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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q/A

Amendment No. 1



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2005



OR



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



For the transition period from  to



Commission file number 0-30889



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HARBOR GLOBAL COMPANY LTD.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|BERMUDA                                                        |  | 52-2256071                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



ONE FANEUIL HALL
MARKETPLACE

4TH FLOOR

BOSTON, MASSACHUSETTS

(Address of principal executive offices)

02109-1820

(Zip Code)



(617) 878-1600

(Registrants telephone number, including area code)



NO CHANGES

(Former name, former
address and former fiscal year, if changes since last report)



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



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



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



As of August 15, 2005, the registrant had 5,667,311 common shares, par value $.0025 per share, issued and outstanding.



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##### Table of Contents

Explanatory Note



This Amendment No. 1 to the Quarterly Report on Form 10-Q of Harbor Global Company Ltd. (the Company) for the quarter ended March 31, 2005
is being filed to:



| | (1) | restate the Companys financial statements for the quarters ended March 31, 2005 and 2004 included in the Companys previously filed Quarterly Report on Form 10-Q to
include in note 5 to the consolidated financial statements a description of the Meridian Commercial Tower tenant leases, the amount of contingent rentals included within the income statements forming a part of the Consolidated Financial Statements
and minimum future rentals on noncancellable leases;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | restate the Companys Consolidated Statements of Cash Flows for the quarters ended March 31, 2005 and 2004 to properly reflect securities held to maturity in Cash Flows
from Investing Activities, trading securities in Cash Flows from Operating Activities, and restricted cash in Cash Flows from Investing Activities; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | amend and restate Item 4 of the Form 10-Q to amend and restate the conclusions of the Companys management with respect to the effectiveness of the Companys disclosure
controls and procedures as of March 31, 2005.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the complete text of Items 1 and 4, as amended, including the complete text of the financial statements required by Item 1, is set forth herein. The remainder of the
Companys Form 10-Q is unchanged and is not reproduced in this Amendment No. 1 on form 10-Q/A. This report speaks as of the original filing date of the Form 10-Q and, except as indicated, has not been updated to reflect events occurring
subsequent to the original filing date.



In addition, in
connection with the filing of this Amendment No. 1 on Form 10Q/A and pursuant to Section 12b-15, the Company is including currently dated certifications.



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HARBOR GLOBAL COMPANY LTD.

AMENDMENT NO. 1 ON FORM 10-Q/A

FOR THE QUARTER ENDED MARCH 31, 2005



INDEX



|              |  |                                                                                    |  |     
|------------- |  | ---------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                    |  | Page
|PART I.       |  | FINANCIAL INFORMATION                                                              |  | 4   
|              |  |                                                                                   
|Item 1.       |  | Financial Statements (Unaudited)                                                   |  | 4   
|              |  |                                                                                   
|              |  | Consolidated Balance Sheets  March 31, 2005 and December 31, 2004                 |  | 4   
|              |  |                                                                                   
|              |  | Consolidated Statements of Operations  three months ended March 31, 2005 and 2004 |  | 5   
|              |  |                                                                                   
|              |  | Consolidated Statements of Cash Flows  three months ended March 31, 2005 and 2004 |  | 6   
|              |  |                                                                                   
|              |  | Notes to Consolidated Financial Statements                                         |  | 7   
|              |  |                                                                                   
|Item 4.       |  | Controls and Procedures                                                            |  | 15  
|              |  |                                                                                   
|PART II.      |  | OTHER INFORMATION                                                                  |  | 17  
|              |  |                                                                                   
|Item 6.       |  | Exhibits                                                                           |  | 17  
|              | 
|SIGNATURE     |  | 18                                                                                
|              | 
|EXHIBIT INDEX |  | 19                                                                                



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PART I  FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED
BALANCE SHEETS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)



|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | - | ---------------- | - | ------ | -
|                                                                                                                                                            |  | March 31,2005 |        |   | December 31,2004 |  
|                                                                                                                                                            |  | (Unaudited)   |        |   |                  |  
|ASSETS                                                                                                                                                      |  |               |        |   |                  |   |        |  
|Cash and Cash Equivalents                                                                                                                                   |  | $             | 6,615  |   |                  | $ | 7,754  |  
|Restricted Cash                                                                                                                                             |  |               | 12,983 |   |                  |   | 13,035 |  
|Marketable Securities                                                                                                                                       |  |               | 17,051 |   |                  |   | 17,456 |  
|Accounts Receivable                                                                                                                                         |  |               | 1,034  |   |                  |   | 986    |  
|Prepaid Expenses                                                                                                                                            |  |               | 2,190  |   |                  |   | 1,880  |  
|Other Current Assets                                                                                                                                        |  |               | 7      |   |                  |   | 7      |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|Total Current Assets                                                                                                                                        |  |               | 39,880 |   |                  |   | 41,118 |  
|                                                                                                                                                            |  |              
|Polish Venture Capital Investment                                                                                                                           |  |               | 259    |   |                  |   | 273    |  
|Marketable Securities                                                                                                                                       |  |               | 23,329 |   |                  |   | 19,998 |  
|Long-term Investments                                                                                                                                       |  |               | 6,414  |   |                  |   | 8,715  |  
|Building                                                                                                                                                    |  |               | 21,553 |   |                  |   | 21,726 |  
|Other Long-term Assets                                                                                                                                      |  |               | 1,274  |   |                  |   | 1,190  |  
|Goodwill                                                                                                                                                    |  |               | 1,253  |   |                  |   | 1,253  |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|Total Assets                                                                                                                                                |  | $             | 93,962 |   |                  | $ | 94,273 |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|                                                                                                                                                            |  |              
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                        |  |               |        |   |                  |   |        |  
|Accounts Payable                                                                                                                                            |  | $             | 614    |   |                  | $ | 1,140  |  
|Dividend Payable                                                                                                                                            |  |               | 12,983 |   |                  |   | 13,035 |  
|Accrued Expenses                                                                                                                                            |  |               | 1,859  |   |                  |   | 2,206  |  
|Accrued Fees Payable to Calypso Management                                                                                                                  |  |               | 186    |   |                  |   | 739    |  
|Foreign Taxes Payable                                                                                                                                       |  |               | 695    |   |                  |   | 196    |  
|Deferred Taxes                                                                                                                                              |  |               | 252    |   |                  |   | 241    |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|Total Current Liabilities                                                                                                                                   |  |               | 16,589 |   |                  |   | 17,557 |  
|                                                                                                                                                            |  |              
|Deferred Taxes                                                                                                                                              |  |               | 2,133  |   |                  |   | 2,039  |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|Total Liabilities                                                                                                                                           |  |               | 18,722 |   |                  |   | 19,596 |  
|                                                                                                                                                            |  |              
|Minority Interest                                                                                                                                           |  |               | 27,983 |   |                  |   | 27,109 |  
|                                                                                                                                                            |  |              
|STOCKHOLDERS EQUITY                                                                                                                                        |  |               |        |   |                  |   |        |  
|                                                                                                                                                            |  |              
|Common shares, par value $.0025 per share; authorized 48,000,000 shares; 5,667,311 shares issued and outstanding as of March 31, 2005 and
December 31, 2004 |  |               | 14     |   |                  |   | 14     |  
|Preferred shares, par value $.01 per share; authorized 1,000,000 shares; none issued                                                                        |  |               |       |   |                  |   |       |  
|Paid-in Capital                                                                                                                                             |  |               | 48,284 |   |                  |   | 48,284 |  
|Accumulated Deficit                                                                                                                                         |  |               | (5,041 | ) |                  |   | (4,541 | )
|Other Comprehensive Income                                                                                                                                  |  |               |        |   |                  |   |        |  
|Net Unrealized Gains on Available for Sale Marketable Securities                                                                                            |  |               | 4,000  |   |                  |   | 3,811  |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|Total Stockholders Equity                                                                                                                                  |  |               | 47,257 |   |                  |   | 47,568 |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  
|Total Liabilities and Stockholders Equity                                                                                                                  |  | $             | 93,962 |   |                  | $ | 94,273 |  
|                                                                                                                                                            |  |               |        |   |                  |   |        |  



The accompanying notes
are an integral part of these Consolidated Financial Statements.



4



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##### Table of Contents

HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED
STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)



|                                                                                                          |  |                              |        |   |      |   |        |  
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                          |  | Three Months Ended March 31, |       
|                                                                                                          |  | 2005                         |        |   | 2004 |  
|Revenues:                                                                                                 |  |                              |        |   |      |   |        |  
|Real Estate Rental Revenue                                                                                |  | $                            | 2,093  |   |      | $ | 1,926  |  
|Other Income                                                                                              |  |                              | 781    |   |      |   | 1,462  |  
|                                                                                                          |  |                              |        |   |      |   |        |  
|Total Revenues                                                                                            |  |                              | 2,874  |   |      |   | 3,388  |  
|                                                                                                          |  |                              |        |   |      |   |        |  
|Operating Expenses:                                                                                       |  |                              |        |   |      |   |        |  
|Salary and Benefit Expenses                                                                               |  |                              | (1,281 | ) |      |   | (1,313 | )
|Facility Expenses                                                                                         |  |                              | (358   | ) |      |   | (379   | )
|Building and Property Management Expenses                                                                 |  |                              | (635   | ) |      |   | (689   | )
|Management Fee Expense                                                                                    |  |                              | (795   | ) |      |   | (980   | )
|Other Expenses                                                                                            |  |                              | (1,380 | ) |      |   | (635   | )
|                                                                                                          |  |                              |        |   |      |   |        |  
|Total Operating Expenses                                                                                  |  |                              | (4,449 | ) |      |   | (3,996 | )
|                                                                                                          |  |                              |        |   |      |   |        |  
|Operating Loss                                                                                            |  |                              | (1,575 | ) |      |   | (608   | )
|                                                                                                          |  |                             
|Other Income:                                                                                             |  |                              |        |   |      |   |        |  
|Net Unrealized and Realized Gains on Securities                                                           |  |                              | 2,242  |   |      |   | 562    |  
|Interest Income                                                                                           |  |                              | 483    |   |      |   | 508    |  
|                                                                                                          |  |                              |        |   |      |   |        |  
|Total Other Income                                                                                        |  |                              | 2,725  |   |      |   | 1,070  |  
|                                                                                                          |  |                              |        |   |      |   |        |  
|Income from Operations before Provision for Income Taxes, Minority Interest and Equity Loss on Investment |  |                              | 1,150  |   |      |   | 462    |  
|                                                                                                          |  |                             
|Provision for Income Taxes                                                                                |  |                              | (879   | ) |      |   | (249   | )
|                                                                                                          |  |                              |        |   |      |   |        |  
|Income from Operations before Minority Interest and Equity Loss on Investment                             |  |                              | 271    |   |      |   | 213    |  
|                                                                                                          |  |                             
|Minority Interest                                                                                         |  |                              | (757   | ) |      |   | (812   | )
|Equity Loss on Venture Capital Investments                                                                |  |                              | (14    | ) |      |   | (10    | )
|                                                                                                          |  |                              |        |   |      |   |        |  
|Net Loss                                                                                                  |  | $                            | (500   | ) |      | $ | (609   | )
|                                                                                                          |  |                              |        |   |      |   |        |  
|Loss Per Share:                                                                                           |  |                              |        |   |      |   |        |  
|Basic and Diluted Loss Per Share                                                                          |  | $                            | (0.09  | ) |      | $ | (0.11  | )
|                                                                                                          |  |                             
|Weighted Average Basic and Diluted Shares Outstanding                                                     |  |                              | 5,667  |   |      |   | 5,661  |  



The accompanying notes
are an integral part of these Consolidated Financial Statements.



5



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HARBOR GLOBAL COMPANY LTD.



CONSOLIDATED
STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)



|                                                                                                        |  |                              |         |   |      |   |        |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                                        |  | THREE MONTHS ENDED MARCH 31, |        
|                                                                                                        |  | 2005                         |         |   | 2004 |  
|                                                                                                        |  | RESTATED                     |        
|Cash Flows from Operating Activities:                                                                   |  |                              |         |   |      |   |        |  
|Net Loss                                                                                                |  | $                            | (500    | ) |      | $ | (609   | )
|Adjustments to Reconcile Net Loss to Net Cash Used in                                                   |  |                              |         |   |      |   |        |  
|Operating Activities                                                                                   |  |                              |         |   |      |   |        |  
|Depreciation and Amortization                                                                           |  |                              | 263     |   |      |   | 231    |  
|Restricted Unit Awards                                                                                  |  |                              |        |   |      |   | 76     |  
|Unrealized and Realized Gains on Venture Capital, Marketable Securities, and Long-term Investments, Net |  |                              | (2,242  | ) |      |   | (562   | )
|Purchase of Trading Securities                                                                          |  |                              | (1,181  | ) |      |   | (1,923 | )
|Proceeds from Sale of Trading Securities                                                                |  |                              | 1,051   |   |      |   | 3,399  |  
|Translation Loss (Gain)                                                                                 |  |                              | 20      |   |      |   | (272   | )
|Minority Interest                                                                                       |  |                              | 757     |   |      |   | 812    |  
|Equity Loss on Venture Capital Investment                                                               |  |                              | 14      |   |      |   | 10     |  
|Changes in Operating Assets and Liabilities                                                            |  |                              |         |   |      |   |        |  
|Other Current Assets                                                                                    |  |                              | (358    | ) |      |   | (1,076 | )
|Accrued Expenses and Accounts Payable                                                                   |  |                              | (957    | ) |      |   | (1,178 | )
|                                                                                                        |  |                              |         |   |      |   |        |  
|Total Adjustments and Changes in Operating Assets and Liabilities                                       |  |                              | (2,633  | ) |      |   | (483   | )
|                                                                                                        |  |                              |         |   |      |   |        |  
|Net Cash Used in Operating Activities                                                                   |  |                              | (3,133  | ) |      |   | (1,092 | )
|                                                                                                        |  |                              |         |   |      |   |        |  
|Cash Flows from Investing Activities:                                                                   |  |                              |         |   |      |   |        |  
|Purchase of Long-term Investments and Marketable Securities                                             |  |                              | (10,709 | ) |      |   | (7,419 | )
|Other Long-term Assets                                                                                  |  |                              | (133    | ) |      |   | 6      |  
|Proceeds from Sale of Long-term Investments and Marketable Securities                                   |  |                              | 12,798  |   |      |   | 4,708  |  
|Proceeds from Payment on Note Receivable                                                                |  |                              |        |   |      |   | 4,700  |  
|Restricted Cash for Minority Dividends                                                                  |  |                              | 53      |   |      |   | (207   | )
|                                                                                                        |  |                              |         |   |      |   |        |  
|Net Cash Provided by Investing Activities                                                               |  |                              | 2,009   |   |      |   | 1,788  |  
|                                                                                                        |  |                              |         |   |      |   |        |  
|Cash Flows from Financing Activities:                                                                   |  |                              |         |   |      |   |        |  
|Dividends Paid                                                                                          |  |                              | (15     | ) |      |   | (5     | )
|                                                                                                        |  |                              |         |   |      |   |        |  
|Net Cash Provided Used In Financing Activities                                                          |  |                              | (15     | ) |      |   | (5     | )
|                                                                                                        |  |                              |         |   |      |   |        |  
|Net (Decrease) Increase in Cash and Cash Equivalents                                                    |  |                              | (1,139  | ) |      |   | 691    |  
|                                                                                                        |  |                              |         |   |      |   |        |  
|Cash and Cash Equivalents, Beginning of Period                                                          |  |                              | 7,754   |   |      |   | 23,957 |  
|                                                                                                        |  |                              |         |   |      |   |        |  
|Cash and Cash Equivalents, End of Period                                                                |  | $                            | 6,615   |   |      | $ | 24,648 |  
|                                                                                                        |  |                              |         |   |      |   |        |  



The accompanying notes
are an integral part of these Consolidated Financial Statements.



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HARBOR GLOBAL COMPANY LTD.



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2005



(1) BACKGROUND AND BASIS OF PRESENTATION



BACKGROUND



Harbor Global Company Ltd., a Bermuda
limited duration company (Harbor Global or the Company), was formed in May 2000 as a wholly owned subsidiary of Pioneer Investment Management USA Inc. (formerly known as The Pioneer Group, Inc.), a Delaware corporation
(Pioneer), to facilitate the merger between Pioneer and UniCredito Italiano, S.p.A., an Italian financial institution (UniCredito). As a condition to closing the merger and pursuant to a Distribution Agreement dated as of
October 24, 2000 by and among the Company, Pioneer and Harbor Global II Ltd., a wholly owned subsidiary of the Company (the Distribution Agreement), Pioneer agreed to transfer certain of its assets to Harbor Global and distribute all of
the outstanding Harbor Global common shares to its stockholders. Pioneer transferred to Harbor Global all of the assets required to be transferred pursuant to the merger agreement and the Distribution Agreement, and on October 24, 2000, Pioneer
distributed all of the outstanding common shares of Harbor Global to its stockholders (the Spin-off). Pioneer stockholders received one Harbor Global common share for every five shares of Pioneer common stock held on that date.



The Companys primary assets by segment consist of the
following:



| |  |  | Russian real estate management and investment management operations: investment advisory and management operations
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | Real estate management operations: real estate management services, including property management and advisory services
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | Other:
| | - |  | ------



| |  |  | approximately $7.5 million in cash, cash equivalents and marketable securities held directly by Harbor Global
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | an approximately 8% limited partnership interest in the Prospect Poland Fund
| | - |  | ----------------------------------------------------------------------------



Harbor Global seeks to liquidate its assets in a timely fashion on economically advantageous terms and continues to operate its assets as going concern businesses
until they are liquidated. Harbor Globals memorandum of association dated May 22, 2000 provides that the liquidation of its assets must be completed upon the earlier of October 24, 2005, the fifth anniversary of the date of the Spin-off, or
the distribution by Harbor Global of all its assets to its shareholders. On October 18, 2004, pursuant to the Companys memorandum of association, the Harbor Global board of directors (Board of Directors) unanimously authorized the
Company to continue operating its assets for an additional one year period or through October 24, 2006, unless and until the Company has distributed all of its assets to its shareholders to the extent permitted by the Bermuda Companies Act of 1981.
If Harbor Global has not liquidated all of its assets before October 24, 2006, the Board of Directors, in its discretion, may authorize Harbor Global to continue to operate its assets for up to two additional one-year periods.



BASIS OF PRESENTATION



The interim financial data as of March 31, 2005 and for the three months
ended March 31, 2005 is unaudited; however, in the opinion of management, the accompanying Consolidated Financial Statements contain all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of the financial
position of the Company as of March 31, 2005 and the results of operations and cash flows of the Company for the three month periods ended March 31, 2005 and 2004. Results for interim periods may not be necessarily indicative of the results to be
expected for the year. The interim Consolidated Financial Statements included in this Quarterly Report on Form 10-Q/A should be read in conjunction with the Companys 2004 Annual Report on Form 10-K for the year ended December 31, 2004 (the



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Form 10-K) filed with the Securities and Exchange Commission on March 23, 2005 and Amendment No. 1 on Form 10-K/A filed with the Securities and
Exchange Commission on August 18, 2005. However, investors are cautioned not to rely on the Consolidated Financial Statements included as part of the Form 10-K as the Company has restated such financial statements in Amendment No. 1 on Form 10-K/A
to include additional lease and lease revenue disclosures in Note 3 to the Notes to the Consolidated Financial Statements and restate the Consolidated Statements of Cash Flows included therein to properly reflect securities held to maturity in Cash
Flows from Investing Activities, trading securities in Cash Flows from Operating Activities and restricted cash in Cash Flows from Investing Activities, as indicated in Note 2 to such Consolidated Financial Statements.



Since Harbor Global is a Bermuda limited duration company, the Company
expects that for United States federal income tax purposes it will be taxed as a partnership, and as a result, virtually all United States federal income tax expenses have been and will be borne by its shareholders. The income tax provisions and
deferred taxes included in the accompanying Consolidated Financial Statements principally relate to the Companys corporate subsidiaries that are located primarily in the Russian Federation (Russia).



RECLASSIFICATIONS



Certain reclassifications have been made to the 2004 amounts to conform to the 2005 presentation.



(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, PRINCIPLES OF CONSOLIDATION



PRINCIPLES OF CONSOLIDATION



The Consolidated Financial Statements include the accounts of Harbor Global
and its majority-owned subsidiaries. The Company maintains an approximate 8% interest in the Prospect Poland Fund, a limited partnership. Because it is a limited partner investor, the Company accounts for this investment using the equity method of
accounting. Equity losses from this investment are included in equity loss on venture capital investments on the accompanying Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated from the
Consolidated Financial Statements.



USE OF ESTIMATES



The preparation of the Consolidated Financial Statements in conformity with generally
accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities
at the date of the Consolidated Financial Statements. Actual results could differ from those estimates.



Current Marketable Securities



United States Treasury securities are classified as held-to-maturity and are recorded at amortized cost. Russian Government and Municipal securities are classified as trading securities and are marked-to-market, with unrealized gains or
losses reported in the Consolidated Statements of Operations pursuant to Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. Russian federal and
municipal government securities are held primarily in the PIOGLOBAL Real Estate Investment Fund, an approximately 52% owned subsidiary of the Company. Security transactions are recorded on the settlement date. Investments are valued at the weighted
average daily price if they are traded on the valuation date; otherwise, the bid price is used. Set forth in the following tables are the balances of marketable securities, segregated between United States Treasury obligations and Russian
obligations at March 31, 2005 and December 31, 2004. Unrealized gains and losses recorded on Russian government securities are presented for the three months ended March 31, 2005 and 2004.



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Balances of Current Marketable Securities



|                                 |  |                |        |                   |   |       
|-------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                 |  | March 31, 2005 |        | December 31, 2004
|                                 | 
|                                 |  | (In Thousands)
|Russia (trading)                 |  | $              | 10,034 |                   | $ | 9,883 
|United States (held to maturity) |  |                | 7,017  |                   |   | 7,573 
|                                 |  |                |        |                   |   |       
|Total Marketable Securities      |  | $              | 17,051 |                   | $ | 17,456
|                                 |  |                |        |                   |   |       



Net Unrealized Gain on Russian Federal
and Municipal Government Securities



|                      |  |                            |     |   |      |   |     |  
|--------------------- |  | -------------------------- | --- | - | ---- | - | --- | -
|                      |  | Three monthsendedMarch 31, |    
|                      |  | 2005                       |     |   | 2004 |  
|                      |  | (In Thousands)             |    
|Gross Unrealized Gain |  | $                          | 128 |   |      | $ | 294 |  
|Gross Unrealized Loss |  |                            | (90 | ) |      |   | (69 | )
|                      |  |                            |     |   |      |   |     |  
|Net Unrealized Gain   |  | $                          | 38  |   |      | $ | 225 |  
|                      |  |                            |     |   |      |   |     |  



LONG-TERM MARKETABLE SECURITIES



Long-term Marketable Securities consist primarily of
Russian equity and fixed income securities, including Russian corporate bonds held in the portfolio of the PIOGLOBAL Real Estate Investment Fund and Closed Joint-Stock Company PIOGLOBAL Asset Management (PIOGLOBAL Asset
Management). In addition, certain subsidiaries of the Company maintain investments in unit funds and trust management accounts managed by PIOGLOBAL Asset Management.



Equity securities, corporate bonds and investments in unit funds and trust management accounts are classified as
available-for-sale and recorded at fair value pursuant to SFAS No. 115. In this regard, such securities are recorded in long-term marketable securities based on quoted prices on the Russian Trading System and Moscow Interbank Currency Exchange
(MICEX). The cost of securities sold is based on the weighted-average method. Dividend income received on investments is recognized on a cash basis. Unrealized gains and unrealized losses for equity securities, corporate bonds and
investments in unit fund and trust management accounts are recorded net of deferred taxes and minority interest in other comprehensive income.



Set forth in the following tables are the balances of long-term marketable securities at March 31, 2005 and December 31, 2004, as well as cumulative
unrealized gains and losses, before deferred taxes and minority interest, recorded in other comprehensive income at March 31, 2005 and December 31, 2004:



Balance of Long-term Marketable Securities Classified as Available for Sale



|                            |  |                |        |                  |   |       
|--------------------------- |  | -------------- | ------ | ---------------- | - | ------
|                            |  | March 31,2005  |        | December 31,2004
|                            |  | (In Thousands)
|Equity Securities           |  | $              | 16,136 |                  | $ | 13,333
|Corporate Bonds             |  |                | 5,482  |                  |   | 5,043 
|Unit Funds                  |  |                | 1,711  |                  |   | 1,622 
|                            |  |                |        |                  |   |       
|Total Marketable Securities |  | $              | 23,329 |                  | $ | 19,998
|                            |  |                |        |                  |   |       



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Cumulative Unrealized Gain and Loss Recorded in Other Comprehensive Income



|                      |  |                |       |   |                   |   |       |  
|--------------------- |  | -------------- | ----- | - | ----------------- | - | ----- | -
|                      |  | March 31, 2005 |       |   | December 31, 2004 |  
|                      |  | (In Thousands) |      
|Equity Securities     |  |                |       |   |                   |   |       |  
|Gross Unrealized Gain |  | $              | 7,826 |   |                   | $ | 7,276 |  
|Gross Unrealized Loss |  |                | (266  | ) |                   |   | (115  | )
|                      |  |                |       |   |                   |   |       |  
|Net Unrealized Gain   |  | $              | 7,560 |   |                   | $ | 7,161 |  
|                      |  |               
|Corporate Bonds       |  |                |       |   |                   |   |       |  
|Gross Unrealized Gain |  | $              | 288   |   |                   | $ | 329   |  
|Gross Unrealized Loss |  |                | (33   | ) |                   |   |      |  
|                      |  |                |       |   |                   |   |       |  
|Net Unrealized Gain   |  | $              | 255   |   |                   | $ | 329   |  
|                      |  |               
|Unit Funds            |  |                |       |   |                   |   |       |  
|Gross Unrealized Gain |  | $              | 1,067 |   |                   | $ | 992   |  
|Gross Unrealized Loss |  |                |      |   |                   |   |      |  
|                      |  |                |       |   |                   |   |       |  
|Net Unrealized Gain   |  | $              | 1,067 |   |                   | $ | 992   |  



BUILDING



The building represents an office building in Moscow, Russia, the
Meridian Commercial Tower. The Meridian Commercial Tower is carried at cost and is being depreciated on a straight-line basis over 40 years. Building improvements are depreciated on a straight-line basis over either five or ten years. A significant
portion of the assets of PIOGLOBAL Real Estate Investment Fund consists of its ownership of Meridian Commercial Tower. Meridian Commercial Tower lease revenues accounted for approximately 80% of the total revenue generated by Harbor Globals
Russian real estate management and investment management operations during the quarterly period ended March 31, 2005, and approximately 74% of Harbor Globals total revenue during the same period.



CONCENTRATION OF RISK



The Companys operations are generally concentrated in Russia. The Company does not maintain political risk insurance
for any of its businesses.



RESTATEMENTS



In the Companys Amendment No. 1 on Form 10-K/A filed
August 18, 2005, the Company restated its consolidated financial statements for the year ended December 31, 2004 to include in Note 3 to such financial statements certain previously omitted lease-related disclosures required by paragraph 23 of
Statement of Financial Accounting Standards No. 13, Accounting for Leases (SFAS No. 13). In addition, on August 18, 2005, the Company restated its Consolidated Statement of Cash Flows for the year ended December 31, 2004. The
accompanying Consolidated Statements of Cash Flows for March 31, 2005 and 2004 are restated herein to properly reflect held to maturity securities (increase of $557,000 and decrease of $2,528,000, respectively) in Cash Flows from Investing
Activities rather than Cash Flows from Operating Activities and trading securities (decrease of $130,000 and increase of $1,476,000, respectively) in Cash Flows from Operating Activities rather than Cash Flows from Investing Activities pursuant to
SFAS No. 115. In addition, the classification of restricted cash has also been restated to properly reflect changes therein as Cash Flows from Investing Activities rather than Cash Flows from Financing Activities.



The net effect of the foregoing restatements on Cash Flows from Operating
Activities, Cash Flows from Investing Activities and Cash Flows from Financing Activities for 2005 and 2004 from the results for such periods previously reported is set forth in the following table:



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|                                                   |  |                             |        |   |      |   |        |  
|-------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                   |  | THREE MONTHS ENDEDMARCH 31, |       
|                                                   |  | 2005                        |        |   | 2004 |  
|                                                   |  | (In Thousands)              |       
|Cash Flow from Operating Activities as reported    |  | $                           | (2,446 | ) |      | $ | (5,096 | )
|Cash Flow from Operating Activities as restated    |  |                             | (3,133 | ) |      |   | (1,092 | )
|                                                   |  |                             |        |   |      |   |        |  
|Net Change in Cash Flows from Operating Activities |  | $                           | (687   | ) |      | $ | 4,004  |  
|                                                   |  |                            
|Cash Flow from Investing Activities as reported    |  | $                           | 1,269  |   |      | $ | 5,999  |  
|Cash Flow from Investing Activities as restated    |  |                             | 2,009  |   |      |   | 1,788  |  
|                                                   |  |                             |        |   |      |   |        |  
|Net Change in Cash Flows from Investing Activities |  | $                           | 740    |   |      | $ | (4,211 | )
|                                                   |  |                            
|Cash Flow from Financing Activities as reported    |  | $                           | 38     |   |      | $ | (212   | )
|Cash Flow from Financing Activities as restated    |  |                             | (15    | ) |      |   | (5     | )
|                                                   |  |                             |        |   |      |   |        |  
|Net Change in Cash Flows from Financing Activities |  | $                           | (53    | ) |      |   | 207    |  
|                                                   |  |                             |        |   |      |   |        |  
|Net Change in Cash and Cash Equivalents            |  | $                           |       |   |      | $ |       |  
|                                                   |  |                             |        |   |      |   |        |  



(3)
EARNINGS PER SHARE



Basic and diluted earnings per share
(EPS) are computed by dividing reported earnings by weighted average shares outstanding. There are currently no potentially dilutive securities.



(4) CHANGES IN STOCKHOLDERS EQUITY



For the three months ended March 31, 2005 and 2004, the Company reported changes in stockholders equity as follows:



|                                                                                                                                                                                                                 |  |                             |      |   |      |   |       |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ---- | - | ---- | - | ----- | -
|                                                                                                                                                                                                                 |  | THREE MONTHS ENDEDMARCH 31, |     
|                                                                                                                                                                                                                 |  | 2005                        |      |   | 2004 |  
|                                                                                                                                                                                                                 |  | (In Thousands)              |     
|Net Loss                                                                                                                                                                                                         |  | $                           | (500 | ) |      | $ | (609  | )
|Net Unrealized Gains on Marketable Securities (Net of deferred taxes of $94,000 and $914,000 and minority interest of $117,000 and $1,287,000)
for the three months ended March 31, 2005 and 2004, respectively) |  |                             | 189  |   |      |   | 1,615 |  
|                                                                                                                                                                                                                 |  |                             |      |   |      |   |       |  
|Total Comprehensive (Loss) Income                                                                                                                                                                                |  | $                           | (311 | ) |      | $ | 1,006 |  
|Additional Paid In Capital                                                                                                                                                                                       |  |                             |     |   |      |   | 76    |  
|                                                                                                                                                                                                                 |  |                             |      |   |      |   |       |  
|Change in Stockholders Equity                                                                                                                                                                                   |  | $                           | (311 | ) |      | $ | 1,082 |  
|                                                                                                                                                                                                                 |  |                             |      |   |      |   |       |  



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(5) LEASING ARRANGEMENTS



The Meridian Commercial Tower is an 18 story, 20,707 square meter office building in Moscow, Russia. The Meridian Commercial
Tower is managed by PREA, L.L.C. (PREA) and occupied primarily by United States and European corporate tenants or their Russian subsidiaries. PREA leases the building from the PIOGLOBAL Real Estate Investment Fund under a master lease
agreement and in turn, subleases the premises to tenants. Generally, the tenant subleases have terms ranging from approximately eleven months to approximately five years nine months and annual base rent ranging from approximately $167 to
approximately $600 per square meter. In addition to base rent, each tenant pays a pro rata share of the operating expenses relating to the building, including utilities, maintenance expenses, management expenses (including fees payable to PREA for
management of the building pursuant to the master lease agreement with PIOGLOBAL Real Estate Investment Fund), license fees, insurance premiums and taxes, other than income taxes relating to PREA. In addition, a small number of subtenants also pay
additional contingent rent based on gross revenues and other financial measures. Rent and operating expenses are typically payable quarterly at the beginning of the applicable calendar quarter.



The following is a schedule by year of minimum future rental income on
noncancellable operating subleases as of March 31, 2005:



|                                   |  |   |           
|---------------------------------- |  | - | ----------
|Year Ending December 31,           |  |  
|2005                               |  | $ | 4,333,445 
|2006                               |  |   | 4,048,386 
|2007                               |  |   | 3,154,448 
|2008                               |  |   | 2,074,450 
|2009                               |  |   | 829,653   
|Beyond                             |  |   | 60,900    
|                                   |  |   |           
|Total minimum future rental income |  | $ | 14,501,282
|                                   |  |   |           



Total minimum future rental income
does not include contingent rental income based on a percentage of gross revenues which may be received under a sublease for the rental of cafeteria space or contingent rental income based on a percentage of billed fees for telephone services and a
fixed amount per installed phone line which may be received under a sublease for the rental of roof space for an aerial tower.



Contingent rental income for the three months ended March 31, 2005 and 2004 was approximately $45,000, and $36,000, respectively.



(6) RELATED PARTY TRANSACTIONS



On July 10, 2003, the Company entered into an amended and restated
administration and liquidation agreement with Calypso Management LLC (Calypso Management), pursuant to which Calypso Management manages the liquidation of the Company and operates the Companys assets pending their liquidation.
Calypso Management is owned and operated by Stephen G. Kasnet, the Companys Chief Executive Officer, and Donald H. Hunter, the Companys Chief Financial Officer. Mr. Kasnet is Calypso Managements President and Chief Executive
Officer and Mr. Hunter is Calypso Managements Chief Operating Officer and Chief Financial Officer. Calypso Management performs its services pursuant to operating plans and budgets approved by the Harbor Global Board of Directors in accordance
with the amended and restated administration and liquidation agreement.



The amended and restated administration and liquidation agreement provides that the Company pays the operating expenses of Calypso Management incurred in connection with the provision of services to the Company.



In addition, as compensation for its provision of services to the Company,
Calypso Management receives a portion of the total net proceeds distributed from the liquidation of the Companys assets, generally according to the following schedule:



| |  |  | with respect to the first $36 million in net proceeds to be distributed, Calypso Management shall receive a payment equal to 10% of such net proceeds;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | with respect to the next $72 million in net proceeds to be distributed, Calypso Management shall receive a payment equal to 7.5% of such net proceeds; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | with respect to any additional net proceeds to be distributed, Calypso Management shall receive a payment equal to 10% of such net proceeds.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



Net proceeds do not include any unexpended portion of the approximate
$19,100,000 contributed by Pioneer to Harbor Global at the time of the Spin-off. However, because Harbor Global entered into a transaction in which it was released from its indirect obligation to fulfill its existing capital commitment of
approximately $5.4 million to the Polish Real Estate Fund, $5.4 million of the amount contributed by Pioneer is included in the calculation of net proceeds. In addition, the proceeds received by Goldfields II in connection with the sale of its
Ghanaian gold mine to Ashanti are not subject to the preceding fee schedule. Instead, Calypso Management will receive only 5% of the Ashanti proceeds that are distributed to shareholders.



In addition, if an individual, entity or group acquires at least 80% of the Companys outstanding common shares or
Harbor Global is a party to a merger, reorganization or similar business combination and the shareholders immediately prior to such transaction cease to own at least 50% of the outstanding common shares and voting power entitled to vote generally in
the election of directors of the resulting entity (a Deemed Sale), Calypso Management is entitled to receive a portion of the consideration, in accordance with the compensation schedule described above, as would be received by all
shareholders if all of the outstanding common shares were sold at the valuation of Harbor Global based on the per share consideration received by each shareholder who sold, exchanged or otherwise disposed of shares in the transaction. Also, in the
event of a change in control (as defined in the agreement) coupled with a material change in the engagement status of Calypso Management or the employment status of its principal officers, Calypso Management will be paid a cash amount equal to a
portion of the value of the underlying assets, in accordance with the compensation schedule described above, with such value determined pursuant to a predetermined valuation schedule.



With respect to ongoing asset sales, Harbor Global accrues management fees at the earlier of (1) the formal declaration by
the Board of Directors of a distribution and (2) the time when a distributable amount is estimable following the sale or liquidation of an asset. Harbor Global will also accrue management fees when a distribution to Calypso Management is triggered
following a Deemed Sale of the Company or a change in control as defined in the amended and restated administration and liquidation agreement.



The Company incurred management fee expenses of approximately $795,000, and $745,000 for the three months ended March 31, 2005, and 2004, respectively,
related to the reimbursement of expenses. Of this management fee, approximately $186,000 and $178,000 were outstanding at March 31, 2005 and 2004, respectively.



During the first quarter of 2004 the Company also accrued management fee expense and a corresponding payable to Calypso Management of approximately
$235,000 associated with proceeds which were ultimately included in the distribution paid to shareholders on November 15, 2004.



Calypso Management pays the rent on behalf of the Company for its offices at One Faneuil Hall Marketplace, Boston, Massachusetts and is reimbursed by the
Company pursuant to the administration and liquidation agreement.



PREA L.L.C., the subsidiary through which the Companys real estate management operations are conducted (PREA), leases the Meridian Commercial Tower from PIOGLOBAL Real Estate Investment Fund under a master lease agreement
and in turn, subleases the premises to tenants. PREA pays PIOGLOBAL Real Estate Investment Fund an amount equal to gross revenues less building operating expenses, the PREA property management fee and any value added taxes or similar taxes. The
master lease agreement between PIOGLOBAL Real Estate Investment Fund and PREA expires in 2043.



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Under a management agreement between PIOGLOBAL Asset Management and PIOGLOBAL Real Estate Investment
Fund, PIOGLOBAL Asset Management provides portfolio management services to PIOGLOBAL Real Estate Investment Fund for an annual fee of 5% of all assets owned by PIOGLOBAL Real Estate Investment Fund net of any value added taxes or similar taxes.



(7) INDEMNIFICATION CONTRACTS



Under the Distribution Agreement, Harbor Global agreed to indemnify Pioneer
for liabilities, other than tax liabilities, incurred by Pioneer relating to the businesses or operations of the Harbor Global assets. Additionally, under a tax separation agreement between Harbor Global and Pioneer, generally, Harbor Global agreed
to indemnify Pioneer for tax liabilities relating to the Harbor Global businesses. Currently, there are no suits pending under the indemnification or other provisions of the Distribution Agreement or tax separation agreement.



(8) FINANCIAL INFORMATION BY BUSINESS SEGMENT



In accordance with SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, the Company presents its segment information for continuing operations using the management approach. The management approach is based on the way that management organizes the segments within a company for
making operating decisions and assessing performance. The Companys operating segments are organized around services and products provided, as well as geographic regions.



The Company derives its revenues from the following products and services by segment:



| |  |  | Russian Real Estate Management and Investment Management Operations: investment advisory and management services
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Real Estate Management Operations: real estate management services, including property management and advisory services
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | Other
| | - |  | -----



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SEGMENT DISCLOSURES



|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|--------------------------------------------------------- |  | -------------------------------------------------------------- | ------ | - | ------------------------------- | - | ----- | ----- |  | - | ----- | - |  | - | ------ | -
|                                                          |  | Russian Real EstateManagementAndInvestmentManagementOperations |        |   | Real EstateManagementOperations |   |       | Other |  |   | Total |  
|As of and for the three months ended March 31, 2005       |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|Net Revenues and Sales                                    |  | $                                                              | 2,620  |   |                                 | $ | 254   |       |  | $ |      |   |  | $ | 2,874  |  
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|Income (Loss) before Provision for Income Taxes, Minority |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|Interest, and Equity Loss on Investment                   |  |                                                                | 1,347  |   |                                 |   | (284  | )     |  |   | 87    |   |  |   | 1,150  |  
|Provision for Income Taxes                                |  |                                                                | (817   | ) |                                 |   | (1    | )     |  |   | (61   | ) |  |   | (879   | )
|Minority Interest Expense                                 |  |                                                                | (757   | ) |                                 |   |      |       |  |   |      |   |  |   | (757   | )
|Equity Loss on Venture Capital Investment                 |  |                                                                |       |   |                                 |   |      |       |  |   | (14   | ) |  |   | (14    | )
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|Net (Loss) Income                                         |  | $                                                              | (227   | ) |                                 | $ | (285  | )     |  | $ | 12    |   |  | $ | (500   | )
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|Depreciation and Amortization                             |  | $                                                              | 257    |   |                                 | $ | 6     |       |  | $ |      |   |  | $ | 263    |  
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  
|Total Assets                                              |  | $                                                              | 84,353 |   |                                 | $ | 1,434 |       |  | $ | 8,175 |   |  | $ | 93,962 |  
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |        |  



|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|--------------------------------------------------------- |  | -------------------------------------------------------------- | ------ | - | ------------------------------- | - | ----- | ----- |  | - | ----- | - |  | - | ------- | -
|                                                          |  | Russian Real EstateManagementAndInvestmentManagementOperations |        |   | Real EstateManagementOperations |   |       | Other |  |   | Total |  
|As of and for the three months ended March 31, 2004       |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|Net Revenues and Sales                                    |  | $                                                              | 3,144  |   |                                 | $ | 244   |       |  | $ |      |   |  | $ | 3,388   |  
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|Income (Loss) before Provision for Income Taxes, Minority |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|Interest, and Equity Loss on Investment                   |  |                                                                | 898    |   |                                 |   | (256  | )     |  |   | (180  | ) |  |   | 462     |  
|Provision for Income Taxes                                |  |                                                                | (230   | ) |                                 |   | (9    | )     |  |   | (10   | ) |  |   | (249    | )
|Minority Interest Expense                                 |  |                                                                | (812   | ) |                                 |   |      |       |  |   |      |   |  |   | (812    | )
|Equity Loss on Venture Capital Investment                 |  |                                                                |       |   |                                 |   |      |       |  |   | (10   | ) |  |   | (10     | )
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|Net Loss                                                  |  | $                                                              | (144   | ) |                                 | $ | (265  | )     |  | $ | (200  | ) |  | $ | (609    | )
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|Depreciation and Amortization                             |  | $                                                              | 224    |   |                                 | $ | 7     |       |  | $ |      |   |  | $ | 231     |  
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  
|Total Assets                                              |  | $                                                              | 95,803 |   |                                 | $ | 1,512 |       |  | $ | 6,158 |   |  | $ | 103,473 |  
|                                                          |  |                                                                |        |   |                                 |   |       |       |  |   |       |   |  |   |         |  



ITEM 4. CONTROLS AND PROCEDURES.



Disclosure
Controls and Procedures. The Companys Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and procedures as of March 31, 2005. The Company has identified two
material weaknesses in internal controls described below and accordingly, the Companys Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2005, the Companys disclosure controls and procedures were
not effective.



On July 15, 2005, the Company and the audit
committee of the Board of Directors (the Audit Committee) determined that due to the omission of certain lease-related disclosures from the notes to the Companys consolidated financial statements included as part of the Form 10-K,
it would restate its financial statements for the years ended December 31, 2004, 2003 and 2002 to include, in Note



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3 to such financial statements, the following previously omitted lease-related disclosure required by SFAS NO. 13:



| |  |  | The amount of contingent rentals included within the income statements forming a part of the Companys Consolidated Financial Statements included as part of the Form 10-K;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A description of leasing arrangements pertaining to the operation of the Meridian Commercial Tower ; and
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | Minimum future rentals on noncancellable leases.
| | - |  | ------------------------------------------------



The Company determined to include this information in the notes to its Consolidated Financial Statements because rental income from the Meridian
Commercial Tower, a commercial office building in Moscow, Russia, is a significant source of the Companys revenues.



In connection with the preparation of the Companys restated consolidated financial statements described above, the Company identified errors in the
classification of securities held to maturity, trading securities and restricted cash as presented in the Companys consolidated statements of cash flows for the years ended December 31, 2004, 2003 and 2002, and related interim periods within
those years (including the three month periods ended March 31, 2005 and 2004, which such periods have been restated in this Amendment No. 1 on Form 10-Q/A). Accordingly, on August 15, 2005, the Company and its Audit Committee determined that the
Companys Consolidated Statement of Cash Flows for the years ended December 31, 2004, 2003, and 2002, and fiscal quarter ended March 31, 2005, should be restated to properly reflect purchases of and proceeds from the sale of securities held to
maturity in Cash Flows from Investing Activities rather than Cash Flows from Operating Activities and purchases of and proceeds from the sale of trading securities in Cash Flows from Operating Activities rather
than Cash Flows from Investing Activities pursuant to SFAS No. 115. The Company also determined to restate the line item entitled Reclassification of Restricted Cash from Cash Flows from Financing Activities to
Cash Flows from Investing Activities at this time.



A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
The Companys management has concluded that, as of March 31, 2005, the Company did not maintain effective controls over the (i) identification and determination of required lease-related disclosures in accordance with accounting principles
generally accepted in the United States and (ii) determination and verification of the reporting of trading securities and securities held to maturity in the statements of cash flows to ensure such disclosure was accurate and in conformity with
accounting principles generally accepted in the United States. These deficiencies in internal control over financial reporting resulted in the restatements described above. Accordingly, management has concluded that each of the control deficiencies
described above constitutes a material weakness.



In response
to the identified material weaknesses in internal control over financial reporting, the Company is reviewing its disclosure controls and procedures relating to lease-related accounting disclosures and the proper classification of certain securities
held by the Company and its subsidiaries in its consolidated statements of cash flows, implementing additional training of the Companys accounting staff regarding lease accounting and disclosure and the proper classification of certain
securities and modifying certain disclosure and internal controls that management believes will improve the Companys ability to process and report complete and correct financial information required by applicable rules and regulations. The
Companys management believes that these additional efforts, together with pre-existing disclosure controls and procedures and other internal controls, will remediate the identified material weaknesses.



Internal Control Over Financial Reporting. There have not been any
significant changes in the Companys internal controls over financial reporting during the first quarter of 2005 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial
reporting.



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##### Table of Contents

Since June 30, 2005, the Company has begun implementing the changes in its internal controls described
above to ensure that (1) required lease-related disclosures are made in accordance with accounting principles generally accepted in the United States and (2) securities held to maturity, trading securities and restricted cash are accurately
reflected in the Companys consolidated statements of cash flows in conformity with accounting principles generally accepted in the United States.



PART II  OTHER INFORMATION



ITEM 6. EXHIBITS



(a) Exhibits: The
Exhibit Index immediately precedes the Exhibits filed herein and is incorporated by reference.



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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.



Dated: September 12, 2005



HARBOR GLOBAL COMPANY LTD./s/ Donald H. HunterDonald H. HunterChief Operating OfficerChief Financial Officer(Duly authorized officer and principal financialand accounting officer)




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|              |  |                                                                                                                              
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                                                  
|3.1+          |  | Memorandum of Association of Harbor Global Company Ltd.                                                                      
|              | 
|3.2+          |  | Bye-Laws of Harbor Global Company Ltd.                                                                                       
|              | 
|4.1*          |  | Specimen Common Share Certificate                                                                                            
|              | 
|10.1++        |  | Second Amendment to Lease dated March 28, 2005 by and between Faneuil Hall Marketplace, LLC, and Harbor Global Company Ltd.  
|              | 
|31.1**        |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|              | 
|31.2**        |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|              | 
|32.1**        |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|              | 
|32.2**        |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

---

|** | Filed herewith.
|-- | ---------------

|* | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q (file number 0-30889) filed on November 13, 2000.
|- | -----------------------------------------------------------------------------------------------------------------------------------------

|+ | Incorporated by reference to Harbor Global Company Ltd.s Registration Statement on Form 10 (file number 0-30889) filed on June 26, 2000
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|++ | Incorporated by reference to Harbor Global Company Ltd.s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 27, 2005.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



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