
              21,658Loss
                  on impairment of assets
              
              
              --
              
              
              --
              
              
              --
              
              
              17,972Depreciation
                  and amortization
              
              
              5,985
              
              
              3,519
              
              
              14,000
              
              
              10,363Total
                  operating costs and expenses
              
              
              33,226
              
              
              19,324
              
              
              78,865
              
              
              75,674Loss
                  from operations
              
              
              (4,011
              )
              
              (3,595
              )
              
              (13,089
              )
              
              (30,531
              )Interest
                  and financing expense
              
              
              (2,282
              )
              
              (2,466
              )
              
              (7,126
              )
              
              (8,975
              )Interest
                  income
              
              
              111
              
              
              100
              
              
              339
              
              
              415Other
                  (expense) income, net
              
              
              111
              
              
              412
              
              
              (561
              )
              
              1,607Gain
                  (loss) on discharge of debt
              
              
              --
              
              
              --
              
              
              (3,182
              )
              
              1,747Loss
                  before income taxes
              
              
              (6,071
              )
              
              (5,549
              )
              
              (23,619
              )
              
              (35,737
              )Income
                  tax expense
              
              
              --
              
              
              21
              
              
              --
              
              
              56Net
                  loss
              
              
              (6,071
              )
              
              (5,570
              )
              
              (23,619
              )
              
              (35,793
              )Dividends
                  on cumulative convertible preferred stock
              
              
              202
              
              
              --
              
              
              202
              
              
              --Net
                  loss attributable to common stock
              
              $
              (6,273
              )
              $
              (5,570
              )
              $
              (23,821
              )
              $
              (35,793
              )Basic
                  and diluted loss per share
              
              $
              (0.13
              )
              $
              (0.34
              )
              $
              (0.79
              )
              $
              (2.17
              )Weighted
                  average common shares outstanding --
                basic
                  and diluted
              
              
              48,678,296
              
              
              16,460,000
              
              
              30,030,850
              
              
              16,460,000




(*)
        Restated - see Note 2 "Reclassifications and Restatement".
   The
        accompanying notes are an integral part of these consolidated financial
        statements.




2


**GLOBIX
      CORPORATION AND SUBSIDIARIES**


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




COMMON
                  STOCK
              
              ADDITIONAL
                PAID-IN
              
              DEFERRED
                COMPEN-
              
              ACCUMU-LATED
                OTHER
                COMPRE-HENSIVE
                INCOME
              
              ACCUMU-LATED
              
              TOTAL
                STOCK-HOLDERS'
                EQUITYSHARES
              
              AMOUNT
              
              CAPITAL
              
              SATION
              
              (LOSS)
              
              DEFICIT
              
              (DEFICIT)Balance,
                  September 30, 2004
              
              
              16,460,000
              
              $
              165
              
              $
              100,012
              
              $
              (8
              )
              $
              4,498
              
              $
              (87,792
              )
              $
              16,875Deferred
                  stock-based compensation
              
              
              --
              
              
              --
              
              
              25
              
              
              (25
              )
              
              --
              
              
              --
              
              
              --Amortization
                  of deferred compensation
              
              
              --
              
              
              --
              
              
              --
              
              
              23
              
              
              --
              
              
              --
              
              
              23Comprehensive
                  Income (loss):Net
                  loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (6,265
              )
              
              --Unrealized
                  holding gains
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              242
              
              
              --
              
              
              --Foreign
                  currency translation adjustments
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              1,879
              
              
              --
              
              
              --Total
                  Comprehensive Income
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (4,144
              )Balance,
                  December 31, 2004
              
              
              16,460,000
              
              
              165
              
              
              100,037
              
              
              (10
              )
              
              6,619
              
              
              (94,057
              )
              
              12,754Amortization
                  of deferred compensation
              
              
              --
              
              
              --
              
              
              --
              
              
              3
              
              
              --
              
              
              --
              
              
              3Neon
                  acquisition - common stock issued
              
              
              27,573,006
              
              
              276
              
              
              83,231
              
              
              --
              
              
              --
              
              
              --
              
              
              83,507Neon
                  acquisition - stock options and
                warrants
                  issued
              
              
              --
              
              
              --
              
              
              7,928
              
              
              --
              
              
              --
              
              
              --
              
              
              7,928Debt
                  for equity swap (note 8)
              
              
              4,545,455
              
              
              45
              
              
              15,636
              
              
              --
              
              
              --
              
              
              --
              
              
              15,681Binford
                  litigation settlement
              
              
              97,000
              
              
              1
              
              
              360
              
              
              --
              
              
              --
              
              
              --
              
              
              361Comprehensive
                  Income (loss):Net
                  loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (11,283
              )
              
              --Unrealized
                  holding losses
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              804
              
              
              --
              
              
              --Foreign
                  currency translation adjustments
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (687
              )
              
              --
              
              
              --Total
                  Comprehensive Loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (11,166
              )Balance,
                  March 31, 2005
              
              
              48,675,461
              
              
              487
              
              
              207,192
              
              
              (7
              )
              
              6,736
              
              
              (105,340
              )
              
              109,068Deferred
                  stock-based compensation
              
              
              --
              
              
              --
              
              
              (42
              )
              
              --
              
              
              --
              
              
              --
              
              
              (42
              )Amortization
                  of deferred compensation
              
              
              --
              
              
              --
              
              
              --
              
              
              7
              
              
              --
              
              
              --
              
              
              7Binford
                  litigation settlement
              
              
              3,000
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --Issuance
                  of stock warrants
              
              
              --
              
              
              --
              
              
              64
              
              
              --
              
              
              --
              
              
              --
              
              
              64Comprehensive
                  Income (loss):Net
                  loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (6,273
              )
              
              --Unrealized
                  holding losses
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (2
              )
              
              --
              
              
              --Foreign
                  currency translation adjustments
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (1,016
              )
              
              --
              
              
              --Total
                  Comprehensive Loss
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (7,291
              )Balance,
                  June 30, 2005
              
              
              48,678,461
              
              $
              487
              
              $
              207,214
              
              $
              --
              
              $
              5,718
              
              $
              (111,613
              )
              $
              101,806


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


3


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




FOR
                  THE NINE MONTHS ENDEDJUNE
                  30, 2005
              
              
              JUNE
                  30, 2004Cash
                  Flows From Operating ActivitiesNet
                  Loss
              
              $
              (23,821
              )
              $
              (35,793
              )Operating
                  activities:Depreciation
                  and amortization
              
              
              14,000
              
              
              10,363Provision
                  for uncollectible receivables
              
              
              260
              
              
              591Loss
                  (gain) on debt discharge
              
              
              3,182
              
              
              (1,747
              )Unrealized
                  gain on investments
              
              
              --
              
              
              (477
              )Loss
                  on impairment of assets
              
              
              --
              
              
              17,972Loss
                  on sale of marketable securities
              
              
              913
              
              
              249Issuance
                  of stock warrants
              
              
              65
              
              
              --Amortization
                    of deferred compensation and issuance ofcommon stock in litigation
                    settlement
              
              
              350
              
              
              --Changes
                  in assets and liabilities (net of acquisition):Decrease
                  (increase) in accounts receivable
              
              
              (4,205
              )
              
              346Decrease
                  (increase) in prepaid expenses and other current assets
              
              
              924
              
              
              (942
              )Decrease
                  (increase) in other assets
              
              
              (369
              )
              
              (326
              )Increase
                  (decrease) in accounts payable
              
              
              652
              
              
              (972
              )Increase
                  (decrease) in accrued liabilities
              
              
              (830
              )
              
              (1,330
              )Increase
                  in accrued interest
              
              
              5,644
              
              
              7,365Increase
                  in accrued dividend preferred stock
              
              
              202
              
              
              --Other
              
              
              (291
              )
              
              (283
              )Net
                  Cash Used in Operating Activities
              
              
              (3,324
              )
              
              (4,984
              )Cash
                  Flows From Investing ActivitiesProceeds
                  from (investments in) short-term and long-term investments
              
              
              4,243
              
              
              (2,641
              )Proceeds
                  from restricted cash and investments
              
              
              223
              
              
              2,710Proceeds
                  from sale of marketable securities
              
              
              594
              
              
              1,000Proceeds
                  from sale of property plant and equipment
              
              
              --
              
              
              48,694Net
                  cash proceeds from Neon acquisition (note 3)
              
              
              2,726
              
              
              --Payment
                  for business acquired from Aptegrity (Appendix A)
              
              
              --
              
              
              (2,287
              )Purchase
                  of property, plant and equipment
              
              
              (11,752
              )
              
              (3,179
              )Net
                  Cash (Used in) Provided by Investing Activities
              
              
              (3,966
              )
              
              44,297Cash
                  Flows From Financing ActivitiesRepurchase
                  of 11% Senior Notes
              
              
              --
              
              
              (49,573
              )Proceeds
                  from exercising of warrants
              
              
              --
              
              
              25Capital
                  contribution (distribution) in minority-owned subsidiary, net
              
              
              --
              
              
              (202
              )Capital
                  lease termination payment
              
              
              --
              
              
              (439
              )Repayment
                  of long-term note payable
              
              
              --
              
              
              (2,666
              )Repayment
                  of mortgage payable and capital lease obligation
              
              
              (559
              )
              
              (424
              )Net
                  Cash Used in Financing Activities
              
              
              (559
              )
              
              (53,279
              )Effect
                  of Exchange Rates Changes on Cash and Cash Equivalents
              
              
              201
              
              
              417Decrease
                  in Cash and Cash Equivalents
              
              
              (7,648
              )
              
              (13,549
              )Cash
                  and Cash Equivalents, Beginning of Period
              
              
              12,075
              
              
              24,503Cash
                  and Cash Equivalents, End Period
              
              $
              4,427
              
              $
              10,954Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest
              
              $
              1,471
              
              $
              5,261Issuance
                  of 11% Senior Notes as payable interest in kind
              
              $
              6,685
              
              $
              7,155Non
                  cash financing activities:Capital
                  leases entered into
              
              $
              327
              
              
              --Put-option
              
              $
              --
              
              $
              2,968




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




4





**GLOBIX
      CORPORATION AND SUBSIDIARIES**


**INTERIM
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


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


(UNAUDITED)





**APPENDIX
      A - PAYMENT FOR BUSINESS ACQUIRED FROM APTEGRITY:**




FOR
                    THE NINE MONTHS ENDEDJUNE
                    30, 2005
                
                
                JUNE
                    30, 2004Current
                    assets
                
                $
                --
                
                $
                (696
                )Property,
                    plant and equipment
                
                
                --
                
                
                (738
                )Current
                    liabilities
                
                
                --
                
                
                347Other
                    intangible assets
                
                
                --
                
                
                (1,200
                )$
                --
                
                $
                (2,287
                )


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




5


**GLOBIX
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


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





**NOTE
      1 - GENERAL**





We
      are a
      provider of application, media and infrastructure management services. We
      provide flexible business solutions which combine skills, support, technology
      and experience to enable our customers to use the Internet as a way to provide
      business benefits and sustain a competitive advantage. By managing complex
      applications, media and infrastructure environments, we help our clients protect
      Internet revenue streams, improve user satisfaction and reduce technology
      operating costs and risks. Our clients include operating divisions of Fortune
      100 companies as well as mid-sized enterprises in a number of vertical markets
      including media and publishing, technology, financial services, health care
      and
      government.





Through
      our wholly owned subsidiary, NEON Communications, Inc. ("Neon"), we own and
      operate a high bandwidth fiber optic network, extending from Portland, ME to
      Washington, DC. Through this network we provide metro and intercity
      telecommunications coverage, as well as co-location space to local, long
      distance and wireless communications 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. We acquired
      Neon on March 7, 2005 as further described in Note 3.





We,
      and
      our subsidiaries, have operations in New York, NY, London, UK, Boston, MA,
      Santa
      Clara, CA, Fairfield, NJ, and Atlanta, GA. Our 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 nine-month period ended June 30, 2005 the Company
      had a net loss of $23,821 and an accumulated deficit at June 30, 2005 of
      $111,613. Our ability to generate positive cash flows from operations and
      achieve profitability is dependant upon our ability to grow our revenue while
      maintaining our current cost structure and network efficiencies. Our management
      believes that steps taken as part of our restructuring efforts to reduce
      facilities and personnel, combined with ongoing efforts to derive efficiencies
      from our network, have reduced our expenses to a level that meets our current
      revenue rate. The Company believes that its cash and investments are sufficient
      to meet its fiscal 2005 anticipated day-to-day operating expenses, commitments,
      working capital and capital expenditures. In addition, the Company's Board
      of
      Directors elected on April 25, 2005 to pay interest of $6,685 on its 11% senior
      notes with the issuance of additional senior notes in lieu of cash. 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 repurchase its indebtedness, 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 then revenue
      base and liquidity needs. Such steps may include further reduction of our
      headcount, consolidation or elimination of facilities, termination of low margin
      customers, reduced capital expenditures and negotiating with our creditors
      to
      restructure our indebtedness, mainly, but not limited to our 11% senior notes.






6


**GLOBIX
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


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





**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES**





**BASIS
      OF PRESENTATION**





The
      consolidated financial statements of Globix Corporation and its subsidiaries
      ("Globix" or 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 U.S. generally accepted accounting principles
      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 June 30, 2005 and the three month and nine month periods 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 our 2004 Form 10-K. The
      results of operations for the three-month and nine-month periods ended June
      30,
      2005 are not necessarily indicative of the results for the entire fiscal year
      ending September 30, 2005.





**MANAGEMENT
      ESTIMATES**





The
      preparation of the Company's financial statements in accordance with U.S.
      generally accepted accounting principles 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, plant,
      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.





**STOCK-BASED
      COMPENSATION**





As
      permitted by SFAS No. 123, "Accounting for Stock-Based Compensation", which
      establishes a fair value based method of accounting for stock-based compensation
      plans, the Company has elected to follow Accounting Principles Board Opinion
      No.
      25 "Accounting for Stock Issued to Employees" for recognizing stock-based
      compensation expense for financial statement purposes. For companies that choose
      to continue applying the intrinsic value method, SFAS No. 123 mandates certain
      pro forma disclosures as if the fair value method had been utilized. The Company
      accounts for stock based compensation to consultants in accordance with EITF
      96-18, "Accounting for Equity Instruments That Are Issued to Other Than
      Employees for Acquiring, or in Conjunction with Selling, Goods or Services"
      and
      SFAS No. 123.





In
      December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
      Compensation - Transition and Disclosure - an amendment of FASB Statement No.
      123", which provides optional transition guidance for those companies electing
      to voluntarily adopt the accounting provisions of SFAS No. 123. In addition,
      SFAS No. 148 mandates certain new disclosures that are incremental to those
      required by SFAS No. 123. The Company continued to account for stock-based
      compensation in accordance with APB No. 25.





The
      following table illustrates the effect on loss attributable to common
      stockholders and loss per share if the Company had applied the fair value
      recognition provisions of SFAS No. 123 to stock-based employee compensation.






7


**GLOBIX
        CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 (ALL
        AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)




FOR
                    THE THREE MONTHS ENDED
                
                FOR
                    THE NINE MONTHS ENDEDJUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,2005
                
                2004
                
                2005
                
                2004
 Net
                      loss attributable to commons stock as reported
                  
                  $
                  (6,273
                  )
                  $
                  (5,570
                  )
                  $
                  (23,821
                  )
                  $
                  (35,793
                  )Add:
                      Stock-based employee compensation expense
                    included
                      in reported net loss
                  
                  
                  (35
                  )
                  
                  (13
                  )
                  
                  (9
                  )
                  
                  --Deduct:
                      Amortization of stock-based employee compensation
                    expense
                      determined under fair value based method
                  
                  
                  107
                  
                  
                  139
                  
                  
                  344
                  
                  
                  374Pro-forma
                      net loss attributed to common stockholders
                  
                  $
                  (6,345
                  )
                  $
                  (5,696
                  )
                  $
                  (24,156
                  )
                  $
                  (36,167
                  )Basic
                      and diluted - as reported
                  
                  $
                  (0.13
                  )
                  $
                  (0.34
                  )
                  $
                  (0.79
                  )
                  $
                  (2.17
                  )Basic
                      and diluted - Pro-forma
                  
                  $
                  (0.13
                  )
                  $
                  (0.35
                  )
                  $
                  (0.81
                  )
                  $
                  (2.20
                  )
   Under
              SFAS No. 123 the fair value of each option grant is estimated on the
              date
              of grant using the Black-Scholes option-pricing model with the following
              weighted-average assumptions:
 FOR
                          THE THREE MONTHS ENDED
                      
                      FOR
                          THE NINE MONTHS ENDEDJUNE
                          30,
                      
                      JUNE
                          30,
                      
                      JUNE
                          30,
                      
                      JUNE
                          30,2005
                      
                      2004
                      
                      2005
                      
                      2004
 Expected
                      life (in years)
                  
                  
                  --
                  
                  
                  --
                  
                  
                  3.0
                  
                  
                  5.0Risk-free
                      interest rate
                  
                  
                  --
                  
                  
                  --
                  
                  
                  4.3
                  %
                  
                  3.2
                  %Volatility
                  
                  
                  --
                  
                  
                  --
                  
                  
                  93
                  %
                  
                  120
                  %Dividend
                      yield
                  
                  
                  --
                  
                  
                  --
                  
                  
                  0.0
                  %
                  
                  0.0
                  %








**RECENT
      ACCOUNTING PRONOUNCEMENTS**


On
      December 16, 2004, the Financial Accounting Standards Board issued No. SFAS
      123
      (revised 2004), "Share-Based Payment", which is a revision of SFAS 123. SFAS
      123(R) supersedes APB 25, Accounting for Stock Issued to Employees, and amends
      SFAS 95, Statement of Cash Flows. Generally, the approach in SFAS 123(R) is
      similar to the approach described in SFAS 123. However, SFAS 123(R) requires
      all
      share-based payments to employees, including grants of employee stock options,
      to be recognized in the income statement based on their fair values. This
      revised standard will be effective for our reporting period beginning October
      1,
      2005.





As
      permitted by SFAS 123, the Company currently accounts for share-based payments
      to employees using APB 25 intrinsic value method and, as such, generally
      recognizes no compensation cost for employee stock options. Accordingly, the
      adoption of SFAS 123(R)'s fair value method will have an impact on our result
      of
      operations, although it will have no impact on our overall financial position.
      The impact of the modified prospective adoption of SFAS 123(R) cannot be
      predicted at this time because it will depend on levels of share-based payments
      granted in the future. However, had we adopted SFAS 123(R) in prior periods,
      the
      impact of that standard would have approximated the impact of SFAS 123 as
      described in the disclosure of pro forma net income and earnings per share
      as
      shown in the table above.





8


**GLOBIX
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


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





**RECLASSIFICATIONS
      AND RESTATEMENT**





Certain
      prior period balances have been reclassified to conform to current period
      presentation.





The
      Company restated its previous presentation of cost of revenue and selling,
      general and administrative costs for fiscal year 2004. The effect of the
      restatement on the Company's consolidated statement of operations is as follows:




Three
                  Months Ended June 30, 2004
              
              Nine
                  Months Ended June 30, 2004Restated
              
              Previously
                  Reported
              
              Restated
              
              Previously
                  ReportedCost
                  of Revenue
              
              $
              8,554
              
              $
              4,935
              
              $
              25,681
              
              $
              14,785Selling,
                  general and administrative
              
              
              7,251
              
              
              10,870
              
              
              21,658
              
              
              32,554Total
                  operating costs and expenses
              
              
              19,324
              
              
              19,324
              
              
              75,674
              
              
              75,674Loss
                  from operations
              
              
              (3,595
              )
              
              (3,595
              )
              
              (30,531
              )
              
              (30,531
              )Net
                  loss
              
              
              (5,570
              )
              
              (5,570
              )
              
              (35,793
              )
              
              (35,793
              )Basic
                  and diluted loss per share
              
              
              (0.34
              )
              
              (0.34
              )
              
              (2.17
              )
              
              (2.17
              )







**NOTE
      3 - ACQUISITION OF NEON COMMUNICATIONS, INC.**





On
      March
      7, 2005, Globix completed its acquisition of Neon by 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
      options and warrants to acquire 3,381 shares 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 estimate
      allocation of the purchase price is summarized below:




Cash
                  and cash equivalents acquired
              
              $
              8,116Accounts
                  receivable assumed
              
              
              1,976Prepaid
                  and other assets assumed
              
              
              1,558Restricted
                  cash and investments (assumed)
              
              
              7,501Fair
                  value of property, plant and equipment assumed
              
              
              117,146Identifiable
                  intangible assets assumed
              
              
              4,500Other
                  assets (assumed)
              
              
              3,625Accounts
                  payable and accrued liabilities assumed
              
              
              (12,133
              )Deferred
                  revenue assumed
              
              
              (17,363
              )Other
                  liabilities assumed
              
              (2,064
              )$
              112,862







9


**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, 2003. This unaudited information should
      not
      be relied upon as necessarily being indicative of future results.




FOR
                    THE THREE MONTHS ENDED
                
                FOR
                    THE NINE MONTHS ENDED(ACTUAL)JUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,2005
                
                2004
                
                2005
                
                2004
 Revenue
                  
                  $
                  29,215
                  
                  $
                  27,734
                  
                  
                  87,120
                  
                  $
                  79,456Net
                      loss before extraordinary items
                  
                  
                  (6,071
                  )
                  
                  (6,347
                  )
                  
                  (24,418
                  )
                  
                  (38,818
                  )Basic
                      and diluted net income per common share
                    Pro-forma
                  
                  $
                  (0.13
                  )
                  $
                  (0.13
                  )
                  $
                  (0.50
                  )
                  $
                  (0.80
                  )Weighted
                      average common shares outstanding - basic and diluted
                  
                  
                  48,678,296
                  
                  
                  48,578,461
                  
                  
                  48,639,631
                  
                  
                  48,578,461
  The
                following unusual and non-recurring items were included in the pro
                forma
                results:
 FOR
                          THE THREE MONTHS ENDED
                      
                      FOR
                          THE NINE MONTHS ENDEDJUNE
                          30,
                      
                      JUNE
                          30,
                      
                      JUNE
                          30,
                      
                      JUNE
                          30,2005
                      
                      2004
                      
                      2005
                      
                      2004
 Loss
                      on impairment of fixed assets (Globix)
                  
                  $
                  --
                  
                  $
                  --
                  
                  $
                  --
                  
                  $
                  17,972Gain
                      (loss) on debt discharge (Globix)
                  
                  
                  --
                  
                  
                  --
                  
                  
                  (3,182
                  )
                  
                  1,747







**NOTE
      4 - RELATED PARTIES**





Effective
      May 15, 2005, Globix entered into an Agreement with Communication Technology
      Advisors LLC ("CTA"), pursuant to which CTA has agreed to provide certain
      advisory services to Globix, including assistance with the integration of the
      Neon acquisition, financing and acquisitions, in exchange for a monthly fee
      of
      $120. In the event that Globix consummates an acquisition, Globix has agreed
      to
      consider whether CTA is entitled to an additional success fee. Wayne Barr,
      Jr.,
      a principal of CTA, joined the Board of Directors of Globix on March 7, 2005.
      CTA previously provided advisory services to Globix and Neon in exchange for
      a
      monthly fee of $65 and $35, respectively.





Neon
      Optica, Inc., a wholly owned subsidiary of Neon, is a party to two agreements
      for the Provision of Fiber Optic Facilities and Services (Phases I and II),
      pursuant to which certain subsidiaries of Northeast Utilities have agreed to
      grant to Neon the right to use transmission structures, other facilities and
      fiber filaments in the their fiber optic cable network in exchange for annual
      payments and other fees. Payment under these agreements and a fee reimbursement
      agreement are expected to amount to approximately $2,500 per year. In calendar
      years 2003 and 2004, Neon made certain payments under these agreements by
      issuing shares of its common stock to Mode 1 Communications, Inc. ("Mode 1"),
      a
      wholly owned subsidiary of Northeast Utilities. Mode 1 held approximately 13.2%
      of the common stock of Neon prior to the merger and as a result of the merger
      became the holder of approximately 5.6% of the Globix common stock. In
      connection with the merger, Globix agreed to guarantee the obligations of Neon
      Optica, Inc. under these agreements. John H. Forsgren, who was a director of
      Neon prior to the merger and became a director of Globix in connection with
      the
      merger, was the Vice Chairman and Chief Financial Officer of Northeast Utilities
      until his retirement as of December 31, 2004.





10


**GLOBIX
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


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





**NOTE
      5 - SEGMENT INFORMATION**





Historically
      the Company has evaluated its results of operations based on one operating
      segment in accordance with SFAS No. 131, "Disclosures about Segments of an
      Enterprise and Related Information". As a result of the acquisition of Neon
      on
      March 7, 2005 the Company now has two operating segments to evaluate.





Operating
      results and assets information by segment:


FOR
                    THE THREE MONTHS ENDED
                
                FOR
                    THE NINE MONTHS ENDEDJUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,2005
                
                2004
                
                2005
                
                2004Revenues:Globix
                
                $
                15,973
                
                $
                15,729
                
                $
                49,311
                
                $
                45,143Neon
                
                
                13,242
                
                
                --
                
                
                16,465
                
                
                --Consolidated
                
                $
                29,215
                
                $
                15,729
                
                $
                65,776
                
                $
                45,143Operating
                    loss:Globix
                
                $
                (4,080
                )
                $
                (3,595
                )
                $
                (12,677
                )
                $
                (30,531
                )Neon
                
                
                69
                
                
                --
                
                
                (412
                )
                
                --Consolidated
                
                $
                (4,011
                )
                $
                (3,595
                )
                $
                (13,089
                )
                $
                (30,531
                )
   JUNE
                    30,
                
                SEPTEMBER
                    30,2005
                
                2004Total
                    assets:Globix
                
                $
                119,969
                
                
                138,542Neon
                
                
                142,145
                
                
                --Consolidated
                
                $
                262,114
                
                $
                138,542Fixed
                    assets:Globix
                
                $
                87,550
                
                
                90,822Neon
                
                
                120,145
                
                
                --Consolidated
                
                $
                207,695
                
                $
                90,822







11


**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 NINE MONTHS ENDEDJUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,
                
                JUNE
                    30,2005
                
                2004
                
                2005
                
                2004Revenues:United
                    States
                
                $
                22,206
                
                $
                9,221
                
                $
                43,714
                
                $
                26,334Europe
                
                
                7,009
                
                
                6,508
                
                
                22,062
                
                
                18,809Consolidated
                
                $
                29,215
                
                $
                15,729
                
                $
                65,776
                
                $
                45,143Operating
                    loss:United
                    States
                
                $
                (4,586
                )
                $
                (4,807
                )
                $
                (15,376
                )
                $
                (33,446
                )Europe
                
                
                575
                
                
                1,212
                
                
                2,287
                
                
                2,915Consolidated
                
                $
                (4,011
                )
                $
                (3,595
                )
                $
                (13,089
                )
                $
                (30,531
                )
   JUNE
                      30,
                  
                  SEPTEMBER
                      30,2005
                  
                  2004Total
                      assets:United
                      States
                  
                  $
                  226,788
                  
                  $
                  98,388Europe
                  
                  
                  35,326
                  
                  
                  40,154Consolidated
                  
                  $
                  262,114
                  
                  $
                  138,542JUNE
                      30,
                  
                  SEPTEMBER
                      30,2005
                  
                  2004Fixed
                      assets:United
                      States
                  
                  $
                  182,542
                  
                  $
                  64,978Europe
                  
                  
                  25,153
                  
                  
                  25,844Consolidated
                  
                  $
                  207,695
                  
                  $
                  90,822
  Although
              the Company operates in two operating 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 NINE MONTHS ENDEDJUNE
                        30,
                    
                    
                    JUNE
                        30,
                    
                    
                    JUNE
                        30,
                    
                    
                    JUNE
                        30,2005
                    
                    
                    2004
                    
                    
                    2005
                    
                    
                    2004Internet
                        Hosting and Co-Location
                    
                    $
                    7,072
                    
                    $
                    6,106
                    
                    
                    19,579
                    
                    $
                    17,854Managed
                        Services
                    
                    
                    5,239
                    
                    
                    4,917
                    
                    
                    16,211
                    
                    
                    13,721Network
                        Services and Internet Access
                    
                    
                    3,809
                    
                    
                    4,465
                    
                    
                    11,823
                    
                    
                    13,197Lit
                        fiber services
                    
                    
                    11,439
                    
                    
                    --
                    
                    
                    14,216
                    
                    
                    --Dark
                        fiber services
                    
                    
                    1,382
                    
                    
                    --
                    
                    
                    1,726
                    
                    
                    --Hardware
                        and Software Sales, DSL and Other
                    
                    
                    274
                    
                    
                    241
                    
                    
                    2,221
                    
                    
                    371Revenue,
                        net
                    
                    $
                    29,215
                    
                    $
                    15,729
                    
                    $
                    65,776
                    
                    $
                    45,143


12


**GLOBIX
        CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 (ALL
        AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)





NOTE
      6 - COMPREHENSIVE LOSS




FOR
                  THE THREE MONTHS ENDED
              
              FOR
                  THE NINE MONTHS ENDEDJUNE
                  30,
              
              
              JUNE
                  30,
              
              
              JUNE
                  30,
              
              
              JUNE
                  30,2005
              
              
              2004
              
              
              2005
              
              
              2004Net
                  loss
              
              $
              (6,273
              )
              $
              (5,570
              )
              $
              (23,821
              )
              $
              (35,793
              )Other
                  comprehensive income (loss):Unrealized
                  gain (loss) on marketable securities available for sale
              
              
              (2
              )
              
              (122
              )
              
              1,045
              
              
              140Foreign
                  currency translation adjustment
              
              
              (1,016
              )
              
              (303
              )
              
              175
              
              
              2,131Comprehensive
                  loss
              
              $
              (7,291
              )
              $
              (5,995
              )
              $
              (22,601
              )
              $
              (33,522
              )


**NOTE
      7 - 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.





On
      November 12, 2003, we were served with a complaint filed in the United States
      Court for Southern District of New York, entitled Alfred G. Binford v. Globix
      Corporation, alleging breach of contract claims related to the failure to make
      payments under an employment letter, as amended, seeking damages in the amount
      of $2,113. On March 4, 2005, we entered into a settlement agreement with Mr.
      Binford pursuant to which we paid him $750 in cash, $100 of which was reimbursed
      by our insurance carrier, and agreed to issue him 100,000 shares of common
      stock
      resulting in approximately $800 of expense in the quarter ended March 31, 2005.





On
      August
      12, 2004, the United States District Court for the Southern District of New
      York
      approved the settlement of a class action lawsuit entitled In re Globix Corp
      Securities Litigation, No. 02-CV-00082. This lawsuit named as defendants Globix
      and our former officers Marc Bell, Peter Herzig (who remains a director of
      Globix) and Brian Reach, and asserted claims under sections 10(b) and 20(a)
      of
      the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder on
      behalf of all persons or entities who purchased our securities between November
      16, 2000 and December 27, 2001. The lawsuit alleged that the defendants had
      failed to disclose the true state of the Company's financial condition during
      this period. Under the settlement, the Company paid $3,500,000 (all of which
      was
      covered by insurance) to settle all claims against it. A motion for
      reconsideration of the fee award filed by those plaintiffs' law firms whose
      fees
      were not included in the settlement was rejected by the court in February 2005.





On
      November 9, 2004, NEON Transcom, Inc. ("Transcom"), a wholly owned subsidiary
      of
      NEON, filed a suit against the Washington Metropolitan Area Transit Authority
      ("WMATA") in the United States District Court for the District of Columbia
      seeking a declaratory judgment that the annual fees provided for under a license
      agreement violate the Telecommunications Act of 1996 and further seeking an
      injunction preventing WMATA from requiring payment of the fees and holding
      Transcom in default under its License Agreement, dated October 5, 1999. On
      February 11, 2005, the court granted a motion filed by WMATA to dismiss
      Transcom's claim. However, Transcom and WMATA have reached a settlement to
      this
      dispute resulting in an Amendment to the license agreement reducing the number
      of fibers under license from 432 to 332 and the consequently reducing annual
      fees by approximately $100,000.




13


**GLOBIX
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


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





**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. As of 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.








**NOTE
      9 - PREFERRED STOCK**





Globix
      has designated 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 June 15, 2005, a dividend of $176 thousand 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 entered in to an agreement with Further Lane Asset Management
      LLC for Further Lane Asset Management LLC to act as a financial advisor to
      Globix for a monthly fee of $10 thousand. In addition the company 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
      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.







14




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





**Cautionary
      Statement Regarding Forward-Looking Statements**





Certain
      statements in this Form 10-Q, under the captions "Management's Discussion and
      Analysis of Financial Condition and Results of Operations," "Quantitative and
      Qualitative Disclosures about Market Risk," and "Legal Proceedings," constitute
      forward-looking statements within the meaning of the Private Securities
      Litigation Reform Act of 1995. Such forward-looking statements involve risks,
      uncertainties and other factors, which may cause the actual results of the
      Company to differ materially from the results anticipated by such
      forward-looking statements. Forward-looking statements are identified by the
      use
      of forward looking words or phrases such as "anticipates," "intends," "expects,"
      "believes," "estimates," or words or phrases of similar import. Statements
      looking forward beyond fiscal 2005 are subject to greater uncertainty because
      of
      the increased likelihood of changes in underlying factors and assumptions.
      Actual results could differ materially from those anticipated by the
      forward-looking statements. Among these factors are the Company's high degree
      of
      leverage and history of operating losses, its ability to retain existing
      customers and attract new customers, its ability to achieve cost-savings and
      generate positive cash flow, its ability to integrate successfully the
      operations of Neon and achieve synergies through the combination of the two
      companies, the potential need for additional capital expenditures to maintain
      the integrity of our systems and in order for Neon to take advantage of
      opportunities in the telecommunications market, as well as risks associated
      with
      potential acquisitions and divestitures and other factors affecting the
      Company's business generally. Such factors are more fully described herein
      and
      in the Company's Annual Report on Form 10-K for the year ended September 30,
      2004, which should be considered in connection with a review of this report,
      and
      in the section entitled "Risk Factors" in the Company's Registration Statement
      on Form S-3 (No. 333-125185) originally filed on May 24, 2005.





**OVERVIEW:
      OUR BUSINESS STRATEGY**





We
      are a
      provider of Internet services for small to large size businesses in a broad
      range of industries. Through our wholly owned Neon subsidiary, we also own
      and
      operate a high bandwidth fiber optic network, extending from Portland, ME to
      Washington, DC.





Globix
      was founded in 1989 and in 1998 undertook a major expansion plan in order to
      pursue opportunities resulting from the growth of the Internet. On March 1,
      2002, Globix filed a voluntary petition under Chapter 11 of the United States
      Bankruptcy Code, together with a prepackaged plan of reorganization, with the
      United States Bankruptcy Court for the District of Delaware. We continued to
      operate in Chapter 11 in the ordinary course of business and received permission
      from the bankruptcy court to pay our employees, trade, and certain other
      creditors in full and on time, regardless of whether these claims arose prior
      to
      or after the Chapter 11 filing. On April 8, 2002, the bankruptcy court confirmed
      the plan of reorganization. Effective April 25, 2002, all conditions necessary
      for the plan of reorganization to become effective were satisfied or waived
      and
      we emerged from Chapter 11 bankruptcy protection. For additional information
      about our reorganization, see "Our Chapter 11 Bankruptcy Reorganization"
      underPart I in our Annual Report on Form 10-K for the year ended September
      30,
      2004.





Since
      Globix emerged from bankruptcy reorganization in April 2002, its management
      has
      actively reviewed various strategies for increasing stockholder value. A key
      objective has been to redress the imbalance between revenues and costs that
      has
      historically been a feature of Globix's business, by increasing the revenue
      base
      and by cutting costs. A second objective has been to reduce leverage by buying
      back or paying off higher cost indebtedness.





Globix
      has attempted to address customer churn, industry-wide price competition and
      price decreases in its traditional offerings of hosting and network services
      by
      broadening the range of services it offers through the addition of value added
      services as part of its managed services business. By focusing on providing
      value added services Globix believes it will be able to increase its monthly
      recurring revenue per customer or average revenue per unit (ARPU). We calculate
      ARPU by dividing our average contracted monthly recurring revenue for the period
      by our average number of contracted customers during the period. In the Globix
      business segment, during the three-month period ended June 30, 2005 our total
      number of customers remained stable, while our ARPU increased to approximately
      $3.7 thousand as of June 30, 2005 compared to approximately $3.4thousand as
      of
      June 30, 2004. In the Globix segments, our monthly churn rate was flat during
      the three month period ended June 30, 2005 compared to a monthly average
      negative churn rate of 0.3% in the fiscal year ended September 30, 2004. The
      improvement in ARPU and flat churn reflect the continuation during fiscal 2005
      of the business trends we experienced in fiscal 2004. We define churn as
      contractual revenue losses as a percentage of total contractual revenue due
      to
      customer cancellations and downgrades, net of upgrades, and additions of new
      services.





Growth
      through acquisition offers the possibility of revenue growth and the expansion
      of service offerings, to enable Globix to offer a broader range of services
      to
      compete more effectively, while providing a larger revenue base to support
      Globix's existing indebtedness. The ability to achieve operating efficiencies
      by
      combining administrative or other functions has also been a consideration in
      reviewing possible acquisitions. In addition, market conditions have made it
      possible to acquire related businesses at what are perceived to be relatively
      low prices. In pursuing its acquisition strategy, Globix has reviewed potential
      transactions involving smaller companies, like Aptegrity, Inc., whose
      acquisition gradually expands the range of services that Globix provides, as
      well as larger companies, such as Neon, that could significantly increase the
      size of Globix's business and enhance its ability to compete against much larger
      competitors.





15





In
      order
      to increase its operating flexibility and address concerns about its long term
      financial viability, Globix has also attempted to decrease its indebtedness
      through the repurchase of its 11% senior notes and the repurchase or early
      payment of other financial obligations.





On
      March
      7, 2005, Globix completed its acquisition of all of the capital stock of Neon
      in
      exchange for common and preferred stock of Globix and approximately $5.3 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.





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.





The
      quarter ended June 30, 2005 reflects $13.2 million of revenue associated with
      the Neon segment an increase of 10% or $1.2 million from $12.0 million for
      the
      three month period ended June 30, 2004. On a pro-forma basis, Neon's revenue
      for
      the nine month period ended June 30, 2005 was $37.8 million an increase of
      10.2%
      or $3.5 million from $34.3 million for the nine-month period ended June 30,
      2004.





Although
      the acquisition of Neon and the debt-for-equity exchange have increased our
      revenues and asset base and reduced the total amount of our indebtedness, we
      remain highly leveraged. On May 1, 2005, we elected to pay annual accrued
      interest of approximately $6.7 million on the 11% senior notes through the
      issuance of additional notes.





Like
      Globix, Neon has a history of operating losses. In addition, Neon may need
      to
      expand its network and invest in its infrastructure in order to take advantage
      of opportunities in the telecommunications industry. Accordingly, we may need
      to
      seek additional financing and achieve greater efficiencies in operations in
      order to attain our goals.





**OVERVIEW:
      OUR MAJOR SERVICE LINES**





Although
      the Company operates in two operating 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 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.





16




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) - 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
      segment. Hardware and software sales are typically tied to agreements to provide
      recurring services such as hosting, network services, managed services and
      etc.





For
      a
      more detailed description of these service lines see "Business" section in
      our
      2004 Form 10-K and "Information about NEON" in the registration statement on
      Form S-4 filed with respect to the acquisition of Neon.





**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. Prior to April 30, 2002, the estimated length of the customer
      relationship was 12-18 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
      collectbility 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.





17


**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 collocation 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.





**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;
- backlog
- network
          build-out/know-how; and
- customer
            contracts and relationships.

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, backlog over a period of 10 years, network build-out/know-how is
      amortized over 8 years and the customer contracts and relationships 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
      realizability 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.




18


**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 June 30, 2005 and September 30, 2004 the balance
      of
      bad debt reserve amounted to approximately $1.8 million and $2.2 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.





**RESTATEMENT**





The
      Company restated its previous presentation of cost of revenue and selling,
      general and administrative costs for fiscal year 2004 by allocating certain
      payroll and occupancy expenses previously included under selling general and
      administrative expenses to cost of revenue. See Note 2 to our financial
      statements.





**QUARTER
      ENDED JUNE 30, 2005 COMPARED TO THE QUARTER ENDED JUNE 30 2004**


(RESTATED)





REVENUE,
      NET. Revenue for the three-month period ended June 30, 2005 increased 85.7%
      or
      approximately $13.5 million to $29.2 million from $15.7 million for the
      three-month period ended June 30, 2004. Excluding $13.2 million of revenue
      generated as a direct result of the Neon acquisition, revenue for the
      three-month period ended June 30, 2005 increased by 1.9% or approximately $0.3
      million compared to the three-month period ended June 30, 2004.





During
      the quarter ended June 30, 2005 (excluding the impact of the Neon acquisition)
      our monthly change in contract rate (negative churn) was flat compared to a
      monthly average negative change in contract rate


(churn)
      of 1.0% in the quarter ended June 30, 2004. Excluding the impact of the Neon
      acquisition, during the quarter ended June 30, 2005, new contracts averaged
      0.7%
      per month and contract upgrades averaged 2.3% per month, offset by a 1.7%
      monthly average in contract downgrades and a 1.3% average in contract
      cancellations per month. We define churn as contractual revenue losses as a
      percentage of total contractual revenue due to customer cancellations and
      downgrades, net of upgrades, and additions of new services. Cancellations refer
      to customers that have either stopped using our services completely or remained
      a customer but terminated a particular service. Downgrades are a result of
      customers taking less of a particular service or renewing their contract for
      identical services at a lower price.





Excluding
      the impact of the Neon acquisition, during the quarter ended June 30, 2005,
      our
      monthly recurring revenue per customer (ARPU) averaged approximately $3.7
      thousand compared to an average ARPU of approximately $3.3 thousand in the
      quarter ended June 30, 2004, despite a decrease of approximately 82 customers
      or
      6% from 1,390 customers in June 30, 2004 to 1,308 at June 30, 2005. This is
      due
      mainly to our focus on higher-revenue managed services customers following
      the
      acquisition of Aptegrity. We calculate ARPU by dividing our average contracted
      monthly recurring revenue for the period by our average number of contracted
      customers during the period.





19


Revenue
      breakdown for the major service lines are as follows. Revenue from Internet
      Hosting and Co-Location increased by $1.0 million or 15.8% to $7.1 million
      in
      the quarter ended June 30, 2005 compared to $6.1 million in the same period
      in
      fiscal year 2004. Revenue from Network Services and Internet Access decreased
      by
      $656 thousand or 14.7% to $3.8 million in third fiscal quarter of 2005 compared
      to $4.5 million in the third fiscal quarter of 2004. The changes in these two
      major service lines are mainly due to the inclusion of $420 thousand for Neon's
      Co-Location revenue in 2005 and churn. Revenue from Hardware and Software Sales
      and Other increased by $33 thousand to $274 thousand in the three-month period
      ended June 30, 2005 compared to $241 thousand in the same period in fiscal
      year
      2004, primarily due to an increase in Hardware sales. Revenue from Managed
      Services increased by $322 thousand or 6.5% to $5.2 million in the three-month
      period ended June 30, 2005 compared to $4.9 million in the same period in fiscal
      2004. This increase is the direct result of our continued focus on adding
      value-added services through our Managed Services line of business. The above
      analysis includes the positive effect of foreign exchange rates between the
      U.S.
      dollar and the British Pound in the amount of approximately $421 thousand on
      our
      revenue for the quarter ended June 30, 2005 over the quarter ended June 30,
      2004.





Revenue
      from Lit and Dark Fiber Services as direct result of the Neon acquisition was
      $11.4 million and $1.4 respectively for the quarter ended June 30, 2005.





COST
      OF
      REVENUE. Cost of revenue for the quarter ended June 30, 2005 increased to $16.8
      million from $8.6 million in the quarter ended June 30, 2004 an increase of
      $8.2
      million. $7.6 million of the increase is the direct result of our acquisition
      of
      Neon on March 7, 2005. The remaining increase of approximately $0.6 million
      was
      directly attributable to an increase of $240 thousand in cost associated with
      hardware sales quarter over quarter. In addition, our cost of revenue increased
      by approximately $320 thousand during the quarter ended June 30, 2005 compared
      to the quarter ended June 30, 2004 due to higher occupancy costs primarily
      as a
      result of higher utility costs. Our gross margins including the impact of the
      Neon acquisition for the three month period ended June 30, 2005 and 2004 were
      42.7% and 45.6% respectively. 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
      $10.5 million as compared to $7.3 million for the quarters ended June 30, 2005
      and 2004 respectively. This increase included $3.2 million of selling, general
      and administrative expenses for Neon. Excluding the impact of Neon selling,
      general and administrative expenses were flat for the quarters ended June 30,
      2005 and 2004 respectively. Employee related costs decreased by $695 thousand
      for the quarter ended June 30, 2005 compared to the quarter ended June 30,
      2005.
      This was offset in part by an increase in utilities costs. 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 three month
      period ended June 30, 2005 were $6.0 million compared to $3.5 million in the
      same quarter in fiscal year 2004. This increase of $2.5 million is primarily
      the
      result of the acquisition of Neon. For the quarter ended June 30, 2005 $2.4
      million of depreciation and amortization expense was recorded as a result of
      the
      Neon acquisition.





INTEREST
      AND FINANCING EXPENSES. Interest and financing expense for the quarter ended
      June 30, 2005 was $2.3 million, compared to $2.5 million for the quarter ended
      June 30, 2004, as a result of our lower average outstanding balance of the
      11%
      senior notes during the three month period ended June 30, 2005 compared to
      the
      same period in 2004.





INTEREST
      INCOME. Interest income for the quarter ended June 30, 2005 was relatively
      flat
      at $111 thousand, compared to $100 thousand for the quarter ended June 30,
      2004.





OTHER
      INCOME/EXPENSE, NET. Other income for the quarter ended June 30, 2005 was $111
      thousand, compared to $412 thousand for the quarter ended June 30, 2004. The
      variance of $201 thousand was primarily the result of the recognition of a
      loss
      on investments in the quarter ended June 30, 2005 as compared to a gain in
      the
      quarter ended June 30, 2004.





NET
      LOSS
      ATTRIBUTABLE TO COMMON STOCKHOLDERS. As a result of the factors described above,
      we reported net loss of $6.3 million, or $0.13 basic and diluted loss per share
      for the three month period ended June 30, 2005, as compared to a net loss of
      $5.6 million, or $0.34 basic and diluted loss per share for the same period
      in
      2004.





20




**NINE
      MONTHS ENDED JUNE 30, 2005 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2004**


(RESTATED)





REVENUE,
      NET. Revenue for the nine-month period ended June 30, 2005 increased 45.7%
      or
      approximately $20.6 million to $65.8 million from $45.1 million for the
      nine-month period ended June 30, 2004. Excluding $16.5 million of revenue as
      a
      direct result of the Neon acquisition, revenue for the nine-month period ended
      June 30, 2005 increased by 9.3% or approximately $4.2 million compared to the
      nine-month period ended June 30, 2004.





During
      the nine-months ended June 30, 2005 (excluding the affect of the Neon
      acquisition) our monthly positive change in contract rate (negative churn)
      averaged 0.78% compared to a monthly average positive change in contract rate
      (negative churn) of 0.8% in the nine-months ended June 30, 2004. During the
      nine-months ended June 30, 2005, new contracts averaged 0.9% per month and
      contract upgrades averaged 2.5% per month, offset by a 1.6% monthly average
      in
      contract downgrades and a 1.1% average in contract cancellations per month.
      We
      define churn as contractual revenue losses as a percentage of total contractual
      revenue due to customer cancellations and downgrades, net of upgrades, and
      additions of new services. Cancellations refer to customers that have either
      stopped using our services completely or remained a customer but terminated
      a
      particular service. Downgrades are a result of customers taking less of a
      particular service or renewing their contract for identical services at a lower
      price.





Excluding
      revenue associated with the Neon acquisition during the nine-months ended June
      30, 2005, our monthly recurring revenue per customer (ARPU) averaged
      approximately $3.6 thousand compared to an average ARPU of approximately $3.2
      thousand in the nine-months ended June 30, 2004, despite a decrease of
      approximately 82 customers or 6% from 1,390 customers at June 30, 2004 to 1,308
      at June 30, 2005. This is due mainly to our focus on higher-revenue managed
      services customers following the acquisition of Aptegrity. We calculate ARPU
      by
      dividing our average contracted monthly recurring revenue for the period by
      our
      average number of contracted customers during the period.




Revenue
      breakdown for the major service lines are as follows. Revenue from Internet
      Hosting and Co-Location increased by $1.7 million or 9.7% to $19.6 million
      in
      the nine-months ended June 30, 2005 compared to $17.9 million in the same period
      in fiscal year 2004. Revenue from Network Services and Internet Access decreased
      by $1.4 million or 10.4% to $11.8 million in the nine-months ended June 30,
      2005
      compared to $13.2 million in the same period of fiscal year 2004. The changes
      in
      these two major service lines are mainly due to the inclusion of $523 thousand
      for Neon's Co-Location revenue as of March 2005 and churn. Revenue from Hardware
      and Software Sales and Other increased by $1.9 million to $2.2 million in the
      nine-month period ended June 30, 2005 compared to $0.4 million in the same
      period in fiscal year 2004, which resulted primarily from an increase in
      Hardware sales. Revenue from Managed Services increased by $2.5 million or
      18.1%
      to $16.2 million in the nine-month period ended June 30, 2005 compared to $13.7
      million in the same period in fiscal 2004. This increase is the direct result
      of
      the acquisition of Aptegrity, which was included in our statement of operation
      from November 1, 2003 and our continued focus on adding value-added services
      through our Managed Services line of business. The above analysis includes
      the
      positive effect of foreign exchange rates between the U.S. dollar and the
      British Pound in the amount of approximately $1.2 million on our revenue for
      the
      nine-months ended June 30, 2005 over the nine-months ended June 30, 2004.





Revenue
      from Lit and Dark Fiber Services were $14.2 million and $1.7 million
      respectively for the nine months ended June 30, 2005.





COST
      OF
      REVENUE. Cost of revenue for the nine-months ended June 30, 2005, increased
      to
      $37.9 million from $25.7 million in the nine-months ended June 31, 2004. $9.4
      million of the increase is the direct result of our acquisition of Neon on
      March
      7, 2005. The remaining increase of approximately $2.8 million was primarily
      attributable to our increase in hardware sales period over period resulting
      in a
      $1.8 million increase in expense. In addition, our cost of revenue increased
      by
      approximately $900 thousand due to increased occupancy expenses primarily as
      a
      result of higher utility costs during the nine-months ended June 30, 2005
      compared to the quarter ended June 30, 2004. Labor costs were also up by
      approximately $455 thousand in comparison to the prior year, mainly due to
      the
      acquisition of Aptegrity, which occurred on October 31, 2003, and due to our
      continued focus on managed services. These increases were offset partly by
      approximately $612 thousand decrease in our network cost resulting from our
      continued focus on deriving efficiencies and cost savings from our network.
      Our
      gross margins including the impact of the Neon acquisition for the nine-month
      period ended June 30, 2005 and 2004 were 42.4% and 43.1% respectively. Foreign
      exchange rates between the U.S. dollar and the British Pound did not have a
      material effect on the aforementioned analysis.





21




SELLING,
      GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses were
      $27.0 million as compared to $21.7 million for the nine-months ended June 30,
      2005 and 2004 respectively. This increase included $4.3 million of selling,
      general and administrative expenses for Neon. The remaining increase of $1.0
      million is primarily the result of a litigation settlement resulting in $0.8
      million of expense in the nine-months ended June 30, 2005. In addition as a
      result of our increased sales, commission expense increased by approximately
      $355 thousand in the nine-months ended June 30, 2005. These increases were
      offset in part by a $380 thousand decrease in bad debt expenses in the
      nine-months ended June 30, 2005 compared to the nine-months need June 30, 2004,
      as a result of our continuing improvement in collections, reduction in the
      number of high risk customer account receivable balances and as a result of
      collection of previously written-off balances. The above analysis includes
      the
      negative effect of foreign exchange rates between the U.S. dollar and the
      British Pound in the amount of approximately $480 thousand on our selling,
      general and administrative expenses for the nine-months ended June 30, 2005
      over
      the nine-months ended June30, 2004.





DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization expenses for the nine-month
      period ended June 30, 2005 were $14.0 million compared to $10.4 million in
      the
      same period in fiscal year 2004. This increase of $3.6 million is primarily
      the
      result of the acquisition of Neon. For the nine months ended June 30, 2005
      $3.1
      thousand of depreciation and amortization expense was recorded as a result
      of
      the Neon acquisition.





INTEREST
      AND FINANCING EXPENSES. Interest and financing expense for the nine months
      ended
      June 30, 2005 was $7.1 million, compared to $9.0 million for the nine-months
      ended June 30, 2004, as a result of our lower average outstanding balance of
      the
      11% senior notes during the nine-month period ended June 30, 2005 compared
      to
      the same period in 2004.





INTEREST
      INCOME. Interest income for the nine months ended June 30, 2005 was $339
      thousand, compared to $415 thousand for the nine-months ended June 30, 2004.
      The
      decrease was primarily due to a decrease in our cash and investments.





OTHER
      INCOME/EXPENSE, NET. Other expense for the nine-months ended June 30, 2005
      was
      $561 thousand, compared to other income of $1.6 million for the nine-months
      ended June, 2004. This difference included the recognition of a loss of $913
      thousand on the sale of marketable securities during the nine-month period
      ended
      June 30, 2005.





GAIN
      (LOSS) ON DISCHARGE OF DEBT. Loss on discharge of debt for the nine-months
      ended
      June 30, 2005 was $3.2 million compared to a gain of $1.7 million in the quarter
      ended June 30, 2004. The $3.2 million loss was the direct result of the debt
      for
      equity swap described in note 9 to the financial statements. The $1.7 million
      gain in fiscal year 2004 was direct result of the buyback of $7.0 million face
      value 11% senior notes plus accrued interest of $0.3 million for $5.6 million
      in
      October of 2003.





NET
      LOSS
      ATTRIBUTABLE TO COMMON STOCKHOLDERS. As a result of the factors described above,
      we reported net loss of $23.8 million, or $0.79 basic and diluted loss per
      share
      for the nine-month period ended June 30, 2005, as compared to a net loss of
      $35.8 million, or $2.17 basic and diluted loss per share for the same period
      in
      2004.





**LIQUIDITY
      AND CAPITAL RESOURCES**





Historically
      our cost structure exceeded our revenue base mainly due to high labor costs
      resulting from higher than necessary head count, significant level of overhead
      due to numerous locations and overlapping within our network. This has led
      us
      historically 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 to a level
      that meets our current revenue rate. Our ability to generate positive cash
      flows
      from operations and achieve profitability is dependent upon our ability to
      grow
      our revenue while maintaining our current cost structure and network
      efficiencies. Management believes that by maintaining a monthly positive change
      in contract rate (negative churn), by continuing to focus on providing managed
      services solutions and by keeping close control over costs and expenditures
      it
      will be able to meet its revenue and profitability targets. Additionally, since
      emerging from bankruptcy our management has taken several significant steps
      to
      reduce our level of outstanding indebtedness and is committed to further
      reducing our financial obligations by settling them in cash, exchange them
      for
      equity instruments, refinancing or any other manner that may be beneficial
      to
      us. The indenture governing our 11% senior notes permits interest to be paid
      in
      kind in 2005 and 2006 at the discretion of our board of directors. On April
      25,
      2005 the Globix Board of Directors elected to pay interest in kind for 2005.





As
      of
      June 30, 2005 our cash and cash equivalent, short-term and long-term investments
      amounted to approximately $10.0 million. In addition during the nine-month
      period ended June 30, 2005 we used approximately $3.3 million in operating
      activities, an improvement of approximately $1.7 million in comparison to cash
      used in operations of $5.0 million in the same period in 2004. We believe that
      the aforementioned cash outflow represents our recurring cash-flow activities
      following the complete consummation of our plan of reorganization and under
      our
      current cost structure. We further believe that this cash and investments are
      sufficient to meet our fiscal 2005 anticipated day to day operating expenses,
      commitments, working capital and capital expenditures.





22




Since
      the
      acquisition of Neon, the Company is closer to achieving positive cash flow
      from
      operations than in the past. However, the growth in the Neon business is driving
      a greater need for capital expenditures as opportunities have recently arisen
      in
      the telecommunications business served by Neon. The Company believes that these
      investments will typically realize payback in the twelve month range, while
      being tied to multiple year contracts. For the quarter ended June 30, 2005
      we
      invested approximately $6.3 million in capital expenditures with approximately
      $4.6 million of this in the Neon segment. We are currently assessing our needs
      for, and the potential profitability of, further capital expenditures and the
      possibility of securing additional financing to fund future capital
      spending.





In
      the
      longer term 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 repurchase indebtedness of our company,
      which, in turn, may adversely affect our liquidity. In such cases management
      will have to take drastic steps to reduce the Company's operating expenses
      to
      meet its revenue base and liquidity needs. Such steps may include further
      reduction of our headcount, consolidation or elimination of facilities,
      termination of low margin customers, reduce capital expenditures and negotiating
      with our creditors to restructure our indebtedness, mainly but not limited
      to
      our 11% senior notes.





**OPERATING
      ACTIVITIES:**





During
      the nine month period ended June 30, 2005, net cash used in operating activities
      was approximately $3.3 million in comparison to $5.0 million, which was used
      in
      operating activities during the same period in 2004. 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 nine months of fiscal
      2005 operating cash-flow.





**INVESTING
      ACTIVITIES:**





Net
      cash
      used in investing activities during the nine month period ended June 30, 2005
      was $4.0 million. Approximately $11.8 million was used for capital expenditures,
      offset by proceeds of $2.7 million from the acquisition of Neon along with
      proceeds of $4.2 million from the sale and maturity of certain marketable
      securities and financial investments.





**FINANCING
      ACTIVITIES:**





Net
      cash
      used in financing activities during the nine month period ended June 30, 2005
      was $559 thousand and was used for paying our scheduled mortgage and capital
      lease payments.







23




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





At
      June
      30, 2005, 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 June 30, 2005, the majority of our
      investments were due to mature within twelve months and the carrying value
      of
      these investments approximated fair value.





At
      June
      30, 2005, $12.0 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 reports 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 Chief 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 Chief Financial Officer, has evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures as of June 30, 2005. Based upon that evaluation and subject to the
      foregoing, our Chief Executive Officer and Chief 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. On March 7, 2005, Globix completed its acquisition of Neon. As a
      result of the acquisition the Company is in the process of integrating Neon
      and
      its processes into Globix's operations and system of internal controls. The
      process of migrating Neon’s systems of financial reporting to the Globix system
      was partially completed by June 30,2005, and is expected to be substantially
      completed by the end of August 2005. There were no other 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.








24


**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.





On
      November 12, 2003, we were served with a complaint filed in the United States
      Court for Southern District of New York, entitled Alfred G. Binford v. Globix
      Corporation, alleging breach of contract claims related to the failure to make
      payments under an employment letter, as amended, seeking damages in the amount
      of $2,113 thousand. On March 4, 2005, we entered into a settlement agreement
      with Mr. Binford pursuant to which we paid him $750 thousand in cash, $100
      thousand of which was reimbursed by our insurance carrier, and agreed to issue
      him 100,000 shares of common stock resulting in approximately $800 thousand
      of
      expense in the quarter ended March 31, 2005.





On
      August
      12, 2004, the United States District Court for the Southern District of New
      York
      approved the settlement of a class action lawsuit entitled In re Globix Corp
      Securities Litigation, No. 02-CV-00082. This lawsuit named as defendants Globix
      and our former officers Marc Bell, Peter Herzig (who remains a director of
      Globix) and Brian Reach, and asserted claims under sections 10(b) and 20(a)
      of
      the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder on
      behalf of all persons or entities who purchased our securities between November
      16, 2000 and December 27, 2001. The lawsuit alleged that the defendants had
      failed to disclose the true state of the Company's financial condition during
      this period. Under the settlement, the Company paid $3,500,000 (all of which
      was
      covered by insurance) to settle all claims against it. A motion for
      reconsideration of the fee award filed by those plaintiffs' law firms whose
      fees
      were not included in the settlement was rejected by the court in February 2005.
      This decision has not been appealed within the applicable time frame allowing
      the judgment to become final.





On
      November 9, 2004, NEON Transcom, Inc. ("Transcom"), a wholly owned subsidiary
      of
      NEON, filed a suit against the Washington Metropolitan Area Transit Authority
      ("WMATA") in the United States District Court for the District of Columbia
      seeking a declaratory judgment that the annual fees provided for under a license
      agreement violate the Telecommunications Act of 1996 and further seeking an
      injunction preventing WMATA from requiring payment of the fees and holding
      Transcom in default under its License Agreement, dated October 5, 1999. On
      February 11, 2005, the court granted a motion filed by WMATA to dismiss
      Transcom's claim. However, Transcom and WMATA have reached a settlement to
      this
      dispute resulting in an Amendment to the license agreement reducing the number
      of fibers under license from 432 to 332 and the consequent annual fees by
      approximately $100,000.





Other
      than as described above, there have been no developments since the prior
      descriptions in Note 18 to the Consolidated Financial Statements in the 2004
      Form 10-K, and the "Legal Proceedings" section thereto.





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





On
      March
      9, 2005 and April 5, 2005, Globix issued to Alfred G. Binford 97,000 shares
      and
      3,000 shares of common stock in a private transaction exempt from registration
      under Section 4(2) of the Securities Act of 1933 in partial settlement of
      litigation brought by Mr. Binford against Globix.





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 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.




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





Not
      Applicable.





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





Not
      applicable.






25




**ITEM
      5. OTHER INFORMATION**





**Not
      applicable**







**ITEM
      6. 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 Chief Financial Officer pursuant to Section 302of
                  the Sarbanes-Oxley Act of 2002
  32.1
              Certification
                  of Chief Executive Officer pursuant to Section 906of
                  the Sarbanes-Oxley Act of 2002
  32.2
              Certification
                  of Chief Financial Officer pursuant to Section 906of
                  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**Date: August
              15, 2005
            By:
            /s/ Peter
              K. StevensonPeter
                K. Stevenson, President,
              Chief
                Executive Officer


Date: August
              15, 2005
            By:
            /s/ Robert
              M. DennerleinRobert
                M. Dennerlein,
              Chief
                Financial Officer
              (principal
                financial and accounting officer)






26