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 March 31,
                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 May 10, 2005
      was 46,045,715.





**GLOWPOINT,
      INC**




**Index**




PART
                I - FINANCIAL INFORMATIONItem
                1. Restated Condensed Consolidated Financial StatementsCondensed
                Consolidated Balance Sheets at March 31, 2005 (unaudited restated)
                and
                December 31, 2004*
            1Unaudited
                Restated Condensed Consolidated Statements of Operations for the
                Three
                Months Ended March 31, 2005 and 2004
            2Unaudited
                Restated Condensed Consolidated Statements of Cash Flows for the
                Three
                Months Ended March 31, 2005 and 2004
            3Notes
                to Restated Condensed Consolidated Financial Statements
            5Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            9Item
                3. Quantitative and Qualitative Disclosures about Market
                Risk
            17Item
                4. Controls and Procedures
            17PART
                II - OTHER INFORMATIONItem
                1. Legal Proceedings
            17Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            17Item
                3. Defaults Upon Senior Securities
            17Item
                4. Submission of Matters to a Vote of Security Holders
            18Item
                5. Other Information
            18Item
                6. Exhibits
            18Signatures
            18Certifications
            19




*  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)**





March
                31, 2005
            
            December
                31, 2004*(Unaudited)(Restated
                - Note 3)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            13,683
            
            $
            4,497Escrowed
                cash
            
            
            —
            
            
            337Accounts
                receivable, net of allowance for doubtful accounts of $366 and $305,
                respectively
            
            
            2,035
            
            
            1,872Receivable
                from Gores Technology Group
            
            
            —
            
            
            2,371Prepaid
                expenses and other current assets
            
            
            455
            
            
            554Total
                current assets
            
            
            16,173
            
            
            9,631Property
                and equipment, net
            
            
            4,828
            
            
            5,103Other
                assets
            
            
            261
            
            
            258Total
                assets
            
            $
            21,262
            
            $
            14,992**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            2,958
            
            $
            2,984Accrued
                expenses
            
            
            3,750
            
            
            3,822Current
                portion of derivative financial instrument
            
            
            586
            
            
            367Deferred
                revenue
            
            
            475
            
            
            265Current
                portion of capital lease obligations
            
            
            —
            
            
            35Total
                current liabilities
            
            
            7,769
            
            
            7,473Derivative
                financial instrument, less current portion
            
            
            755
            
            
            932Total
                liabilities
            
            
            8,524
            
            
            8,405Preferred
                stock, $.0001 par value; 5,000 shares authorized and redeemable,
                0.120334
                and 0.203667 Series B shares outstanding (stated value of $2,888
                and
                $4,888;liquidation value of $3,353 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
            
            
            (1,021
            )
            
            (1,176
            )Additional
                paid-in capital
            
            
            160,099
            
            
            148,510Accumulated
                deficit
            
            
            (148,993
            )
            
            (145,399
            )10,090
            
            
            1,939Less:
                Treasury stock, 40 shares at cost
            
            
            (240
            )
            
            (240
            )Total
                stockholders’ equity
            
            
            9,850
            
            
            1,699Total
                liabilities and stockholders’ equity
            
            $
            21,262
            
            $
            14,992*
                Derived from 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.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


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





**(Restated-Note
      3)**


**(Unaudited)**




Three
                Months Ended March 31,2005
            
            2004Revenue
            
            $
            4,202
            
            $
            3,186Cost
                of revenue
            
            
            3,686
            
            
            3,539Gross
                margin (loss)
            
            
            516
            
            
            (353
            )Operating
                expenses:Research
                and development
            
            
            313
            
            
            241Sales
                and marketing
            
            
            923
            
            
            556General
                and administrative
            
            
            3,214
            
            
            2,609Total
                operating expenses
            
            
            4,450
            
            
            3,406Loss
                from operations before other (income) expense
            
            
            (3,934
            )
            
            (3,759
            )Other
                (income) expenseAmortization
                of deferred financing costs
            
            
            —
            
            
            448Interest
                income
            
            
            (3
            )
            
            (14
            )Interest
                expense
            
            
            42
            
            
            67Amortization
                of discount on subordinated debentures
            
            
            —
            
            
            2,650Loss
                on exchange of debt
            
            
            —
            
            
            743Gain
                on settlement with Gores
            
            
            (379
            )
            
            —Total
                other (income) expense, net
            
            
            (340
            )
            
            3,894Net
                loss
            
            
            (3,594
            )
            
            (7,653
            )Preferred
                stock dividends
            
            
            (89
            )
            
            (74
            )Preferred
                stock deemed dividends
            
            
            (1,282
            )
            
            —Net
                loss attributable to common stockholders
            
            $
            (4,965
            )
            $
            (7,727
            )Net
                loss attributable to common stockholders per share:Basic
                and diluted
            
            $
            (0.13
            )
            $
            (0.24
            )Weighted
                average number of common shares:Basic
                and diluted
            
            
            39,020
            
            
            32,363





See
      accompanying notes to condensed consolidated financial
      statements.


2


**GLOWPOINT,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(In
      thousands)**





**(Restated-Note
      3)**


**(Unaudited)**




Three
                Months Ended March 31,2005
            
            2004Cash
                flows from Operating ActivitiesNet
                loss
            
            $
            (3,594
            )
            $
            (7,653
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            570
            
            
            543Amortization
                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
            
            
            43
            
            
            13Equity-based
                compensation
            
            
            189
            
            
            181Gain
                on settlement with Gores
            
            
            (379
            )
            
            —Common
                stock issued for interest on convertible debentures
            
            
            —
            
            
            45Other
            
            
            —
            
            
            83Increase
                (decrease) in cash attributable to changes in assets and liabilities,
                net
                of effects of acquisition:Escrowed
                cash
            
            
            337
            
            
            (1
            )Accounts
                receivable
            
            
            (163
            )
            
            683Receivable
                from Gores Technology Group
            
            
            —
            
            
            59Prepaid
                expenses and other current assets
            
            
            99
            
            
            (48
            )Other
                assets
            
            
            (3
            )
            
            (209
            )Accounts
                payable
            
            
            (26
            )
            
            (661
            )Accrued
                expenses
            
            
            21
            
            
            (31
            )Deferred
                revenue
            
            
            210
            
            
            26Net
                cash used in operating activities
            
            
            (2,696
            )
            
            (3,129
            )Cash
                flows from Investing ActivitiesSettlement
                from discontinued operations (Note 6)
            
            
            2,750
            
            
            —Purchases
                of property, equipment and leasehold improvements
            
            
            (295
            )
            
            (309
            )Net
                cash provided by (used in) investing activities
            
            
            2,455
            
            
            (309
            )Cash
                flows from Financing ActivitiesProceeds
                from issuance of common stock and warrants
            
            
            9,389
            
            
            11,399Proceeds
                attributed to derivative financial instrument
            
            
            —
            
            
            1,164Proceeds
                from exercise of warrants and options, net
            
            
            73
            
            
            122Payments
                on capital lease obligations
            
            
            (35
            )
            
            (39
            )Net
                cash provided by financing activities
            
            
            9,427
            
            
            12,646Increase
                in cash and cash equivalents
            
            
            9,186
            
            
            9,208Cash
                and cash equivalents at beginning of period
            
            
            4,497
            
            
            4,105Cash
                and cash equivalents at end of period
            
            $
            13,683
            
            $
            13,313Supplement
                disclosures of cash flow information:Cash
                paid during the period for:Interest
            
            $
            53
            
            $
            8




3





Three
                Months Ended March 31,2005
            
            2004Non-cash
                investing and financing activities:Deferred
                compensation and additional paid-in capital recorded for the issuance
                of
                restricted common stock
            
            $
            —
            
            $
            380Issuance
                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
            
            
            89
            
            
            74Equity
                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**


**March
      31, 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 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
      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 three months ended March
      31,
      2004 gives effect to the acquisition as if it had occurred on January 1, 2004
      (in thousands, except per share amounts):


Revenue
            
            $
            4,066Gross
                margin
            
            
            80Net
                loss
            
            
            (7,405
            )Net
                loss attributable to common stockholders
            
            
            (7,479
            )Net
                loss attributable to common stockholders per share
            
            $
            (0.23
            )


**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 three months
      ended March 31, 2005 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 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.




Our
      consolidated financial statements have been prepared assuming we will continue
      as a going concern. We incurred a net loss of $3.6 million and $7.7 million
      for
      the three months ended March 31, 2005 and 2004, respectively, and had negative
      operating cash flows of $2.7 million and $3.1 million, respectively, for the
      three months ended March 31, 2005 and 2004. At March 31, 2005, we had cash
      and
      cash equivalents of $13.7 million, working capital of $8.4 million and an
      accumulated deficit of $149.0 million. We raised net proceeds of $9.4 million
      in
      March 2005, but continue to sustain losses and negative operating cash flows.
      In
      March 2006, we commenced a restructuring of our business (see Note 9), and
      we
      are working on raising capital to fund such operations. However, there are
      no
      assurances that additional capital will be obtained. We believe that our
      available working capital at March 31, 2005 along with our operating activities
      will enable us to continue as a going concern through March 31,
      2006.


5




**Note
      3 - Restatement**




The
      accompanying unaudited condensed consolidated financial statements restate
      the
      unaudited condensed consolidated financial statements included in Form 10-Q/A,
      which was filed on March 22, 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.
      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 unaudited condensed
      consolidated financial statements for the three months ended March 31, 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 March 31, 2005 and for the three months ended March 31, 2005 (the
      2005 period) and 2004 (the 2004 period):




**Accrued
      expenses** -
      Accrued expenses at March 31, 2005 were increased by $1,587,000.




**Accumulated
      deficit** - Our
      accumulated deficit at March 31, 2005 has been increased by $1,587,000,
      including an increase of $1,401,000 as of January 1, 2005 and an increase in
      our
      net loss for the 2005 period of $186,000.




**General
      and administrative** -
      General
      and administrative expenses were increased by $186,000 and $127,000,
      respectively, for the 2005 and 2004 periods.




The
      following tables summarize the account balances that have been restated (in
      thousands, except per share amounts):




Previously
                Reported
            
            As
                RestatedMarch
                31, 2005
              (unaudited)Balance
                sheets:Accrued
                expenses
            
            $
            2,163
            
            $
            3,750Total
                current liabilities
            
            
            6,182
            
            
            7,769Total
                liabilities
            
            
            6,937
            
            
            8,524Accumulated
                deficit
            
            
            (147,406
            )
            
            (148,993
            )Total
                stockholders’ equity
            
            $
            11,437
            
            $
            9,850





Previously
                Reported
            
            As
                Restated
            
            Previously
                Reported
            
            As
                RestatedThree
                months ended
            
            Three
                months endedMarch
                31, 2005
            
            March
                31, 2004(unaudited)
            
            (unaudited)Statements
                of Operations:General
                and administrative
            
            $
            3,028
            
            $
            3,214
            
            $
            2,482
            
            $
            2,609Total
                operating expenses
            
            
            4,264
            
            
            4,450
            
            
            3,279
            
            
            3,406Loss
                from operations before other (income) expense
            
            
            (3,748
            )
            
            (3,934
            )
            
            (3,632
            )
            
            (3,759
            )Net
                loss
            
            
            (3,408
            )
            
            (3,594
            )
            
            (7,526
            )
            
            (7,653
            )Net
                loss attributable to common stockholders
            
            
            (4,779
            )
            
            (4,965
            )
            
            (7,600
            )
            
            (7,727
            )Net
                loss attributable to common stockholders - basic and
                diluted
            
            $
            (0.12
            )
            $
            (0.13
            )
            $
            (0.23
            )
            $
            (0.24
            )


6


**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 Accounting 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 three months ended March 31, 2005 and 2004 if the
      fair value based method had been applied to all awards.




Three
                Months Ended March 31,2005
            
            2004Net
                loss attributable to common stockholders, as reported
            
            $
            (4,965
            )
            $
            (7,727
            )Add:
                stock-based compensation expense included in reported loss, net of
                tax.
            
            
            155
            
            
            181Deduct:
                total stock-based employee compensation expense determined under
                the fair
                value based method for all awards, net of tax
            
            
            (439
            )
            
            (390
            )Pro
                forma net loss attributable to common stockholders
            
            $
            (5,249
            )
            $
            (7,936
            )Net
                loss attributable to common stockholders per share:Basic
                and diluted - as reported
            
            $
            0.13
            
            $
            0.24Basic
                and diluted - pro forma
            
            $
            0.13
            
            $
            0.25


The
      weighted average grant date fair value of options granted during the three
      months ended March 31, 2005 and 2004 was $1.57 and $1.65, respectively. The
      weighted average grant date fair value of 190,000 shares of restricted common
      stock granted during the three months ended March 31, 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:




Three
                Months Ended March 31,2005
            
            2004Risk
                free interest rate
            
            
            4.27
            %
            
            4.87
            %Expected
                lives
            
            
            5
                Years
            
            
            5
                YearsExpected
                volatility
            
            
            101.05
            %
            
            101.76
            %




**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 three months
      ended
      March 31, 2005 and 2004 is the same as basic loss per share. A total of
      14,780,000 and 11,052,000 potential shares of common stock for outstanding
      and
      issuable options and warrants and 2,059,000 and 1,288,000 shares of common
      stock
      issuable upon the conversion of our Series B convertible preferred stock have
      been excluded from the calculation of diluted loss per share for the three
      months ended March 31, 2005 and 2004, respectively, because the effects would
      be
      antidilutive.




7




**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 an 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
      segment, 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.




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. On January 12, 2005, we
      announced that the arbitrator had concluded that the net assets of the VS
      business sold to Gores should be reduced by $4.3 million.




In
      March
      2005, we announced that we had entered into a settlement agreement with Gores,
      resolving the outstanding disputes between the companies relating to the sale
      of
      the assets 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 earnout
      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
      $100,000 of revenue that we recognized during the three months ended March
      31,
      2004, have been excluded from the sale transaction, and a gain from the
      settlement of these items of $379,000 has been recognized during the three
      months ended March 31, 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 three months ended March
      31, 2004.




**Note
      8 - Stockholder’s Equity**




In
      January 2004, in exchange for the cancellation and termination of debentures
      with an aggregate face value of $4,888,000 and forfeiture of any and all rights
      of collection, claim or demand under the notes, 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 three months ended March 31, 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 $2.242 and $2.49, respectively. In connection with the
      adjustment to the conversion price, we recognized deemed dividends of $115,000
      in the 2005 period. The corresponding amount in the 2004 period was nominal,
      as
      was the incremental fair value for the adjustments to the exercise price of
      the
      warrants.




8




In
      February 2004, we raised net proceeds of $12.4 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 $2.56 (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.




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 the Company 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 were
      attributed to the estimated fair value of the derivative liability. As of March
      31, 2005 and December 31, 2004, we estimated the fair value of the derivative
      liability to be $1,341,000 and $1,298,000, respectively, and recognized other
      expense of $43,000 and $13,000, respectively, for the three months ended March
      31, 2005 and 2004.




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. We also issued warrants to the
      investors in the private placement to purchase 2,666,667 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
      aggregate fair value of $1,350,000. We recognized deemed dividends of $1,167,000
      during the three months ended March 31, 2005 in connection with the warrants
      and
      a reduced conversion price, which were offered as an inducement to
      convert.




**Note
      9 - Subsequent Events**




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
      $197,000, $218,000 and $73,000 for the years ending December 31, 2005, 2006
      and
      2007, respectively, excluding operating costs.




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.
      We also announced that Gerard Dorsey, executive vice president and chief
      financial officer since December 2004, will be leaving Glowpoint in April 2006.




**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 three months ended March 31, 2005
      (the
      2005 period) and the three months ended March 31, 2004 (the 2004 period), and
      the notes thereto. 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.


9




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 4 to the 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 $1.000
      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.
      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.




In
      the
      2005 period, 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. The Sony service, powered by Glowpoint, is
      designed to bring together Sony's state-of-the-art line of video conferencing
      systems with our patent-pending advanced IP-based video applications and network
      services. The two companies are also developing joint initiatives to support
      the
      growing use of IP-based video for more diverse and innovative applications,
      including the broadcasting production segment where Sony is a recognized leader
      in providing customers with advanced audio and video equipment and systems.
      Through a "private label" arrangement, the two companies plan on delivering
      a
      customized Sony experience that will allow subscribers to see and talk to
      anyone, anywhere around the world regardless of network technology and device.
      Additionally, as part of the alliance and to support development of the new
      service, Sony will install the Glowpoint powered solution into a number of
      its
      office locations in the U. S.




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."


10


**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.




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 March
      31, 2005 and the unaudited condensed consolidated statements of operations
      and
      cash flows for the three months ended March 31, 2005 and 2004, which were
      previously filed on Form 10-Q/A on March 22, 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 unaudited condensed consolidated financial
      statements for the three months ended March 31, 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 March
      31, 2005 and for the three months ended March 31, 2005 (the 2005 period) and
      2004 (the 2004 period) in the discussion below:




**Results
      of Operations**




The
      following table sets forth for the three months ended March 31, 2005 and 2004,
      information derived from our restated condensed consolidated financial
      statements expressed as a percentage of our revenues:




(Unaudited)Three
                Months Ended
              March
                31,2005
            
            2004Revenue
            
            
            100.0
            %
            
            100.0
            %Cost
                of revenues
            
            
            87.7
            
            
            111.1Gross
                margin (loss)
            
            
            12.3
            
            
            (11.1
            )Operating
                expenses:Research
                and development
            
            
            7.4
            
            
            7.6Sales
                and marketing
            
            
            22.0
            
            
            17.4General
                and administrative
            
            
            76.5
            
            
            81.9Total
                operating expenses
            
            
            105.9
            
            
            106.9Loss
                from operations before other (income) expense
            
            
            (93.6
            )
            
            (118.0
            )Other
                (income) expense:Amortization
                of deferred financing costs
            
            
            0.0
            
            
            14.0Interest
                income
            
            
            (0.1
            )
            
            (0.4
            )Interest
                expense
            
            
            1.0
            
            
            2.1Amortization
                of discount on subordinated debentures
            
            
            0.0
            
            
            83.2Loss
                on exchange of debt
            
            
            0.0
            
            
            23.3Gain
                on settlement with Gores
            
            
            (9.0
            )
            
            —Total
                other (income) expenses, net
            
            
            (8.1
            )
            
            122.2Net
                loss
            
            
            (85.5
            )
            
            (240.2
            )Preferred
                stock dividends
            
            
            (2.1
            )
            
            (2.3
            )Preferred
                stock deemed dividends
            
            
            (30.5
            )
            
            —Net
                loss attributable to common stockholders
            
            
            (118.1
            )
            
            (242.5
            )


11


**Three
      months ended March 31, 2005 (the “2005 period”) compared to three months ended
      March 31, 2004 (the “2004 period).**




**Revenue** .
      Revenue
      increased $1.0 million, or 32%, in the 2005 period to $4.2 million from $3.2
      million for the 2004 period. Subscription and related revenue (which includes
      contractual revenue related to the Network Services customer base) increased
      $0.3 million, or 13%, in the 2005 period to $2.7 million from $2.4 million
      for
      the 2004 period. Contractual revenue related to the Network Services customer
      base (formerly known as NuVision) was $0.1 million in the 2005 period. We
      received no revenue from this customer base in the 2004 period because we
      acquired it from Tandberg USA in May 2004. Non-subscription revenue consisting
      of bridging, events and other one-time fees increased $0.7 million, or 88%
      in
      the 2005 period to $1.5 million from $0.8 million for the 2004 period. The
      growth in non-subscription revenue was the result of $0.8 million in revenue
      from the Network Services customer base.




**Cost
      of revenue** .
      Cost of
      revenue increased $0.2 million, or 4%, in the 2005 period to $3.7 million from
      $3.5 million for the 2004 period. Infrastructure costs (defined as backbone
      related costs of network) decreased $0.1 million, or 11%, in the 2005 period
      to
      $1.0 million from $1.1 million for the 2004 period. Access costs (defined as
      costs of connecting subscriber locations to the network) decreased $0.3 million,
      or 6%, in the 2005 period to $1.3 million from $1.6 million for the 2004 period.
      The decline in access costs in the 2005 period was the result of the
      renegotiation of rates and the migration of service to lower cost providers
      where possible. Costs associated with the Network Services customer base were
      $0.5 million for the 2005 period. Other costs of revenue decreased $0.1 million,
      or 13%, in the 2005 period to $0.7 million from $0.8 million for the 2004
      period. The rate of increase in our gross profit percentage is not indicative
      of
      results expected to be achieved in subsequent periods.




**Research
      and development** .
      Research and development expense, which includes 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 $0.3 million from
      $0.2
      million for 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 as a percentage of revenue was 7.4% and 7.6%,
      respectively, for the 2005 and 2004 periods.




**Sales
      and marketing** .
      Sales
      and marketing expense, which includes salaries of our direct sales force, sales
      engineers and marketing personnel, commissions, overhead and marketing costs,
      increased $0.4 million in the 2005 period to $0.9 million, from $0.6 million
      in
      the 2004 period. The primary causes of the increase in costs for the 2005 period
      were the $0.4 million increase in salaries, benefits and travel costs resulting
      from the addition of a direct sales force of 11 employees and an increase of
      $0.1 million in marketing expense associated with a sales lead generation
      program. Sales and marketing expense as a percentage of revenue was 22.0% and
      17.5%, respectively, for the 2005 and 2004 periods.




**General
      and Administrative** .
      General
      and administrative expenses, as restated, increased $0.6 million in the 2005
      period to $3.2 million from $2.6 million in the 2004 period. The primary
      components of the increase were $0.1 million in salaries and benefits related
      to
      executive management, $0.1 million increase in equity-based compensation
      recorded in connection with the issuance of restricted stock and warrants as
      compensation and an increase of $0.1 million of additional provision for bad
      debt. 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 $0.3 million and $0.2
      million for the 2005 period and 2004 period, respectively. 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 net revenues was 76.5% for the 2005 period, a decrease from 81.9%
      for the 2004 period.




**Restatement
      impact-general and administrative** -
      General and administrative expenses were increased by $186,000 and $127,000,
      respectively, for the 2005 and 2004 periods.




**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 $3.9 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 the warrants.


12




**Net
      loss** .
      Net
      loss attributable to common stockholders, as restated, decreased to $5.0
      million, or $0.13 per basic and diluted share, in the 2005 period from $7.7
      million, or $0.24 per basic and diluted share, for the 2004 period.




**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. Management believes 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.




Three
                Months Ended March 31,2005
            
            2004Net
                loss attributable to common stockholders
            
            $
            (4,965
            )
            $
            (7,727
            )Depreciation
                and amortization
            
            
            570
            
            
            543Amortization
                of deferred financing costs
            
            
            —
            
            
            448Amortization
                of discount on subordinated debentures
            
            
            —
            
            
            2,650Loss
                on exchange of debt
            
            
            —
            
            
            743Equity-based
                compensation
            
            
            189
            
            
            181Gain
                from discontinued VS operations
            
            
            (379
            )
            
            —Preferred
                stock dividends
            
            
            1,371
            
            
            74Interest
                expense, net
            
            
            39
            
            
            53EBITDA
                from continuing operations
            
            $
            (3,175
            )
            $
            (3,035
            )




**Liquidity
      and Capital Resources**




At
      March
      31, 2005, we had working capital of $8.4 million compared to $2.2 million at
      December 31, 2004. We had $13.7 million in cash and cash equivalents at March
      31, 2005 compared to $4.5 million at December 31, 2004. The $6.2 million
      increase in working capital resulted primarily from the net proceeds from the
      March 2005 private placement of common stock of $9.4 million.




In
      January 2004, in exchange for the cancellation and termination of 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.




In
      February 2004, we raised net proceeds of $12.4 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. 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
      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 may be exercised by
      cash
      payment of the exercise price or by "cashless exercise".




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




Net
      cash
      used in operating activities was $2.7 million and $3.1 million, respectively,
      during the 2005 and 2004 periods. For the 2005 period, we had a net loss of
      $3.6
      million, a gain on settlement with Gores of $0.4 million, an increase in
      accounts receivable of $0.2 million and a decrease in accrued expenses of $0.02
      million, offset by depreciation and amortization of $0.5 million, $0.2 million
      of equity-based compensation, the collection of $0.3 million of escrowed cash
      and an increase in deferred revenue of $0.2 million. For the 2004 period, we
      had
      a net loss of $7.7 million, an increase in other assets of $0.2 million and
      a
      decrease in accounts payable and accrued expenses of $0.7 million, partially
      offset by depreciation and amortization of $0.5 million, amortization of
      debenture discount and deferred financing costs of $3.1 million, loss on
      exchange of convertible debentures of $0.7 million and equity-based compensation
      of $0.2 million.


13




During
      the quarter ended March 31, 2005, there were no material changes in our
      contractual obligations.




Cash
      provided by investing activities for the 2005 period was $2.5 million and cash
      used in investing activities for the 2004 period was $0.3 million. In the 2005
      period, we collected $2.8 million from Gores. The balance of investing
      activities for both periods related to purchases of network and computer
      equipment and leasehold improvements. The Glowpoint network is currently built
      out to handle the anticipated level of subscriptions for 2005. We do not
      anticipate current expansion for the network and therefore have no significant
      commitments to make capital expenditures in 2005.




Cash
      provided by financing activities for the 2005 period and 2004 period were $9.4
      million and $12.6 million, respectively. Financing activities for the 2005
      period and 2004 period 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.




We
      believe that our available capital as of March 31, 2005, together with our
      operating activities, will enable us to continue as a going concern through
      March 31, 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 restated our unaudited condensed consolidated financial
      statements as of March 31, 2005 and for the three months ended March 31, 2005
      and 2004, which were filed on our March 31, 2005 Form 10-Q/A on March 22, 2006.
      We are again restating our unaudited condensed consolidated financial statements
      as of March 31, 2005 and for the three months ended March 31, 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.




14




·
            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.




15




**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 bad debts, 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 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.




**Goodwill
      and Other Intangible Assets**




We
      follow
      SFAS No. 142, *"Goodwill
      and Other Intangible Assets"* in
      accounting for goodwill and other intangible assets. SFAS No. 142 requires,
      among other things, that companies no longer amortize goodwill, but instead
      test
      goodwill for impairment at least annually. In addition, SFAS 142 requires that
      we identify reporting units for the purposes of assessing potential future
      impairments of goodwill, reassess the useful lives of other existing recognized
      intangible assets, and cease amortization of intangible assets with indefinite
      useful lives. An intangible asset with an indefinite useful life should be
      tested for impairment in accordance with the guidance in SFAS No.
      142.




**Inflation**




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




16




**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.




**Item
      4. Controls and Procedures**




During
      the period 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,
      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, under the supervision of our Chief Executive Officer
      and Chief Financial Officer, 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.




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**




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 2,666,667 shares of common
      stock. The issued shares and shares underlying the warrants were registered
      pursuant to our Registration Statement on Form S-3 (registration No.
      333-114207), which was filed with the Securities and Exchange Commission on
      April 5, 2004 and declared effective on April 16, 2004. The warrants were not
      registered under the Securities Act in reliance on the exemption provided by
      Rule 506 of Regulation D. The warrants are exercisable beginning on September
      15, 2005 and expire on March 14, 2010, five years after the closing date. The
      proceeds will be used for general corporate purposes.




Concurrently,
      we issued an additional 1,333,328 shares of common stock and warrants to
      purchase 533,331 shares of common stock to an institutional investor in exchange
      for the cancellation of 83.333 shares of our Series B preferred stock. The
      shares and warrants issued pursuant to this exchange offer were exempt from
      registration under Section 3(a)(9) of the Securities Act. We received no
      proceeds from this transaction.




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




None.


17


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




None.




**Item
      5. Other Information**




None.




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




None.





**(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)




18