SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549




**FORM
      10-Q/A**


x
                Quarterly
                    report under Section 13 or 15(d) of the Securities Exchange Act
                    of 1934
                    for the quarterly period ended September 30,
                    2005.




or




o
              Transition
                  report under Section 13 or 15(d) of the Securities Exchange Act
                  of
                  1934




**Commission
      file number: 0-25940**




**GLOWPOINT,
      INC.**


(Exact
      Name of registrant as Specified in its Charter)




**Delaware**
              (State
                or other Jurisdiction of
              Incorporation
                or Organization)
            **77-0312442**
              (I.R.S.
                Employer Number)





**225
      Long Avenue, Hillside, New Jersey 07205**


(Address
      of Principal Executive Offices)




**312-235-3888**


(Issuer’s
      Telephone Number, Including Area Code)




Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the 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
o No
x




Check
      whether the registrant is an accelerated filer as defined in Rule 12b-2 of
      the
      Exchange Act of 1934.




Yes
o No
x




The
      number of shares outstanding of the registrant’s Common Stock as of November 14,
      2005 was 46,046,340.







**GLOWPOINT,
      INC**




**Index**


PART
                  I - FINANCIAL INFORMATIONItem
                  1. Restated Condensed Consolidated Financial StatementsCondensed
                    Consolidated Balance Sheets at September 30, 2005 (unaudited
                    restated) and
                  December
                    31,2004*
              
              1Unaudited
                  Restated Condensed Consolidated Statements of Operations For the
                  Nine
                  Months
                and
                  ThreeMonths ended September 30, 2005 and 2004
              
              2Unaudited
                  Restated Condensed Consolidated Statements of Cash Flows for the
                  Nine
                  Months EndedSeptember
                  30, 2005 and 2004
              
              3Notes
                  to Restated Condensed Consolidated Financial Statements
              
              5Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              
              11Item
                  3. Quantitative and Qualitative Disclosures about Market
                  Risk
              
              19Item
                  4. Controls and Procedures
              
              20PART
                  II - OTHER INFORMATIONItem
                  1. Legal Proceedings
              
              20Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              
              20Item
                  3. Defaults Upon Senior Securities
              
              20Item
                  4. Submission of Matters to a Vote of Security Holders
              
              20Item
                  5. Other Information
              
              20Item
                  6. Exhibits
              
              20Signatures
              
              21Certifications
              
              22




*
            The
                Condensed Consolidated Balance Sheet at December 31, 2004 has been
                derived
                from the audited restated consolidated financial statements filed
                as an
                exhibit to our Report on Form 8-K on January 18,
                2007.




i




**GLOWPOINT,
      INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(In
      thousands, except par value)**








September
                30, 2005
            
            December
                31, 2004*(Unaudited)
                (Restated - Note 3)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            6,221
            
            $
            4,497Escrowed
                cash
            
            
            —
            
            
            337Accounts
                receivable, net of allowance for doubtful accounts of $152 and $305;
                respectively
            
            
            2,329
            
            
            1,872Receivable
                from Gores Technology Group
            
            
            —
            
            
            2,371Prepaid
                expenses and other current assets
            
            
            923
            
            
            554Total
                current assets
            
            
            9,473
            
            
            9,631Property
                and equipment, net
            
            
            4,588
            
            
            5,103Other
                assets
            
            
            217
            
            
            258Total
                assets
            
            $
            14,278
            
            $
            14,992**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            3,732
            
            $
            2,984Accrued
                expenses
            
            
            4,353
            
            
            3,822Current
                portion of derivative financial instrument
            
            
            1,026
            
            
            367Deferred
                revenue
            
            
            449
            
            
            265Capital
                lease obligations
            
            
            —
            
            
            35Total
                current liabilities
            
            
            9,560
            
            
            7,473Derivative
                financial instrument, less current portion
            
            
            387
            
            
            932Total
                liabilities
            
            
            9,947
            
            
            8,405Preferred
                stock, $.0001 par value; 5,000 shares authorized and redeemable;
                0.120 and
                0.204 Series B shares issued and outstanding, (stated value of $2,888
                and
                $4,888; liquidation value of $3,279 and $5,257),
                respectively
            
            
            2,888
            
            
            4,888Stockholders’
                Equity:Common
                stock, $.0001 par value; 100,000 shares authorized; 46,086 and 37,935
                shares issued and issuable; 45,966 and 37,815 shares outstanding,
                respectively
            
            
            5
            
            
            4Deferred
                compensation
            
            
            (711
            )
            
            (1,176
            )Additional
                paid-in capital
            
            
            160,328
            
            
            148,510Accumulated
                deficit
            
            
            (157,939
            )
            
            (145,399
            )1,683
            
            
            1,939Less:
                Treasury stock, 40 shares at cost
            
            
            (240
            )
            
            (240
            )Total
                stockholders’ equity
            
            
            1,443
            
            
            1,699Total
                liabilities and stockholders’ equity
            
            $
            14,278
            
            $
            14,992





·
            Derived
                from the audited restated consolidated financial statements filed
                as an
                exhibit to our Report on Form 8-K on January 18,
                2007.





See
      accompanying notes to condensed consolidated financial statements.




1


**GLOWPOINT,
      INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(In
      thousands, except per share data)**





**(Restated-
      Note 3)**


**(Unaudited)**




Nine
                Months Ended
              September
                30,
            
            Three
                Months Ended
              September
                30,2005
            
            2004
            
            2005
            
            2004Revenue
            
            $
            13,157
            
            $
            11,748
            
            $
            4,558
            
            $
            4,383Cost
                of revenue
            
            
            11,367
            
            
            11,851
            
            
            3,675
            
            
            4,240Gross
                margin (loss)
            
            
            1,790
            
            
            (103
            )
            
            883
            
            
            143Operating
                expenses:Research
                and development
            
            
            896
            
            
            794
            
            
            320
            
            
            313Sales
                and marketing
            
            
            3,159
            
            
            2,190
            
            
            1,011
            
            
            931General
                and administrative
            
            
            10,616
            
            
            8,694
            
            
            3,946
            
            
            3,118Total
                operating expense
            
            
            14,671
            
            
            11,678
            
            
            5,277
            
            
            4,362Loss
                from operations before other (income) expense
            
            
            (12,881
            )
            
            (11,781
            )
            
            (4,394
            )
            
            (4,219
            )Other
                (income) expense:Amortization
                of deferred financing costs
            
            
            —
            
            
            448
            
            
            —
            
            
            —Interest
                (income) expense, net
            
            
            (76
            )
            
            (5
            )
            
            (43
            )
            
            (26
            )Increase
                in fair value of derivative financial instrument
            
            
            114
            
            
            88
            
            
            33
            
            
            45Amortization
                of discount on subordinated debentures
            
            
            —
            
            
            2,650
            
            
            —
            
            
            —Other
                non-operating business
            
            
            —
            
            
            (132
            )
            
            —
            
            
            (132
            )Loss
                on exchange of debt
            
            
            —
            
            
            743
            
            
            —
            
            
            —Gain
                on settlement with Gores
            
            
            (379
            )
            
            —
            
            
            —
            
            
            —Total
                other (income) expense, net
            
            
            (341
            )
            
            3,792
            
            
            (10
            )
            
            (113
            )Net
                loss
            
            
            (12,540
            )
            
            (15,573
            )
            
            (4,384
            )
            
            (4,106
            )Preferred
                stock dividends
            
            
            (205
            )
            
            (
                270
            )
            
            (58
            )
            
            (99
            )Preferred
                stock deemed dividends
            
            
            (1,282
            )
            
            —
            
            
            —
            
            
            —Net
                loss attributable to common stockholders
            
            $
            (14,027
            )
            $
            (15,843
            )
            $
            (4,442
            )
            $
            (4,205
            )Net
                loss attributable to common stockholders per share:Basic
                and diluted
            
            $
            (0.32
            )
            $
            (0.44
            )
            $
            (0.10
            )
            $
            (0.11
            )Weighted
                average number of common shares:Basic
                and diluted
            
            
            43,693
            
            
            35,865
            
            
            45,966
            
            
            37,841





See
      accompanying notes to condensed consolidated financial statements.




2


**GLOWPOINT,
      INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(In
      thousands)**





**(Restated-
      Note 3)**


**(Unaudited)**




Nine
                Months Ended
              September
                30,2005
            
            2004Cash
                flows from Operating Activities:Net
                loss
            
            $
            (12,540
            )
            $
            (15,573
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            1,727
            
            
            1,669Amortization
                of deferred financing costs
            
            
            —
            
            
            448Amortization
                of discount on subordinated debentures
            
            
            —
            
            
            2,650Loss
                on exchange of debt
            
            
            —
            
            
            743Other
                expense recognized for the increase in the estimated fair value of
                the
                derivative financial instrument
            
            
            114
            
            
            88Common
                stock issued for interest on convertible debentures
            
            
            —
            
            
            45Gain
                on settlement with Gores
            
            
            (379
            )
            
            —Equity-based
                compensation
            
            
            775
            
            
            586Other
            
            
            —
            
            
            (78
            )Increase
                (decrease) in cash attributable to changes in assets and liabilities,
                net
                of effects of acquisition:Escrowed
                cash
            
            
            337
            
            
            (2
            )Accounts
                receivable
            
            
            (457
            )
            
            188Receivable
                from Gores Technology Group
            
            
            —
            
            
            (400
            )Prepaid
                expenses and other current assets
            
            
            (369
            )
            
            350Other
                assets
            
            
            41
            
            
            (220
            )Accounts
                payable
            
            
            748
            
            
            (449
            )Accrued
                expenses
            
            
            577
            
            
            905Deferred
                revenue
            
            
            184
            
            
            17Net
                cash used in operating activities
            
            
            (9,242
            )
            
            (9,033
            )Cash
                flows from Investing Activities:Settlement
                from discontinued operations (Note 6)
            
            
            2,750
            
            
            —Purchases
                of property, equipment and leasehold improvements
            
            
            (1,212
            )
            
            (852
            )Net
                cash provided by (used in) investing activities
            
            
            1,538
            
            
            (852
            )Cash
                flows from Financing Activities:Proceeds
                from issuance of common stock and warrants
            
            
            9,389
            
            
            11,399Offering
                costs
            
            
            —
            
            
            (34
            )Proceeds
                attributed to derivative financial instrument
            
            
            —
            
            
            1,164Proceeds
                from exercise of warrants and options, net
            
            
            74
            
            
            562Payments
                on capital lease obligations
            
            
            (35
            )
            
            (97
            )Net
                cash provided by financing activities
            
            
            9,428
            
            
            12,994Increase
                in cash and cash equivalents
            
            
            1,724
            
            
            3,109Cash
                and cash equivalents at beginning of period
            
            
            4,497
            
            
            4,105Cash
                and cash equivalents at end of period
            
            $
            6,221
            
            $
            7,214Supplement
                disclosures of cash flow information:Cash
                paid during the period for:Interest
            
            $
            2
            
            $
            62




3





Nine
                Months Ended
              September
                30,2005
            
            2004Non-cash
                investing and financing activities:Deferred
                compensation and additional paid-in capital recorded for the issuance
                of
                restricted common stock
            
            $
            —
            
            $
            511Issuance
                of Series B convertible preferred stock in exchange for convertible
                debentures
            
            
            —
            
            
            4,888Conversion
                of Series B convertible preferred stock to common stock
            
            
            2,000
            
            
            —Preferred
                stock deemed dividends
            
            
            1,282
            
            
            —Preferred
                stock dividends
            
            
            205
            
            
            270Equity
                issued as consideration for accrued preferred stock
                dividends
            
            
            183
            
            
            —




See
      accompanying notes to condensed consolidated financial statements.




4


**GLOWPOINT,
      INC.**


**NOTES
      TO RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2005**




**Note
      1 — The Business**




Glowpoint,
      Inc. (“Glowpoint” or “we” or “us”), a Delaware corporation, provides
      comprehensive video communications services. Prior to 2004, Glowpoint, then
      known as Wire One Technologies, Inc., sold substantially all of the assets
      of
      its video solutions (VS) business to an affiliate of Gores Technology Group
      (Gores) (See Note 6). Our services include IP-based and ISDN-based
      videoconferencing services, which are provided principally on a subscription
      basis, and managed bridging conferencing services for multi-point video and
      audio communications among three or more participants. We also provide hosting,
      IP-based broadcasting and event services.




On
      April
      20, 2004, we entered into an agreement with Tandberg, Inc., a wholly owned
      subsidiary of Tandberg ASA (OSLO: TAA.OL), a global provider of visual
      communications solutions. As part of the agreement, we acquired for $1.00
      certain assets and the customer base of Tandberg owned Network Systems LLC.
      Network Systems customers, primarily ISDN-based video users, obtained immediate
      access to our video bridging and webcasting services. As part of the agreement,
      Tandberg’s corporate use of IP video communications and other telecommunications
      services, formerly purchased through Network Systems, is being provided
      exclusively by us under a multi-year agreement. In addition, we assumed current
      contractual commitments with AT&T, MCI and Sprint from Network Systems,
      which were subsequently consolidated into new agreements with these carriers.
      For accounting purposes, such commitments did not result in any additional
      asset
      or liability recognition. The transaction was accounted for following purchase
      accounting under Statement of Financial Accounting Standards (“SFAS”) No. 141, *“Business
      Combinations”* .
      The
      fair value of tangible assets acquired and liabilities assumed were nominal.
      Accordingly, we did not record any value of intangible assets acquired. Results
      of operations of the acquired business were included in the accompanying
      financial statements from April 20, 2004, the date of acquisition. The following
      restated (see Note 3) pro forma information for the nine months ended September
      30, 2004 gives effect to the acquisition as if it had occurred on January 1,
      2004 (in thousands, except per share amounts):




Nine
                Months
              Ended
              September
                30,
              2004Revenue
            
            $
            12,738Gross
                margin
            
            
            410Net
                loss
            
            
            (15,268
            )Net
                loss attributable to common stockholders
            
            
            (15,538
            )Net
                loss attributable to common stockholders per share
            
            $
            (0.43
            )




**Note
      2 — Basis of Presentation**




Our
      accompanying unaudited financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and pursuant to the rules and regulations
      of
      the Securities and Exchange Commission. Accordingly, they do not include all
      of
      the information and footnotes required by accounting principles generally
      accepted in the United States of America for complete financial statements.
      In
      the opinion of management, all adjustments (consisting of normal recurring
      accruals and the restatement adjustments-see Note 3) considered necessary for
      a
      fair presentation have been included. Operating results for the nine months
      and
      three months ended September 30, 2005 and 2004 are not necessarily indicative
      of
      the results that may be expected for the year ending December 31, 2005. For
      further information, refer to the restated consolidated financial statements
      and
      footnotes thereto for the fiscal year ended December 31, 2004 as filed with
      the
      Securities and Exchange Commission as an exhibit to Form 8-K on January 18,
      2007.




The
      restated condensed consolidated financial statements include the accounts of
      Glowpoint and our wholly owned subsidiaries, AllComm Products Corporation
      (“APC”) and VTC Resources, Inc. (“VTC”). All material inter-company balances and
      transactions have been eliminated in consolidation.




5




Our
      condensed consolidated financial statements have been prepared assuming we
      will
      continue as a going concern. We incurred a net loss of $12.5 million and $4.4
      million for the nine months and three months ended September 30, 2005,
      respectively and of $15.6 million and $4.1 million for the nine months and
      three
      months ended September 30, 2004, respectively. We had net cash used in
      operations of $9.2 million and $9.0 million for the nine months ended September
      30, 2005 and 2004, respectively. At September 30, 2005, we had cash and cash
      equivalents of $6.2 million, a working capital deficit of $0.1 million and
      an
      accumulated deficit of $157.9 million. We continue to sustain losses and
      negative cash flows from operations. In March 2006, we commenced a restructuring
      of our business (see Note 11). In March and April 2006, we issued senior secured
      convertible notes and warrants and raised net proceeds of $5.6 million. We
      believe that our available working capital at September 30, 2005, together
      with
      our operating activities and the March and April 2006 financing will enable
      us
      to continue as a going concern through September 30, 2006.




**Note
      3 — Restatement**




The
      accompanying unaudited condensed consolidated financial statements restate
      the
      unaudited condensed consolidated financial statements included in Form 10-Q,
      which was previously filed on May 11, 2006. These restatements relate to
      additional accruals for (i) estimated sales and use taxes, regulatory fees
      and
      related penalties and interest and (ii) a tax obligation of a predecessor of
      Glowpoint and (iii) recognition of compensation expense related to the issuance
      of 100,000 warrants to a financial advisor in May 2005 and for the extension
      in
      the expiration date of 130,500 warrants. The restated condensed consolidated
      balance sheet as of December 31, 2004 has been derived from the audited restated
      financial statements filed as an exhibit to our Report on Form 8-K on January
      18, 2007. The restated condensed consolidated financial statements for the
      nine
      and three months ended September 30, 2004 are consistent with the restated
      unaudited condensed consolidated financial information included in the audited
      restated financial statements filed as an exhibit to Form 8-K on January 18,
      2007. The restatements had the following effect as of September 30, 2005 and
      for
      the nine months ended September 30, 2005 (the 2005 period) and 2004 (the 2004
      period) and for the three months ended September 30, 2005 (the 2005 quarter)
      and
      2004 (the 2004 quarter):




**Accrued
      expenses** -
      Accrued expenses were increased by $2,000,000 as of September 30, 2005 to
      reflect the revised liability for sales and use taxes, regulatory fees and
      related penalties and interest.




**Additional
      paid-in capital** -
      Additional paid-in capital as of September 30, 2005 has been increased by
      $195,000, related to the issuance of 100,000 warrants to a financial advisor
      and
      recorded as compensation and for the extension of the expiration date of 130,500
      warrants.




**Accumulated
      deficit** -
      Accumulated deficit as of September 30, 2005 has been increased by $2,195,000,
      including an increase of $1,401,000 as of January 1, 2005 and an increase in
      our
      net loss for the 2005 period of $599,000 related to sales and use taxes,
      regulatory fees and related penalties and interest and $195,000 for compensation
      expense related to warrants.




**General
      and administrative** -
      General
      and administrative expenses were increased by $794,000 and $582,000,
      respectively, in the 2005 and 2004 periods. The increase is comprised of sales
      and use taxes, regulatory fees and related penalties and interest of $599,000
      and $582,000, respectively, for the 2005 and 2004 periods and $195,000 in the
      2005 period for compensation expense related to warrants. General and
      administrative expenses were increased for sales and use taxes, regulatory
      fees
      and related penalties and interest by $226,000 and $248,000, respectively,
      in
      the 2005 and 2004 quarters.




6


The
      following table summarizes the account balances that have been restated (In
      thousands, except per share amounts):





Previously
                Reported
            
            As
                RestatedSeptember
                30, 2005
              (unaudited)Balance
                sheets:Accrued
                expenses
            
            $
            2,353
            
            $
            4,353Total
                current liabilities
            
            
            7,560
            
            
            9,560Total
                liabilities
            
            
            7,947
            
            
            9,947Additional
                paid-in capital
            
            
            160,133
            
            
            160,328Accumulated
                deficit
            
            
            (155,744
            )
            
            (157,939
            )Total
                stockholders’ equity
            
            $
            3,443
            
            $
            1,443




Previously
                Reported
            
            As
                Restated
            
            Previously
                Reported
            
            As
                Restated
            
            Previously
                Reported
            
            As
                Restated
            
            Previously
                Reported
            
            As
                RestatedNine
                months ended
            
            Nine
                months ended
            
            Three
                months ended
            
            Three
                months endedSeptember
                30, 2005
            
            September
                30, 2004
            
            September
                30, 2005
            
            September
                30, 2004(unaudited)
            
            (unaudited)
            
            (unaudited)
            
            (unaudited)Statements
                of Operations:General
                and administrative
            
            $
            9,822
            
            $
            10,616
            
            $
            8,112
            
            $
            8,694
            
            $
            3,721
            
            $
            3,946
            
            $
            2,870
            
            $
            3,118Total
                operating expenses
            
            
            13,877
            
            
            14,671
            
            
            11,096
            
            
            11,678
            
            
            5,052
            
            
            5,277
            
            
            4,114
            
            
            4,362Loss
                from operations before other (income) expense
            
            
            (12,087
            )
            
            (12,881
            )
            
            (11,199
            )
            
            (11,781
            )
            
            (4,169
            )
            
            (4,394
            )
            
            (3,971
            )
            
            (4,219
            )Net
                loss
            
            
            (11,746
            )
            
            (12,540
            )
            
            (14,991
            )
            
            (15,573
            )
            
            (4,159
            )
            
            (4,384
            )
            
            (3,858
            )
            
            (4,106
            )Net
                loss attributable to common stockholders
            
            
            (13,233
            )
            
            (14,027
            )
            
            (15,261
            )
            
            (15,843
            )
            
            (4,217
            )
            
            (4,442
            )
            
            (3,957
            )
            
            (4,205
            )Net
                loss per share - basic and diluted
            
            $
            (0.30
            )
            $
            (0.32
            )
            $
            (0.43
            )
            $
            (0.44
            )
            $
            (0.09
            )
            $
            (0.10
            )
            $
            (0.10
            )
            $
            (0.11
            )




**Note
      4 — Stock-Based Compensation**




We
      periodically grant stock options to employees and directors in accordance with
      the provisions of our stock option plans, with the exercise price of the stock
      options being set at the closing market price of the common stock on the date
      of
      grant. We account for our employee stock-based compensation plans under
      Accounting Principles Board (“APB”) Opinion No. 25, *“Accounting
      for Stock Issued to Employees”* ,
      and,
      accordingly, account for employee stock-based compensation utilizing the
      intrinsic value method. Statement of Financial Standards (“SFAS”) No. 123, *“Accounting
      for Stock-Based Compensation”* ,
      establishes a fair value based method of accounting for stock-based compensation
      plans. We have adopted the disclosure only alternative under SFAS No. 123,
      and
      SFAS No. 148 *“Accounting
      for Stock Based Compensation - Transition and Disclosure”* which
      requires disclosure of the pro forma effects on our net loss attributable to
      common stockholders and the related per share amounts as if SFAS No. 123 had
      been adopted as well as certain other information.




The
      fair
      value of stock options or warrants issued in return for services rendered by
      non-employees is accounted for using the fair value based method. The following
      table illustrates the effect on net loss attributable to common stockholders
      and
      net loss per share for the nine months and three months ended September 30,
      2005
      and 2004 if the fair value based method had been applied to all
      awards.




7




Nine
                Months Ended
              September
                30,
            
            Three
                Months Ended
              September
                30,2005
            
            2004
            
            2005
            
            2004Net
                loss attributable to common stockholders, as
              reported
                herein
            
            $
            (14,027
            )
            $
            (15,843
            )
            $
            (4,442
            )
            $
            (4,205
            )Add:
                stock-based compensation expense included in reported
                loss.
            
            
            509
            
            
            550
            
            
            198
            
            
            172Deduct:
                total stock-based employee
              compensation
                expense determined under the
              fair
                value based method for all awards
            
            
            (1,351
            )
            
            (1,490
            )
            
            (504
            )
            
            (710
            )Pro
                forma net loss attributable to common
              stockholders
            
            $
            (14,869
            )
            $
            (
                16,783
            )
            $
            (4,748
            )
            $
            (
                4,743
            )Net
                loss attributable to common stockholders per
              share:Basic
                and diluted - as reported herein
            
            $
            (0.32
            )
            $
            (0.44
            )
            $
            (0.10
            )
            $
            (0.11
            )Basic
                and diluted - pro forma
            
            $
            (0.34
            )
            $
            (0.47
            )
            $
            (0.10
            )
            $
            (0.13
            )




The
      weighted average grant date fair value of options granted during the nine months
      and three months ended September 30, 2005 were $1.10 and $0.99, respectively.
      The weighted average grant date fair value of options granted during the nine
      months and three months ended September 30, 2004 were $1.06 and $1.00,
      respectively. The weighted average grant date fair value of 190,000 shares
      of
      restricted common stock granted during the nine months ended September 30,
      2004
      was $2.01. The fair value of our stock-based option awards to employees was
      estimated assuming no expected dividends and the following weighted average
      assumptions:




Nine
                Months Ended
              September
                30,
            
            Three
                Months Ended
              September
                30,2005
            
            2004
            
            2005
            
            2004Risk
                free interest rate
            
            
            4.07
            
            
            3.51
            
            
            4.19
            
            
            3.57Expected
                lives
            
            
            5
                Years
            
            
            5
                Years
            
            
            5
                Years
            
            
            5
                YearsExpected
                volatility
            
            
            108.51
            %
            
            113.60
            %
            
            107.94
            %
            
            113.66
            %




**Note
      5 — Loss Per Share**




Basic
      loss per share is calculated by dividing net loss attributable to common
      stockholders by the weighted average number of shares of common stock
      outstanding during the period. Diluted loss per share for the nine months and
      three months ended September 30, 2005 and 2004 is the same as basic loss per
      share. Potential shares of common stock associated with 14,787,000 and
      12,345,000 outstanding and issuable options and warrants and 1,301,000 and
      2,080,000 shares issuable upon the conversion of our Series B convertible
      preferred stock as of September 30, 2005 and 2004, respectively, have been
      excluded from the diluted calculations because the effects would be
      antidilutive.




**Note
      6 — Sale of VS Business**




In
      September 2003, we completed the sale of all of the assets of our VS business
      to
      Gores pursuant to the terms of the asset purchase agreement dated as of June
      10,
      2003. The total consideration payable to us under the agreement was up to $24
      million, consisting of $21 million in cash, of which $19 million was payable
      as
      of closing ($335,000 was placed in an escrow account) and $2 million was held
      back by Gores to cover potential purchase price adjustments, an unsecured $1
      million promissory note maturing on December 31, 2004 and bearing interest
      at 5%
      per annum and up to $2 million in earn-out payments based on performance of
      the
      assets over the two years following the closing. As partial consideration for
      the purchase of assets, Gores also assumed certain liabilities related to the
      VS
      business, including (1) all liabilities to be paid or performed after the
      closing date that arose from or out of the performance or non-performance by
      Gores after the closing date of any contracts included in the assets or entered
      into after June 10, 2003 and (2) our accounts payable, customer deposits,
      deferred revenue and accrued liabilities related to the VS
      business.




8




Pursuant
      to the agreement, Gores agreed that, for a period of three years commencing
      on
      the closing date, it would not, directly or indirectly, acquire or own any
      equity interest in certain of our competitors identified in the agreement.
      The
      agreement further provided that Gores could acquire an identified competitor
      upon payment to us of a one-time fee of $5 million. In November 2004, Gores
      acquired V-SPAN, Inc., which was one of the identified competitors.




Following
      the closing of the sale to Gores, we were unable to reach agreement with Gores
      on the amount, if any, of the adjustment to be made to the purchase price,
      which
      was based on the net assets, as defined, of the VS business sold to Gores as
      of
      June 30, 2003. Consequently, we entered into arbitration with Gores in July
      2004, with PriceWaterhouseCoopers as the arbitrator. In January 2005, the
      arbitrator concluded that the net assets of the VS business sold to Gores should
      be reduced by $4.3 million.




In
      March
      2005, we entered into a settlement agreement with Gores, resolving the
      outstanding disputes between the companies relating to the sale of the VS
      business, various payables between the companies and Gores’ acquisition of
      V-SPAN. Pursuant to the agreement, Gores paid us $2.75 million and released
      the
      $335,000, including interest thereon that was escrowed at the closing of the
      asset sale. We dismissed our lawsuit against Gores relating to the V-SPAN
      acquisition. We will not receive any payments under the earn-out provision
      in
      the agreement.




The
      ultimate settlement of amounts due to/from Gores that arose subsequent to the
      transaction closing date and unrelated to the sale transaction, including
      $293,000 and $77,000 of revenues that we recognized during the nine months
      and
      three months ended September 30, 2004, respectively have been excluded from
      the
      sale transaction, and a gain from the settlement of these items of $379,000
      has
      been recognized during the nine months ended September 30, 2005, when the
      settlement was reached with Gores.




The
      arbitrator’s adjustment of $4,340,000 related to the correction of specific
      financial reporting errors. Accordingly, the accompanying financial statements
      reflect these items prior to 2004 and the gain or loss on the transaction has
      been accounted for upon the closing in 2003. Pursuant to the settlement
      agreement with Gores in 2005, each party was released from amounts due to the
      other beyond the payment by Gores of $2,750,000 and the release of the escrowed
      cash to us. Accordingly, we recognized the gain on settlement.




**Note
      7 — Bank Loan Payable**




In
      February 2004, we terminated a working capital credit facility with JPMorgan
      Chase. As a result of the termination of this facility, we wrote off $85,000
      of
      unamortized deferred financing costs to expense in the nine months ended
      September 30, 2004.




**Note
      8 — Stockholder’s Equity**




In
      January 2004, in exchange for the cancellation and termination of convertible
      debentures with an aggregate face value of $4,888,000 and forfeiture of any
      and
      all rights of collection, claim or demand under the debentures, we agreed to
      give the holders of the debentures: (i) an aggregate of 203.667 shares of series
      B convertible preferred stock; (ii) an aggregate of 250,000 shares of restricted
      common stock; and (iii) a reduction of the exercise price of the warrants issued
      pursuant to the original purchase agreement from $3.25 to $2.75. As a result
      of
      this exchange, the unamortized discount on subordinated debentures and deferred
      financing costs were written off to expense, resulting in amortization of
      discount of $2,650,000 and amortization of deferred financing costs of $363,000
      for the nine months ended September 30, 2004. Additionally, we recognized a
      $743,000 loss on the exchange. The investors have anti-dilution rights. As
      a
      result of the February 2004 and March 2005 financings, the conversion price
      of
      the Series B convertible preferred stock and the exercise price of the warrants
      have been adjusted to $2.22 and $2.47, respectively and we recognized deemed
      dividends of $115,000 in the nine months ended September 30, 2005. The
      corresponding amount in the 2004 period was nominal.




In
      February 2004, we raised net proceeds of $12.5 million in a private placement
      of
      6,100,000 shares of our common stock at $2.25 per share. We also issued warrants
      to the investors in the private placement to purchase 1,830,000 shares of our
      common stock at an exercise price of $2.75 per share. The warrants expire five
      and a half years after the closing date. The warrants are subject to certain
      anti-dilution protection and as a result of the March 2005 financing, the
      exercise price was reduced to $2.60 (the incremental fair value was nominal).
      We
      also issued to our placement agent five and a half year warrants to purchase
      427,000 shares of common stock at an exercise price of $2.71 per share with
      an
      estimated fair value of $895,000. As a result of the March 2005 financing,
      the
      exercise price was reduced to $2.60




9




The
      registration rights agreement for the February 2004 financing provides for
      liquidated damages of 3% of the aggregate purchase price for the first month
      and
      1.5% for each subsequent month if we failed to register the common stock and
      the
      shares of common stock underlying the warrants or maintain the effectiveness
      of
      such registration. We account for the registration rights agreement as a
      separate freestanding instrument and account for the liquidated damages
      provision as a derivative liability subject to SFAS No. 133. The estimated
      fair
      value of the derivative liability is based on estimates of the probability
      and
      costs expected to be incurred and such estimates are revalued at each balance
      sheet date with changes in value recorded as other income or expense.
      Approximately $1,164,000 of the proceeds of the financing was attributed to
      the
      estimated fair value of the derivative liability. We estimated the fair value
      of
      the derivative liability to be $1,413,000 as of September 30, 2005 and
      $1,298,000 as of December 31, 2004. We recognized other expense of $88,000
      and
      $45,000 for the nine months and three months ended September 30, 2004,
      respectively and $114,000 and $33,000 for the nine months and three months
      ended
      September 30, 2005, respectively.




In
      March
      2005, we raised net proceeds of $9.4 million in a private placement of 6,766,667
      shares of our common stock at $1.50 per share. Investors in the private
      placement were also issued warrants to purchase 2,706,667 shares of common
      stock
      at an exercise price of $2.40 per share. The warrants expire five years after
      the closing date. The warrants are subject to certain anti-dilution protection.




In
      March
      2005, 83.333 shares of our outstanding Series B convertible preferred stock
      and
      accrued dividends of $183,000 were exchanged for 1,333,328 shares of our common
      stock and warrants to purchase 533,331 shares of our common stock with an excess
      aggregate fair value of $1,167,000. We recognized deemed dividends of $1,167,000
      during the 2005 period in connection with the warrants and a reduced conversion
      price, which were offered as an inducement to convert.




**Note
      9 — Other Matters**




In
      April
      2005, we amended our operating lease for our Hillside, New Jersey office to
      extend the term of the lease through April 2007. At such time, we also increased
      the square feet under lease. Payments under the amended lease aggregate
      $145,000, $218,000 and $73,000 for the years ending December 31, 2005, 2006
      and
      2007, respectively, excluding operating costs.




**Note
      10 — Subsequent Events**




In
      March
      2006, we implemented a corporate restructuring plan designed to reduce certain
      operating, sales and marketing and general and administrative costs. As part
      of
      the strategic initiative, we implemented management changes, including the
      promotion of Michael Brandofino to Chief Operating Officer with principal
      responsibility for the implementation and management of the restructuring plan.
      Gerard Dorsey, Executive Vice President and Chief Financial Officer since
      December 2004, left Glowpoint in April 2006. In April 2006, Mr. Brandofino
      was
      appointed President and Chief Executive Officer and a member of the Board of
      Directors and Ed Heinen was appointed Chief Financial Officer.




In
      March
      and April 2006, we issued senior secured convertible notes and warrants in
      a
      private placement to private investors. In the transaction, we issued $6.18
      million aggregate principal amount of our 10% Senior Secured Convertible Notes,
      Series A warrants to purchase 6,180,000 shares of common stock at an exercise
      price of $0.65 per share and Series B warrants to purchase 6,180,000 shares
      of
      common stock at an exercise price of $0.01 per share. The warrants are subject
      to certain anti-dilutive protection. The Series B warrants only become
      exercisable if we fail to achieve positive operating income, determined in
      accordance with generally accepted accounting principles, excluding
      restructuring and non-cash charges, in the fourth quarter of 2006. In addition,
      the Series B warrants will be cancelled if we consummate a strategic transaction
      or repay the Notes prior to the date we make our financial statements for the
      fourth quarter of 2006 available to the public. We also agreed to change the
      exercise price of all previously issued warrants held by the investors in this
      offering to $0.65, and to extend the term of any such warrants that would expire
      earlier than three years after the offering date. Our costs related to the
      issuance of the notes were approximately $0.58 million, a portion of which
      represents placement fees of $0.5 million to Burnham Hill
      Partners, our placement agent. In addition, we issued to Burnham
      Hill Partners placement agent warrants to purchase 618,000 shares of our
      common stock at an exercise price of $0.55 per share. The $5.6 million net
      proceeds of the offering will be used to support our corporate restructuring
      program and for working capital.




10




The
      Notes
      bear interest at 10% per annum, mature on September 30, 2007 and are convertible
      into common stock at a conversion rate of $0.50 per share. The Series A and
      Series B warrants are exercisable for a period of 5 years.




We
      are
      evaluating the accounting treatment of this transaction, including consideration
      of applicable accounting standards for derivative instruments.  We are also
      evaluating the effect on the conversion price of our Series B convertible
      preferred stock and the exercise price of outstanding warrants that are subject
      to anti-dilution adjustments occasioned by this transaction.  Reductions to
      the conversion price and exercise prices may result in deemed dividend
      treatment.




**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





The
      following discussion should be read in conjunction with our condensed
      consolidated financial statements for the nine months and three months ended
      September 30, 2005 and 2004 and the notes thereto included elsewhere herein.
      The
      discussion of results, causes and trends should not be construed to imply any
      conclusion that such results or trends will necessarily continue in the
      future.




The
      statements contained herein, other than historical information, are or may
      be
      deemed to be forward-looking statements within the meaning of Section 27A of
      the
      Securities Act of 1933, as amended, and Section 21E of the Securities and
      Exchange Act of 1934, as amended, and involve factors, risks and uncertainties
      that may cause our actual results in future periods to differ materially from
      such statements. These factors, risks and uncertainties, include market
      acceptance and availability of new video communications services; the
      non-exclusive and terminable at-will nature of sales agent agreements; rapid
      technological change affecting demand for our services; competition from other
      video communication service providers; and the availability of sufficient
      financial resources to enable us to expand our operations.




**Overview**




Glowpoint,
      Inc. ("Glowpoint" or "we" or "us"), a Delaware corporation, provides
      comprehensive video communications services over its carrier-grade IP-based
      subscriber network enabling users to connect across the United States, as well
      as to business centers around the world. Prior to 2004, Glowpoint, then known
      as
      Wire One Technologies, Inc., sold substantially all of the assets of its video
      solutions (VS) business to an affiliate of Gores Technology Group (Gores).
      See
      Note 7 to the condensed consolidated financial statements for further
      information.




On
      April
      20, 2004, we entered into an agreement with Tandberg, Inc., a wholly owned
      subsidiary of Tandberg ASA (OSLO:TAA.OL), a global provider of visual
      communications solutions. As part of the agreement, we acquired for $1.00
      certain assets and the customer base of Tandberg-owned Network Systems LLC
      (successor to the NuVision Companies). Network Systems customers, primarily
      ISDN-based video users, obtained immediate access to our video bridging and
      webcasting services. As part of the agreement, Tandberg's corporate use of
      IP
      video communications and other telecommunications services, formerly purchased
      through Network Systems, is being provided exclusively by us under a multi-year
      agreement. In addition, we assumed contractual commitments with AT&T, MCI
      and Sprint from Network Systems, which were subsequently consolidated into
      new
      agreements with these carriers. Tandberg named the Glowpoint Certified Program
      as a recognized external testing partner for its hardware and software
      products.






In
      March
      2005, we entered into a strategic alliance with Sony Electronics, Inc. to create
      and launch a complete, Sony-customized, user-friendly video communication
      solution focused on broadening the use of IP-based video in and out of
      traditional office environments. Initially the relationship focused on creating
      a unique video experience for Sony customers by "private labeling" Glowpoint's
      features and services for Sony. The two companies launched a number of
      initiatives including broadcast solutions and an internet based video service
      called IVE (an acronym for Instant Video Everywhere). We developed and own
      IVE,
      but branded it for Sony as part of this initiative. In March 2006 Glowpoint
      and
      Sony modified and renewed their agreements to limit the focus to providing
      solutions for the broadcast market, which the parties believe has the most
      promise for near-term success.




In
      February 2006, we signed a separate agreement with Sony of Canada Ltd. to
      promote and resell our services, including the IVE video service. The IVE video
      service is now branded "Glowpoint’s IVE."




11




On
      March
      7, 2005, we announced a settlement agreement with Gores, resolving the
      outstanding disputes relating to the sale of the assets of our VS business
      to
      Gores in September 2003. The agreement also covered Gores' acquisition of V-SPAN
      Inc. in November 2004. Pursuant to the terms of the settlement agreement, Gores
      paid us $2.75 million and released to us the $335,000 that was escrowed at
      the
      closing of the asset sale. Also as part of the settlement, we dismissed our
      lawsuit against Gores relating to the V-SPAN acquisition.




On
      March
      14, 2005, we entered into a common stock purchase agreement with several
      unrelated institutional investors in connection with the offering of (i) an
      aggregate of 6,766,667 shares of our common stock and (ii) warrants to purchase
      up to an aggregate of 2,706,667 shares of our common stock. We received proceeds
      from this offering of approximately $10.15 million, less our expenses relating
      to the offering, which were approximately $760,500, a portion of which
      represents investment advisory fees totaling $710,500 to Burnham Hill Partners,
      our financial advisor. The warrants are exercisable for a five-year period
      term
      and have an exercise price of $2.40 per share. The warrants may be exercised
      by
      cash payment of the exercise price or by "cashless exercise."




**Restatement**




Glowpoint
      has reviewed its accruals relating to sales and use taxes, regulatory fees
      and
      related penalties and interest. This analysis caused Glowpoint to revise certain
      assumptions and determinations and, on September 20, 2006, Glowpoint’s Board of
      Directors concluded that the restatement of previously issued financial
      statements was appropriate. We have also reflected an adjustment to recognize
      compensation expense related to the issuance of 100,000 warrants to a financial
      advisor in May 2005 and the modification of the expiration date for 130,500
      warrants.




Additionally,
      on October 26, 2006, Glowpoint announced a potential tax owed by All
      Communications Corp. (“AllComm”), a predecessor of Glowpoint, to New York State
      Department of Taxation and Finance (the “AllComm Tax Liability”).  Our
      representatives then met with New York State officials and presented the
      supporting documentation in an attempt to have this matter resolved on the
      merits of the case. On or about December 12, 2006, we and New York State agreed
      on the amount of $269,000 owed to settle the AllComm Tax Liability.




Accordingly,
      we have restated our unaudited condensed consolidated balance sheet as of
      September 30, 2005 and the unaudited condensed consolidated statements of
      operations for the nine and three months ended September 30, 2005 and 2004
      and
      cash flows for the nine months ended September 30, 2005 and 2004, which were
      previously filed on Form 10-Q on May 11, 2006. The restated condensed
      consolidated balance sheet as of December 31, 2004 has been derived from the
      audited restated financial statements filed as an exhibit to our Report on
      Form
      8-K on January 18, 2007. The restated condensed consolidated financial
      statements for the nine and three months ended September 30, 2004 are consistent
      with the restated unaudited condensed consolidated financial information
      included in the audited restated financial statements filed as an exhibit to
      Form 8-K on January 18, 2007. We have described the specific impact of the
      restatement as of September 30, 2005 and for the nine months ended September
      30,
      2005 (the 2005 period) and 2004 (the 2004 period) and for the three months
      ended
      September 30, 2005 (the 2005 quarter) and 2004 (the 2004 quarter) in the
      discussion below.




12




**Results
      of Operations**




The
      following table sets forth for the nine months and three months ended September
      30, 2005 and 2004, information derived from our restated condensed consolidated
      financial statements as expressed as a percentage of revenues:




(Unaudited)Nine
                Months Ended
              September
                30,
            
            Three
                Months Ended
              September
                30 ,2005
            
            2004
            
            2005
            
            2004Revenue
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of revenue
            
            
            86.4
            
            
            100.9
            
            
            80.6
            
            
            96.7Gross
                margin (loss)
            
            
            13.6
            
            
            (0.9
            )
            
            19.4
            
            
            3.3Operating
                expenses:Research
                and development
            
            
            6.8
            
            
            6.8
            
            
            7.0
            
            
            7.1Sales
                and marketing
            
            
            24.0
            
            
            18.6
            
            
            22.2
            
            
            21.2General
                and administrative
            
            
            80.7
            
            
            74.1
            
            
            86.6
            
            
            71.1Total
                operating expenses
            
            
            111.5
            
            
            99.5
            
            
            115.8
            
            
            99.4Loss
                from operations before other (income)
              expense
            
            
            (97.9
            )
            
            (100.4
            )
            
            (96.4
            )
            
            (96.1
            )Other
                (income) expense:Amortization
                of deferred financing costs
            
            
            0.0
            
            
            3.8
            
            
            0.0
            
            
            ──Interest
                (income) expense, net
            
            
            (0.6
            )
            
            (0.1
            )
            
            (1.0
            )
            
            (0.6
            )Increase
                in derivative financial instrument
            
            
            0.9
            
            
            0.7
            
            
            0.7
            
            
            1.0Amortization
                of discount on
              subordinated
                debentures
            
            
            0.0
            
            
            22.6
            
            
            0.0
            
            
            ──Other
                non-operating business
            
            
            ──
            
            
            (1.1
            )
            
            ──
            
            
            (3.0
            )Loss
                on exchange of debt
            
            
            0.0
            
            
            6.3
            
            
            0.0
            
            
            ──Gain
                on settlement with Gores
            
            
            (2.9
            )
            
            ──
            
            
            ──
            
            
            ──Total
                other (income) expenses, net
            
            
            (2.6
            )
            
            32.2
            
            
            (0.3
            )
            
            (2.6
            )Net
                loss
            
            
            (95.3
            )
            
            (132.6
            )
            
            (96.1
            )
            
            (93.5
            )Preferred
                stock dividends
            
            
            (1.6
            )
            
            (2.3
            )
            
            (1.3
            )
            
            (2.3
            )Preferred
                stock deemed dividends
            
            
            (9.7
            )
            
            ──
            
            
            ──
            
            
            ──Net
                loss attributable to common
              stockholders
            
            
            (106.6
            )%
            
            (134.9
            )%
            
            (97.4
            )%
            
            (95.8
            )%




**Nine
      Months Ended September 30, 2005 (the “2005 period”) Compared to Nine Months
      Ended September 30, 2004 (the “2004 period”) and the Three Months Ended
      September 30, 2005 (the “2005 quarter”) Compared to Three Months Ended September
      30, 2004 ( the “ 2004 quarter”).**




**Revenue** -
      Revenue increased $1.4 million, or 12%, in the 2005 period to $13.2 million
      from
      $11.8 million in the 2004 period. Subscription and related revenue (which
      includes contractual revenue related to the Network Services customer base,
      formerly known as NuVision) increased $0.6 million, or 8%, in the 2005 period
      to
      $8.2 million from $7.6 million in the 2004 period. Contractual revenue related
      to the Network Services customer base was $0.2 million in both the 2005 period
      and the 2004 period. We began receiving revenue from this customer base when
      we
      acquired it from Tandberg, Inc. in April 2004. Non-subscription revenue
      consisting of bridging, events and other one-time fees increased $0.8 million,
      or 20%, in the 2005 period to $4.9 million from $4.1 million in the 2004 period.
      The growth in non-subscription revenue was the result of an increase of $0.7
      million in revenue from the Network Services customer base in the 2005 period
      from the 2004 period. Revenues for the 2005 quarter increased $0.2 million,
      or
      4%, to $4.6 million from $4.4 million in the 2004 quarter. Subscription and
      related revenue increased $.3 million, or 10%, in the 2005 quarter to $2.9
      million from $2.6 million in the 2004 quarter. Non-subscription revenue
      consisting of bridging events and other one-time fees decreased $0.1 million,
      or
      3%, in the 2005 quarter to $1.7 million from $1.8 million in the 2004 quarter.
      This decrease was caused by a reduction in revenue from the Network Services
      customer base.




13





**Cost
      of revenue** - Cost
      of revenues for the 2005 period decreased $0.5 million, or 4%, to $11.4 million
      from $11.9 million in the 2004 period. Cost of revenues decreased $0.5 million,
      or 13%, in the 2005 quarter to $3.7 million from $4.2 million in the 2004
      quarter. The decline in costs as a percentage of revenue in the 2005 period
      and
      the 2005 quarter is the result of the renegotiation of rates, the migration
      of
      service to lower cost providers where possible and a reduction of $166,000
      to
      reflect a vendor credit relating to a second quarter of 2005 billing dispute.
      For the 2005 period, additional revenue associated with the Network Services
      customer base, which began in the second quarter of 2004, resulted in increased
      gross margins. This additional revenue caused our gross margin to increase
      to
      13.6% in the 2005 period (12.3% excluding the credit) from a negative 0.9%
      in
      the 2004 period. The additional revenue also caused our gross margin to increase
      to 19.4% (15.7% excluding the credit) in the 2005 quarter from 3.3% in the
      2004
      quarter. The rate of increase in our gross margin percentage is not indicative
      of results expected to be achieved in subsequent periods.





**Research
      and development** -
      Research and development costs, which include the costs of the personnel in
      this
      group, the equipment they use and their use of the network for development
      projects, increased by $0.1 million in the 2005 period to $0.9 million from
      $0.8
      million in the 2004 period. The increase was a result of increased usage of
      outside contractors to meet the demand for application development in
      conjunction with new product development for us and certain of our partners.
      Research and development expense was $0.3 million for the 2005 quarter and
      2004
      quarter. Research and development expense as a percentage of revenue was 6.8%
      for the 2005 period, 6.8% for the 2004 period, 7.0% for the 2005 quarter and
      7.1% for the 2004 quarter.





**Sales
      and marketing** - Sales
      and marketing expenses, which include sales salaries, commissions, overhead
      and
      marketing costs, increased $1.0 million in the 2005 period to $3.2 million
      from
      $2.2 million in the 2004 period. The primary causes of the increase in costs
      for
      the 2005 period were a $0.5 million increase in salaries, benefits and travel
      costs resulting from the addition of a direct sales force of 11 employees and
      an
      increase of $0.3 million in marketing expense associated with a sales lead
      generation program and other initiatives. Sales and marketing expenses increased
      $0.1 million to $1.0 million for the 2005 quarter from $0.9 million for the
      2004
      quarter. The primary causes of the increase in costs for the 2005 quarter were
      an increase in salaries, benefits and travel costs. Sales and marketing expense,
      as a percentage of revenue, was 24.0% for the 2005 period, 18.6% for the 2004
      period, 22.2% for the 2005 quarter and 21.2% for the 2004 quarter.





**General
      and administrative** -
      General and administrative expenses, as restated, increased $1.9 million in
      the
      2005 period to $10.6 million from $8.7 million in the 2004 period. The primary
      components of the increase were $1.1 million in salaries and benefits related
      to
      executive management and increased staffing levels, $0.8 million for
      professional fees incurred in connection with the restatement of our financial
      statements and the related audit committee investigation, $0.2 million of
      equity-based financial advisory fees and $0.2 million for increased equipment
      rentals. These increases were partially offset by a reduction of $0.4 in
      consulting fees. General and administrative expenses increased $0.8 million
      to
      $3.9 million for the 2005 quarter from $3.1 million for the 2004 quarter.
      Professional fees incurred in connection with the restatement of our financial
      statements and the related audit committee investigation resulted in an increase
      of $0.8 million and salaries and benefits related to executive management and
      increased staffing levels increased $0.3 million in the 2005 quarter. These
      increases were partially offset by reductions of $0.2 million in consulting
      fees. General and administrative expenses include (i) estimated sales and use
      taxes, regulatory fees and related penalties and interest and (ii) a tax
      obligation of a predecessor of Glowpoint which totaled $0.8 million for both
      the
      2005 period and 2004 period and $0.3 million for both the 2005 quarter and
      2004
      quarter. Sales taxes and regulatory fees are supposed to be, or are routinely,
      collected from customers and remitted to the applicable authorities in certain
      circumstances. We have not been collecting and remitting such taxes and
      regulatory fees and as a result our general and administrative expenses include
      costs for such matters that would otherwise not have been incurred. General
      and
      administrative expenses as a percentage of revenue were 80.7% in the 2005
      period, 74.1% in the 2004 period, 86.6% in the 2005 quarter and 71.1% in the
      2004 quarter.





**Restatement
      Impact - General and administrative** -
      General and administrative expenses were increased by $794,000 and $582,000,
      respectively, in the 2005 and 2004 periods. The increase is comprised of sales
      and use taxes, regulatory fees and related penalties and interest of $599,000
      and $582,000, respectively, for the 2005 and 2004 periods and $195,000 in the
      2005 period for compensation expense related to warrants. General and
      administrative expenses were increased by $226,000 and $248,000, respectively,
      in the 2005 and 2004 quarters. The increase is comprised of sales and use taxes,
      regulatory fees and related penalties and interest.





**Other
      (income) expense** - Other
      income of $0.3 million for the 2005 period principally reflects a gain on the
      settlement of an amount owed to Gores. Other expense of $3.8 million for the
      2004 period principally reflects amortization of discount on convertible
      debentures and related deferred financing costs and a loss on exchange of the
      debentures for Series B convertible preferred stock, common stock and a
      modification to warrants. Other income for the 2005 quarter reflects net
      interest income and for the 2004 quarter reflects a gain on marketable
      securities and an insurance claim payment.




14





**Preferred
      stock deemed dividends** -
      We
      recognized deemed dividends of $1,167,000 for the 2005 period in connection
      with
      warrants and a reduced conversion price, which were offered as an inducement
      to
      convert our Series B convertible preferred stock. In addition, we recognized
      deemed dividends of $115,000 in the 2005 period in connection with an
      anti-dilution adjustment to the conversion price of our Series B convertible
      preferred stock resulting from our March 2005 financing. There were no deemed
      dividends previously reported.





**Net
      loss** - Net
      loss attributable to common stockholders, as restated, increased to $14.0
      million, or $0.32 per basic and diluted share, in the 2005 period from $15.8
      million, or $0.44 per basic and diluted share, in the 2004 period. Net loss
      attributable to common stockholders, as restated, increased to $4.4 million,
      or
      $0.10 per basic and diluted share in the 2005 quarter, from $4.2 million in
      the
      2004 quarter, or $0.11 per basic and diluted share, in the 2004
      quarter.





**Earnings
      before interest, taxes, depreciation and amortization
      (EBITDA)** - EBITDA
      is not a standard financial measurement under accounting principles generally
      accepted in the United States of America (GAAP). EBITDA should not be considered
      as an alternative to net loss or cash flow from operating activities as a
      measure of liquidity or as an indicator of operating performance or any measure
      of performance derived in accordance with GAAP. EBITDA is provided below to
      more
      clearly present the financial results that management uses to internally
      evaluate its business. We believe that this non-GAAP financial measure allows
      investors and management to evaluate and compare our operating results from
      continuing operations from period to period in a meaningful and consistent
      manner. The following table provides a reconciliation of the net loss
      attributable to common stockholders to EBITDA from continuing
      operations.





Nine
                Months Ended
              September
                30,
            
            Three
                Months Ended
              September
                30,2005
            
            2004
            
            2005
            
            2004(Restated)
            
            (Restated)
            
            (Restated)
            
            (Restated)Net
                loss attributable to common stockholders
            
            $
            (14,027
            )
            $
            (15,843
            )
            $
            (4,442
            )
            $
            (4,205
            )Depreciation
                and amortization
            
            
            1,727
            
            
            1,669
            
            
            580
            
            
            567Amortization
                of deferred financing costs
            
            
            —
            
            
            448
            
            
            —
            
            
            —Amortization
                of discount on subordinated debentures
            
            
            —
            
            
            2,650
            
            
            —
            
            
            —Loss
                on exchange of debt
            
            
            —
            
            
            743
            
            
            —
            
            
            —Gain
                from discontinued operations
            
            
            (379
            )
            
            —
            
            
            —
            
            
            —Preferred
                stock dividends and deemed dividends
            
            
            1,487
            
            
            270
            
            
            58
            
            
            99Interest
                income, net
            
            
            (76
            )
            
            (5
            )
            
            (43
            )
            
            (26
            )EBITDA
                from continuing operations
            
            $
            (11,268
            )
            $
            (10,068
            )
            $
            (3,847
            )
            $
            (3,565
            )




**Liquidity
      and Capital Resources**




At
      September 30, 2005, we had a working capital deficit of $0.1 million compared
      to
      working capital of $2.2 million at December 31, 2004, a decrease of
      approximately $2.3 million or 105%. We had $6.2 million in cash and cash
      equivalents at September 30, 2005 compared to $4.5 million at December 31,
      2004.
      The $1.7 million increase in cash resulted from the net proceeds from the March
      2005 private placement of common stock of $9.4 million and the $2.7 million
      from
      the Gores settlement offset by the $9.2 million usage of cash in operations
      in
      the 2005 period and the purchase of $1.2 million of property, equipment and
      leasehold improvements.




In
      January 2004, in exchange for the cancellation and termination of convertible
      debentures with an aggregate face value of $4,888,000 and forfeiture of any
      and
      all rights of collection, claim or demand under the debentures, we agreed to
      give the holders of the debentures: (i) an aggregate of 203.667 shares of series
      B convertible preferred stock; (ii) an aggregate of 250,000 shares of restricted
      common stock; and (iii) a reduction of the exercise price of the warrants issued
      pursuant to the original purchase agreement from $3.25 to $2.75.




15




In
      February 2004, we raised net proceeds of $12.5 million in a private placement
      of
      6,100,000 shares of our common stock at $2.25 per share. We also issued warrants
      to purchase 1,830,000 shares of our common stock at an exercise price of $2.75
      per share. The warrants expire on August 17, 2009. The warrants are subject
      to
      certain anti-dilution protection and as a result of the March 2005 financing,
      the exercise price was reduced to $2.60 (the incremental fair value was
      nominal). In addition, we issued to our placement agent five and a half year
      warrants to purchase 427,000 shares of common stock at an exercise price of
      $2.71 per share.




In
      February 2004, we terminated a $7.5 million revolving credit facility with
      JPMorgan Chase.




In
      March
      2005, we entered into a common stock purchase agreement with several unrelated
      institutional investors in connection with the offering of (i) an aggregate
      of
      6,766,667 shares of our common stock and (ii) warrants to purchase up to an
      aggregate of 2,706,667 shares of our common stock. We received proceeds from
      this offering of approximately $10.15 million, less our expenses relating to
      the
      offering, which were approximately $760,500, a portion of which represents
      investment advisory fees totaling $710,500 to Burnham Hill Partners, our
      financial advisor. The warrants are exercisable for a five-year period term
      and
      have an exercise price of $2.40 per share. The warrants are subject to certain
      anti-dilution protection. The warrants may be exercised by cash payment of
      the
      exercise price or by “cashless exercise.”




In
      March
      and April 2006, we issued senior secured convertible notes and warrants in
      a
      private placement to private investors. In the transaction, we issued $6.18
      million aggregate principal amount of our 10% Senior Secured Convertible Notes,
      Series A warrants to purchase 6,180,000 shares of common stock at an exercise
      price of $0.65 per share and Series B warrants to purchase 6,180,000 shares
      of
      common stock at an exercise price of $0.01 per share. The warrants are subject
      to certain anti-dilution protection. The Series B warrants only become
      exercisable if we fail to achieve positive operating income, determined in
      accordance with GAAP, excluding restructuring and non-cash charges, in the
      fourth quarter of 2006. In addition, the Series B warrants will be cancelled
      if
      we consummate a strategic transaction or repay the Notes prior to the date
      we
      make our financial statements for the fourth quarter of 2006 available to the
      public. We also agreed to change the exercise price of all previously issued
      warrants held by the investors in this offering to $0.65, and to extend the
      term
      of any such warrants that would expire earlier to three years after the offering
      date. Our costs related to the issuance of the notes were approximately $0.58
      million, a portion of which
      represents placement fees of $0.5 million to Burnham Hill
      Partners, our placement agent. In addition, we issued to Burnham
      Hill Partners placement agent warrants to purchase 618,000 shares
      of our common stock at an exercise price of $0.55 per share. The $5.6 million
      net proceeds of the offering will be used to support our corporate restructuring
      program and for working capital.




The
      Notes
      bear interest at 10% per annum, mature on September 30, 2007 and are convertible
      into common stock at a conversion rate of $0.50 per share. The Series A and
      Series B warrants are exercisable for a period of 5 years.





We
      are
      currently evaluating the accounting treatment of this transaction, including
      consideration of applicable accounting standards for derivative
      instruments.  We are also evaluating the effect on the conversion price of
      our Series B convertible preferred stock and the exercise price of outstanding
      warrants that are subject to anti-dilution adjustments occasioned by this
      transaction.  Reductions to the conversion price and exercise prices may
      result in deemed dividend treatment.




Net
      cash
      used in operating activities was $9.2 million for the 2005 period and $9.0
      million for the 2004 period. For the 2005 period, the primary components of
      the
      net cash usage were the net loss of $12.5 million which was increased by a
      $0.5
      million increase in accounts receivable, a $0.4 million increase in prepaid
      expenses and other current assets and a non-cash gain on the settlement with
      Gores of $0.4 million and reduced by depreciation and amortization expense
      of
      $1.7 million, a $0.7 million increase in accounts payable and accrued expenses,
      $0.8 million of equity-based compensation and consulting fees, the receipt
      of
      $0.3 million in previously escrowed cash in conjunction with the Gores
      settlement agreement and an increase in deferred revenue of $0.2 million. For
      the 2004 period, the primary components of the net cash usage were the net
      loss
      of $15.6 million and an increase in the amount due from Gores of $0.4 million,
      reduced by amortization of discount on subordinated debentures of $2.7 million,
      depreciation and amortization of $1.7 million, loss on exchange of debt of
      $0.7
      million, an increase in accounts payable and accrued expenses of $0.5 million,
      equity-based compensation of $0.6 million and amortization of deferred financing
      costs of $0.4 million.




During
      the quarter ended September 30, 2005, there were no material changes in our
      contractual obligations.




16




Cash
      provided by investing activities for the 2005 period amounted to $1.5 million
      which consisted of $2.7 collected in the settlement with Gores partially offset
      by $1.2 million for the purchase of property, equipment and leasehold
      improvements. For the 2004 period, cash used in investing activities was $0.9
      million for the purchase of property, equipment and leasehold improvements.
      The
      Glowpoint network is currently built out to handle the anticipated level of
      subscriptions through 2006. We do not anticipate current expansion for the
      network and therefore currently have no significant commitments to make capital
      expenditures in 2006.




Cash
      provided by financing activities for the 2005 and 2004 periods was $9.4 million
      and $13.0 million, respectively. Financing activities for the 2005 and 2004
      periods included receipt of the $9.4 million and $11.4 million of net proceeds
      from the private placements of common stock and warrants. The 2004 period
      includes $1.2 million of proceeds attributable to a derivative financial
      instrument and $0.6 million for the exercise of warrants and
      options.




We
      believe that our available capital as of September 30, 2005, together with
      our
      operating activities, will enable us to continue as a going concern through
      September 30, 2006.




**Other
      Matters**




On
      June
      2, 2005, we dismissed our independent accounting firm, BDO Seidman LLP, for
      geographic reasons, and retained the independent accounting firm of Eisner
      LLP.
      In the course of its initial assessment of our December 31, 2004 balance sheet,
      Eisner raised certain issues relating to property and equipment. Our internal
      accounting team looked into the matter and subsequently concluded, on a
      preliminary basis, that the costs associated with certain purchases of
      videoconferencing equipment for resale and certain other operating costs that
      represented cost of revenue had erroneously been capitalized as property and
      equipment.




These
      preliminary conclusions were discussed at a meeting of our board of directors
      on
      July 21, 2005. At that meeting, our Audit Committee determined to undertake
      an
      independent investigation of the matter. Following that meeting, our internal
      accounting team conducted a further review of the audited financial statements
      for 2002 through 2004 and held several discussions with our former CFO. Based
      on
      these discussions, on August 2, 2005, we concluded that our financial statements
      for fiscal years 2002 through 2004 (and the related quarters) and the quarter
      ended March 31, 2005 needed to be restated and should no longer be relied
      upon.




We
      requested that BDO Seidman audit our restated consolidated financial statements
      for fiscal years 2002 through 2004 and review our condensed consolidated
      financial statements for the applicable inclusive interim periods and the
      quarter ended March 31, 2005, which BDO Seidman declined. We have twice restated
      our consolidated financial statements as of December 31, 2004 and for the year
      then ended, including disclosure of the effect of the restatements on our
      unaudited condensed consolidated financial information for the interim periods
      within 2004, which have been filed as exhibits to our Reports on Form 8-K filed
      with the Securities and Exchange Commission on January 18, 2007, and previously
      on March 17, 2006. We have restated our unaudited condensed consolidated
      financial statements as of March 31, 2005 and for the three months ended March
      31, 2005 and 2004, which have
      been
      filed on Form 10-Q/A with the Commission on January 31, 2007 and previously
      on
      March 22, 2006. We restated
      our unaudited condensed consolidated financial statements for the six and three
      months ended June 30, 2004, which were filed on our June 30, 2005 Form 10-Q
      on
      April 20, 2006 and our unaudited condensed consolidated financial statements
      for
      the nine and three months ended September 30, 2004, which were filed on our
      September 30, 2005 Form 10-Q on May 11, 2006. We restated our unaudited
      condensed consolidated financial statements as of June 30, 2005 and for the
      six
      and three months ended June 30, 2005 and 2004, which were filed on our June
      30,
      2005 Form 10-Q/A on January 31, 2007. We are restating our unaudited condensed
      consolidated financial statements as of September 30, 2005 and for the nine
      and
      three months ended September 30, 2005 and 2004, which were filed on Form 10Q/A
      on January 31, 2007 and o ur
      unaudited condensed consolidated financial statements as of September 30, 2005
      and for the nine and three months ended September 30, 2005 and 2004, which are
      included elsewhere in this Report on Form 10-Q/A.




Our
      internal accounting team is working diligently to complete our fiscal 2005
      results. Restating financial statements for fiscal years 2002 and 2003 will
      require significant additional time and resources, primarily because of the
      following reasons:




·
            During
                2003, we completed the sale of our VS business to Gores. As part
                of the
                sale, we transferred four data communication servers which contained
                various documents and audit support workpapers associated with the
                books
                and records of the VS business for all periods prior to the sale.
                We did
                not retain backups of the information on those servers and we just
                recently received data downloads from such servers. Gores was only
                able to
                locate three of the four servers
                transferred.




17




·
            We
                may not be able to quantify inventory in periods prior to 2004. Effective
                with the sale to Gores, we no longer owned any inventory and BDO
                Seidman
                was the only auditor who observed the physical inventory counts that
                affect those periods. To date, we have not been able to verify such
                inventory amounts, which will be necessary in order to complete a
                restatement of our consolidated financial statements for the years
                ended
                December 31, 2002 and 2003. We will take all available actions to
                gain
                access to the BDO Seidman
                workpapers.




At
      this
      time, we cannot determine whether the resolution of the above items will enable
      us to restate fiscal years 2002 and 2003 in a reasonable amount of time or
      at
      all.




**Audit
      Committee Investigation** .
      The
      Audit Committee commenced its independent investigation following the July
      21,
      2005 board meeting. The Audit Committee hired independent counsel, the law
      firm
      of Kronish Lieb Weiner & Hellman LLP, to conduct the investigation. Kronish
      Lieb retained a forensic audit firm, Alix Partners LLP, to assist in the
      investigation. The investigation was concluded in late September 2005 and found
      that expenses associated with services provided to and equipment purchased
      by
      customers during 2001 through 2003 were improperly capitalized as additions
      to
      our fixed assets, and that such practices affected our 2001 through 2004
      financial statements. The Audit Committee investigation also found that, during
      the same period, some of the amounts associated with practices described in
      the
      preceding sentence were written off in subsequent accounting journal entries
      that were themselves improper, and that similarly improper additions to our
      fixed assets continued even after such write-offs had occurred. Our prior CFO,
      who participated in these practices and under whose supervision they occurred,
      left Glowpoint in April 2005 after the planned relocation of the finance
      department from New Hampshire to our headquarters in New Jersey. In addition
      to
      issues affecting fixed assets, the investigation found that during the relevant
      period, we lacked adequate internal accounting controls. Finally, the
      investigation identified certain areas that warrant further review, including
      past revenue recognition practices when we were a reseller of videoconferencing
      equipment, costs allocated to the accounting associated with the Gores
      transaction and internal reallocation of communication costs.




As
      noted
      above, the Audit Committee investigation found that during the relevant periods
      being restated, we lacked adequate internal controls. A material weakness in
      internal controls is a significant deficiency, or a combination of significant
      deficiencies, that results in more than a remote likelihood that a material
      misstatement of the annual or interim financial statements will be not be
      prevented or detected. We believe that a material weakness in our internal
      controls arose as the result of aggregating several significant deficiencies,
      including: inadequate review and approval of journal entries in the financial
      statement preparation process and a lack of supporting documentation and
      assumptions used therein, an insufficient number of technical accounting and
      public company reporting personnel in the finance department, the absence of
      a
      formal monthly closing process and subsequent formal reporting of monthly
      financial statements and account variance analysis. Additionally, our finance
      office was located in New Hampshire and our headquarters was located in New
      Jersey.




The
      Audit
      Committee investigation further found that our current management has instituted
      improved internal accounting controls, including the hiring of our current
      CFO
      based in New Jersey and the subsequent relocation and restaffing of the finance
      organization to our headquarters in April 2005. Our restaffing included a
      corporate Controller who has over twenty years experience in public company
      reporting, has earned his CPA and will become our acting CFO in April 2006.
      We
      also instituted a formal monthly closing process, including account analysis,
      oversight of all closing processes, formal monthly review of the financial
      statements and the implementation of monthly written reports to the Board of
      Directors. We are continuing to evaluate and improve our internal control
      procedures, where applicable.




**SEC
      Inquiry** .
      On
      August 2, 2005, we contacted the Securities and Exchange Commission to notify
      it
      of our determination to restate our financial statements. On August 3, 2005,
      the
      SEC notified us that it was conducting an informal inquiry into our reported
      accounting issues. The SEC has met with our outside counsel as well as counsel
      to the Audit Committee. The SEC also sent us a document production request
      on
      October 27, 2005, and we responded to the request on November 14, 2005. The
      SEC
      has also recently contacted our former CFO and BDO Seidman LLP, our former
      independent accounting firm.




18




**Delisting** .
      On
      August 16, 2005, we received a letter from the Nasdaq National Market indicating
      that our common stock would be delisted from Nasdaq because of our failure
      to
      timely file our Form 10-Q for the quarter ended June 30, 2005. We requested
      and
      were granted a hearing to seek a conditional listing exception. The hearing
      occurred on September 15, 2005. On October 3, 2005, the Nasdaq Listing
      Qualifications Panel notified us that our common stock would be delisted from
      the Nasdaq National Market effective with the open of business on October 5,
      2005. Our common stock now trades over the counter in the pink sheets under
      the
      symbol "GLOW.PK".




**Critical
      Accounting Policies**




We
      prepare our financial statements in accordance with accounting principles
      generally accepted in the United States of America. Preparing financial
      statements in accordance with generally accepted accounting principles requires
      us to make estimates and assumptions that affect the reported amounts of assets
      and liabilities and disclose contingent assets and liabilities as of the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. The following paragraphs include a discussion
      of
      some critical areas where estimates are required. The significant areas of
      estimation includes determining the allowance for doubtful accounts, accrued
      sales tax, the estimated lives of property and equipment and the fair value
      of
      the derivative financial instrument.




**Revenue
      Recognition**




We
      recognize service revenue, including amounts related to surcharges charged
      by
      our carriers, related to the Glowpoint network subscriber service and the
      multi-point video and audio bridging services as service is provided. As the
      non-refundable, upfront activation fees charged to the subscribers do not meet
      the criteria as a separate unit of accounting, they are deferred and recognized
      over the life of the customer contracts. Revenues derived from other sources
      are
      recognized when services are provided or events occur.




**Allowance
      for Doubtful Accounts**




We
      record
      an allowance for doubtful accounts based on specifically identified amounts
      that
      we believe to be uncollectible. We also record additional allowances based
      on
      certain percentages of our aged receivables, which are determined based on
      historical experience and our assessment of the general financial conditions
      affecting our customer base. If our actual collections experience changes,
      revisions to our allowance may be required. After all attempts to collect a
      receivable have failed, we write off the receivable against the
      allowance.




**Long-Lived
      Assets**




We
      evaluate impairment losses on long-lived assets used in operations, primarily
      fixed assets, when events and circumstances indicate that the carrying value
      of
      the assets might not be recoverable in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 144 *“Accounting
      for the Impairment or Disposal of Long-Lived Assets”* .
      For
      purposes of evaluating the recoverability of long-lived assets, the undiscounted
      cash flows estimated to be generated by those assets are compared to the
      carrying amounts of those assets. If and when the carrying values of the assets
      exceed their fair values, the related assets will be written down to fair value.
      In the 2005 period, no impairment losses were recorded.




**Inflation**




Management
      does not believe inflation had a material adverse effect on the financial
      statements for the periods presented.




**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk**




We
      have
      exposure to interest rate risk related to our cash equivalents portfolio. The
      primary objective of our investment policy is to preserve principal while
      maximizing yields. Our cash equivalents portfolio is short-term in nature;
      therefore changes in interest rates will not materially impact our consolidated
      financial condition. However, such interest rate changes can cause fluctuations
      in our results of operations and cash flows.




There
      are
      no other material qualitative or quantitative market risks particular to
      us.




19




**Item
      4. Controls and Procedures**




During
      the periods covered by this report, we lacked adequate internal controls. A
      material weakness in internal controls is a significant deficiency, or a
      combination of significant deficiencies, that results in more than a remote
      likelihood that a material misstatement of the annual or interim financial
      statements will be not be prevented or detected. We believe that a material
      weakness in our internal controls arose as the result of aggregating several
      significant deficiencies, including: inadequate review and approval of journal
      entries in the financial statement preparation process and a lack of supporting
      documentation and assumptions used therein, an insufficient number of technical
      accounting and public company reporting personnel in the finance department,
      an
      externally maintained warrant registry, the absence of a formal monthly closing
      process and subsequent formal reporting of monthly financial statements and
      account variance analysis. Additionally, our finance office was located in
      New
      Hampshire and our headquarters was located in New Jersey.




Our
      current management team has instituted improved internal accounting controls,
      including the institution of a formal monthly closing process, including account
      analysis, oversight of all closing processes, formal monthly review of the
      financial statements and the implementation of monthly written reports to the
      Board of Directors and an internally maintained warrant registry. We are
      continuing to evaluate and improve our internal control procedures, where
      applicable.




**PART
      II - OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings**





We
      are
      defending several suits in the ordinary course of business that are not material
      to our business, financial condition or results of operations.




**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**




None.





**Item
      3.**  **Defaults
      upon Senior Securities**




None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**




None.





**Item
      5.**  **Other
      Information**




None.





**Item
      6.**  **Exhibits**




None.




20




**(i)**  **Signatures**




In
      accordance with 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.




GLOWPOINT,
                INC.
              RegistrantDate:
                January 31, 2007
            By:
            /s/
                Michael BrandofinoMichael
                Brandofino, Chief Executive Officer
              (principal
                executive officer)Date:
                January 31, 2007
            By:
            /s/
                Edwin F. HeinenEdwin
                F. Heinen, Chief Financial Officer
              (principal
                financial and accounting officer)




21