SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549








**FORM
      10-Q**





x
            Quarterly
                report under Section 13 or 15(d) of the Securities Exchange Act of
                1934
                for the quarterly period ended March 31,
                2007.





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)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





Yeso
              No
                  x





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





Large
                accelerated filer ̈
            Accelerated filer ̈
            Non-accelerated
                filerx





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




Yeso
              No
                  x


The
      number of shares outstanding of the registrant’s Common Stock as of June 26,
      2007 was 47,209,673.





**GLOWPOINT,
      INC**





**Index**





PART
                I - FINANCIAL INFORMATIONItem
                1. Condensed Consolidated Financial StatementsCondensed
                Consolidated Balance Sheets at March 31, 2007 (unaudited) and December
                31,
                2006*
            1Unaudited
                Condensed Consolidated Statements of Operations for the Three Months
                ended
                March 31, 2007 and 2006
            2Unaudited
                Condensed Consolidated Statements of Stockholders’ Deficit for the three
                months Ended March 31, 2007
            3Unaudited
                Condensed Consolidated Statements of Cash Flows for the three months
                Ended
                March 31, 2007 and 2006
            4Notes
                to Condensed Consolidated Financial Statements
            5Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            13Item
                3. Quantitative and Qualitative Disclosures about Market
                Risk
            17Item
                4. Controls and Procedures
            17PART
                II - OTHER INFORMATIONItem
                1. Legal Proceedings
            17Item
                1A. Risk Factors
            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
            17Item
                5. Other Information
            18Item
                6. Exhibits
            18Signatures
            19Certifications
            20





*
            The
                Condensed Consolidated Balance Sheet at December 31, 2006 has been
                derived
                from the audited consolidated financial statements filed as an exhibit
                to
                our Report on Form 10-K on June 6, 2007.







i


**GLOWPOINT,
      INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


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








March
                31, 2007
            
            December
                31, 2006(Unaudited)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            2,290
            
            $
            2,153Accounts
                receivable, net of allowance for doubtful accounts of $132 and $121;
                respectively
            
            
            2,350
            
            
            2,748Prepaid
                expenses and other current assets
            
            
            527
            
            
            327Total
                current assets
            
            
            5,167
            
            
            5,228Property
                and equipment, net
            
            
            2,635
            
            
            2,762Other
                assets
            
            
            273
            
            
            403Total
                assets
            
            $
            8,075
            
            $
            8,393**LIABILITIES
                AND STOCKHOLDERS’ DEFICIT**Current
                liabilities:Accounts
                payable
            
            $
            2,259
            
            $
            1,957Accrued
                expenses
            
            
            2,205
            
            
            1,906Customer
                deposits
            
            
            329
            
            
            102Accrued
                sales taxes and regulatory fees
            
            
            4,210
            
            
            4,216Derivative
                financial instruments
            
            
            4,956
            
            
            4,30110%
                Senior secured convertible notes, net of discount of $1,652 and $2,280,
                respectively
            
            
            5,119
            
            
            4,326Deferred
                revenue
            
            
            290
            
            
            288Total
                current liabilities
            
            
            19,368
            
            
            17,096Preferred
                stock, $.0001 par value; 5,000 shares authorized and
                redeemable;
              0.120
                Series B shares issued and outstanding, (stated value of $2,888;
              liquidation
                value of $3,820 and $3,735, respectively)
            
            
            2,888
            
            
            2,888Commitments
                and contingenciesStockholders’
                deficit:Common
                stock, $.0001 par value; 100,000 shares authorized; 46,750 and 46,390
                shares issued
              and
                issuable;46,710
                and 46,350 shares outstanding, respectively
            
            
            5
            
            
            5Additional
                paid-in capital
            
            
            161,327
            
            
            161,267Accumulated
                deficit
            
            
            (175,273
            )
            
            (172,623
            )(13,941
            )
            
            (11,351
            )Less:
                Treasury stock, 40 shares at cost
            
            
            (240
            )
            
            (240
            )Total
                stockholders’ deficit
            
            
            (14,181
            )
            
            (11,591
            )Total
                liabilities and stockholders’ deficit
            
            $
            8,075
            
            $
            8,393






See
      accompanying notes to condensed consolidated financial statements.


1


**GLOWPOINT,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


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





**(Unaudited)**




Three
                Months Ended March 31,2007
            
            2006Revenue
            
            $
            5,661
            
            $
            4,721Cost
                of revenue
            
            
            3,909
            
            
            3,486Gross
                margin
            
            
            1,752
            
            
            1,235Operating
                expenses:Research
                and development
            
            
            161
            
            
            271Sales
                and marketing
            
            
            646
            
            
            729General
                and administrative
            
            
            1,951
            
            
            4,653Total
                operating expense
            
            
            2,758
            
            
            5,653Loss
                from operations
            
            
            (1,006
            )
            
            (4,418
            )Other
                expense (income):Interest
                expense
            
            
            915
            
            
            1,638Interest
                income
            
            
            (15
            )
            
            (4
            )(Decrease)
                increase in fair value of derivative financial instruments
            
            
            614
            
            
            (23
            )Amortization
                of deferred financing costs
            
            
            130
            
            
            —Total
                other expense, net
            
            
            1,644
            
            
            1,611Net
                loss
            
            
            (2,650
            )
            
            (6,029
            )Preferred
                stock dividends
            
            
            (85
            )
            
            (85
            )Net
                loss attributable to common stockholders
            
            $
            (2,735
            )
            $
            (6,114
            )Net
                loss attributable to common stockholders per share:Basic
                and diluted
            
            $
            (0.06
            )
            $
            (0.13
            )Weighted
                average number of common shares:Basic
                and diluted
            
            
            46,540
            
            
            46,046






See
      accompanying notes to condensed consolidated financial statements.


2


**GLOWPOINT,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT**


**Three
      Months Ended March 31, 2007**





**(In
      thousands)**





**(Unaudited)**




Common
                Stock
            
            Paid
                In
            
            Accumulated
            
            Treasury
                StockShares
            
            Amount
            
            Capital
            
            Deficit
            
            Shares
            
            Amount
            
            TotalBalance
                at January 1, 2007
            
            
            46,390
            
            $
            5
            
            $
            161,267
            
            $
            (172,623
            )
            
            40
            
            $
            (240
            )
            $
            (11,591
            )Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            (2,650
            )
            
            —
            
            
            —
            
            
            (2,650
            )Comprehensive
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2,650
            )Stock-based
                compensation
            
            
            —
            
            
            —
            
            
            83
            
            
            —
            
            
            —
            
            
            —
            
            
            83Issuance
                of restricted stock
            
            
            360
            
            
            —
            
            
            62
            
            
            —
            
            
            —
            
            
            —
            
            
            62Preferred
                stock dividends
            
            
            **—**
            
            
            **—**
            
            
            (85
            )
            
            **—**
            
            
            **—**
            
            
            **—**
            
            
            (85
            )Balance
                at March 31, 2007
            
            
            46,750
            
            $
            5
            
            $
            161,327
            
            $
            (175,273
            )
            
            40
            
            $
            (240
            )
            $
            (14,181
            )














See
      accompanying notes to consolidated financial statements.


3
 **GLOWPOINT,
        INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(In
      thousands)**





**(Unaudited)**





Three
                Months Ended March 31,2007
            
            2006Cash
                flows from Operating Activities:Net
                loss
            
            $
            (2,650
            )
            $
            (6,029
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Depreciation
                and amortization
            
            
            429
            
            
            526Other
                expense (income) recognized for the increase (decrease) in the estimated
                fair value of the derivative financial instruments
            
            
            614
            
            
            (23
            )Amortization
                of deferred financing costs
            
            
            130
            
            
            —Accretion
                of discount on 10% Notes
            
            
            628
            
            
            —Beneficial
                conversion feature for 10% Notes
            
            
            41
            
            
            1,586Stock-based
                compensation
            
            
            145
            
            
            297Increase
                (decrease) in cash attributable to changes in assets and
                liabilities:Accounts
                receivable
            
            
            398
            
            
            143Prepaid
                expenses and other current assets
            
            
            (200
            )
            
            85Other
                assets
            
            
            —
            
            
            6Accounts
                payable
            
            
            302
            
            
            822Customer
                deposits
            
            
            227
            
            
            (10
            )Accrued
                expenses, sales taxes and regulatory fees
            
            
            373
            
            
            1,623Deferred
                revenue
            
            
            2
            
            
            (58
            )Net
                cash provided by (cash used) in operating activities
            
            
            439
            
            
            (1,032
            )Cash
                flows from Investing Activities:Purchases
                of property, equipment and leasehold improvements
            
            
            (302
            )
            
            (121
            )Net
                cash used in investing activities
            
            
            (302
            )
            
            (121
            )Increase
                (decrease) in cash and cash equivalents
            
            
            137
            
            
            (1,153
            )Cash
                and cash equivalents at beginning of period
            
            
            2,153
            
            
            2,023Cash
                and cash equivalents at end of period
            
            $
            2,290
            
            $
            870Supplement
                disclosures of cash flow information:Cash
                paid during the period forInterest
            
            $
            1
            
            $
            —Non-cash
                investing and financing activities:Preferred
                stock dividends
            
            $
            85
            
            $
            85Additional
                10% Notes issued as payment for interest
            
            
            165
            
            
            —Deferred
                financing costs for 10% Notes incurred by issuance of placement agent
                warrants
            
            
            —
            
            
            279Proceeds
                from March 2006 financing not yet received
            
            
            —
            
            
            5,179






See
        accompanying notes to condensed consolidated financial
        statements.


4


**GLOWPOINT,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**(Unaudited)**





**Note
      1 - Basis of Presentation**





**The
      Business**





Glowpoint,
      Inc. (“Glowpoint” or “we” or “us”), a Delaware corporation, is a premiere
      broadcast-quality, IP (Internet Protocol)-based managed video services provider.
      We offer a vast array of managed video services, including video application
      services, managed network services, IP and ISDN videoconferencing services,
      multi-point conferencing (bridging), technology hosting and management, and
      professional services. We provide these services to a wide variety of companies,
      from large enterprises and governmental entities to small and medium-sized
      businesses. Glowpoint is exclusively focused on high quality two-way video
      communications and has been supporting millions of video calls since its launch
      in 2000. We have bundled some of our managed services to offer video
      communication solutions for broadcast/media content acquisition and for video
      call center applications. Recently, with the advent of HD (High Definition)
      Telepresence solutions, we have combined various components of our features
      and
      services into a comprehensive “white glove” service offering that can support
      any of the telepresence solutions on the market today.





**Liquidity
      and Going Concern**





Our
      condensed consolidated financial statements have been prepared assuming we
      will
      continue as a going concern. We have incurred recurring operating losses and
      negative operating cash flows since our inception including a net loss
      attributable to common stockholders of $2,735,000 for the three months ended
      March 31, 2007. At March 31, 2007, we had a working capital deficit of
      $14,201,000. Excluding $657,000 of one-time customer deposits and an early
      payment for services provided in March, we would have had $1,633,000 in cash
      and
      cash equivalents at March 31, 2007 and cash used in operating activities of
      $218,000 for the three months ended March 31, 2007. Additionally, the 10% Senior
      Secured Convertible Notes (the “10% Notes”) (see Note 5) mature in September
      2007. These factors raise substantial doubt as to our ability to continue as
      a
      going concern. In March 2006 we implemented a corporate restructuring plan
      designed to reduce certain operating, sales and marketing and general and
      administrative costs (see Note 7). Assuming we realize all of the savings from
      our restructured operating activities, assuming we are able to negotiate
      favorable terms with the authorities regarding our sales and use taxes and
      regulatory fees and assuming we are able to renegotiate or refinance the 10%
      Notes, we believe that our available capital as of March 31, 2007 will enable
      us
      to continue as a going concern through March 31, 2008. There are no assurances,
      however that we will be able to raise additional capital as needed, or upon
      acceptable terms nor any assurances that we will be able renegotiate the terms
      and maturity date of the 10% Notes. If we are unable to renegotiate the maturity
      of the 10% Notes or issue new securities on favorable terms to repay them,
      it
      would have a material adverse effect on the Company. The accompanying financial
      statements do not include any adjustments that might result from this
      uncertainty.





**Summary
      of Significant Accounting Policies**





**Quarterly
      Financial Information and Results of Operations**





The
      financial statements as of March 31, 2007 and for the three months ended March
      31, 2007 and 2006, are unaudited and, in the opinion of management, include
      all
      adjustments (consisting only of normal recurring adjustments) necessary to
      present fairly the financial position as of March 31, 2007, and the results
      of
      operations and cash flows for the three months ended March 31, 2007 and 2006.
      The results for the three months ended March 31, 2007 are not necessarily
      indicative of the results to be expected for the entire year. While management
      of the Company believes that the disclosures presented are adequate to make
      the
      information not misleading, these consolidated financial statements should
      be
      read in conjunction with the consolidated financial statements and the footnotes
      thereto for the fiscal year ended December 31, 2006 as filed with the Securities
      and Exchange Commission as an exhibit to Form 10-K on June 6, 2007.





5


See
“Note
      2 - Basis of Presentation, Liquidity and Summary of Significant Accounting
      Policies” in the consolidated financial statements for the fiscal year ended
      December 31, 2006 as filed with the Securities and Exchange Commission as an
      exhibit to Form 10-K on June 6, 2007 for a discussion of the estimates and
      judgments necessary in the Company’s accounting for sales taxes and regulatory
      fees, concentration of credit risk, lives of property and equipment, income
      taxes and fair value of financial instruments. There have been no changes to
      our
      critical accounting policies in the three months ended March 31, 2007. Critical
      accounting policies and the significant estimates made in accordance with them
      are regularly discussed with our Audit Committee.





**Principles
      of Consolidation**





The
      condensed consolidated financial statements include the accounts of Glowpoint
      and our wholly owned subsidiaries, GP Communications LLC, AllComm Products
      Corporation and VTC Resources, Inc. All material inter-company balances and
      transactions have been eliminated in consolidation.





**Reclassifications**





Certain
      amounts from 2006 have been reclassified to conform to the 2007
      presentation.





**Use
      of Estimates**





Preparation
      of the condensed consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the condensed consolidated financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual amounts
      could differ from the estimates made. We continually evaluate estimates used
      in
      the preparation of the consolidated financial statements for reasonableness.
      Appropriate adjustments, if any, to the estimates used are made prospectively
      based upon such periodic evaluation. The significant areas of estimation include
      determining the allowance for doubtful accounts, deferred tax valuation
      allowance, sales and use tax obligations, regulatory fees and related penalties
      and interest, the estimated life of customer relationships, the estimated lives
      of property and equipment and the fair value of derivative financial
      instruments.





**Revenue
      Recognition**





We
      recognize subscription revenue when the related services have been performed.
      Revenue billed in advance is deferred until the revenue has been earned. Other
      service revenue, including amounts related to surcharges charged by our
      carriers, related to the Glowpoint managed network service and the multi-point
      video and audio bridging services are recognized 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 twenty-four month period estimated life of the customer relationship.
      Revenues derived from other sources are recognized when services are provided
      or
      events occur.





**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 2007 and 2006 periods, no impairment losses were indicated or
      recorded.





**Derivative
      Financial Instruments**





The
      Company’s objectives in using debt related derivative financial instruments are
      to obtain the lowest cash cost source of funds within a targeted range of
      variable to fixed-rate debt obligations. Derivatives are recognized in the
      consolidated balance sheets at fair value based on the criteria specified in
      SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”.
      The estimated fair value of the derivative liabilities is calculated using
      the
      Black-Scholes formula where applicable and such estimates are revalued at each
      balance sheet date with changes in value recorded as other income or expense
      in
      the statement of operations.





6


**Related
      Party Transactions**





The
      Company receives consulting and tax services from an accounting firm in which
      one of our directors is a partner. Management believes that such transactions
      are at arm’s-length and for terms that would have been obtained from
      unaffiliated third parties. For the three months ended March 31, 2007 and 2006,
      we incurred fees for these services of $3,000 and $0, respectively.





**Software
      Development Costs**





The
      company incurs costs for the development of its “Customer Connect” software that
      is to be sold, leased or licensed to third parties in the future. All software
      development costs have been appropriately accounted for in accordance with
      SFAS
      86 “ *Accounting
      for the Costs of Computer Software to be Sold, Leased or Otherwise
      Marketed”* .
      Software development costs are required to be capitalized when a product’s
      technological feasibility has been established by completion of a detailed
      program design or working model of the product, and ending when a product is
      available for release to customers. The Company capitalized $73,000 and $0
      of
      software development costs for the three months ended March 31, 2007 and 2006,
      respectively.





**Uncertainty
      in Income Taxes**





In
      June
      2006, the FASB issued FASB Interpretation No. (“FIN”) 48 *“Accounting
      for Uncertainty in Income Taxes* ”
(“FIN
      48”). FIN 48 sets forth a recognition threshold and measurement attribute for
      financial statement recognition of positions taken or expected to be taken
      in
      income tax returns. FIN 48 is effective for fiscal years beginning after
      December 15, 2006. The adoption of FIN 48 had no material impact on the
      Company’s consolidated financial statements.





**Recent
      Accounting Pronouncements**





In
      February 2007, the FASB issued SFAS No. 159 *“The
      Fair Value Option for Financial Assets and Financial
      Liabilities”* .
      SFAS
      No. 159 permits entities to choose to measure many financial assets and
      financial liabilities at fair value. Unrealized gains and losses on items for
      which the fair value option has been elected are reported in earnings. SFAS
      No.
      159 is effective for fiscal years beginning after November 15, 2007. The
      Company is currently assessing the impact of SFAS No. 159 on its financial
      position and results of operations.





**Note
      2 - 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. Effective January 1, 2006, the Company adopted Statement of Financial
      Standards No. 123R, *Share-Based
      Payment* (“SFAS
      No. 123R”) which requires that compensation cost relating to share-based payment
      transactions be recognized as an expense in the financial statements and that
      measurement of that cost be based on the estimated fair value of the equity
      or
      liability instrument issued. Under SFAS No. 123R, the pro forma disclosures
      previously permitted under SFAS No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”) are no longer an alternative to financial statement recognition. SFAS
      No. 123R also requires that forfeitures be estimated and recorded over the
      vesting period of the instrument.





The
      Company has adopted SFAS No. 123R using the modified prospective method which
      requires that share-based expense recognized includes: (a) earned share-based
      expense for all awards granted prior to, but not yet vested, as of the adoption
      date and (b) earned share-based expense for all awards granted subsequent to
      the
      adoption date. Since the modified prospective application method is being used,
      there is no cumulative effect adjustment upon the adoption of SFAS No. 123R,
      and
      the Company’s December 31, 2006 financial statements do not reflect any restated
      amounts. No modifications were made to outstanding options prior to the adoption
      of SFAS No. 123R, and the Company did not change the quantity, type or payment
      arrangements of any share-based payments programs.




7


The
      weighted average fair value of each option granted is estimated on the date
      of
      grant using the Black-Scholes option pricing model with the following
      assumptions during the three months ended March 31, 2007 and 2006:




Three
                Months Ended March 31,2007
            
            2006Risk
                free interest rate
            
            
            4.7
            %
            
            4.3
            %Expected
                option lives
            
            
            5
                Years
            
            
            5
                YearsExpected
                volatility
            
            
            99.3
            %
            
            96.1
            %Estimated
                forfeiture rate
            
            
            10
            %
            
            30
            %Expected
                dividend yields
            
            
            None
            
            
            NoneWeighted
                average grant date fair value of options
            
            $
            0.45
            
            $
            0.45




Expected
      volatility was calculated using the historical volatility of the Company. The
      expected term of the options is estimated based on the Company’s historical
      exercise rate and forfeiture rates are estimated based on employment termination
      experience. The risk free interest rate is based on U.S. Treasury yields for
      securities in effect at the time of grants with terms approximating the term
      of
      the grants. The assumptions used in the Black-Scholes option valuation model
      are
      highly subjective, and can materially affect the resulting
      valuation.





A
      summary
      of options granted, exercised, expired and forfeited under our plans and options
      outstanding as of and for the three months ended March 31, 2007 with respect
      to
      all outstanding options is as follows (options in thousands):




Outstanding
            
            ExercisableNumber
                of Options
            
            Weighted
              Average
              Exercise
              Price
            
            Number
                of Options
            
            Weighted
              Average
              Exercise
              PriceOptions
                outstanding, January 1, 2007
            
            
            5,100
            
            $
            2.26
            
            
            3,664
            
            $
            2.86Granted
            
            
            34
            
            
            0.59Exercised
            
            
            —
            
            
            —Expired
            
            
            (1,360
            )
            
            2.95Forfeited
            
            
            (148
            )
            
            1.61Options
                outstanding, March 31, 2007
            
            
            3,626
            
            $
            2.02
            
            
            2,230
            
            $
            2.84




At
      March
      31, 2007, there was $114,000 of total unrecognized compensation costs related
      to
      non-vested options granted prior to January 1, 2006 that are expected to be
      recognized over a weighted-average period of 0.72 years.





The
      Company has recorded $83,000 and $142,000 related to its stock option
      compensation in general and administrative expenses for the three months ended
      March 31, 2007 and 2006, respectively. There was no income tax benefit
      recognized for stock-based compensation for the three months ended March 31,
      2007 and 2006. No compensation costs were capitalized as part of the cost of
      an
      asset. The intrinsic value of stock options granted in the three months ended,
      and as of March 31, 2007 and 2006 was $2,000 and $0, respectively.





8


**Restricted
      Stock**





A
      summary
      of restricted stock granted, vested, forfeited and unvested restricted stock
      outstanding as of March 31, 2007, is presented below (restricted shares in
      thousands):




Restricted
                Shares
            
            Weighted
                Average
              Exercise
                PriceUnvested
                restricted shares outstanding, January 1, 2007
            
            
            317
            
            $
            0.71Granted
            
            
            360
            
            
            0.62Vested
            
            
            (97
            )
            
            1.35Forfeited
            
            
            —
            
            
            —Unvested
                restricted shares outstanding, March 31, 2007
            
            
            580
            
            $
            0.53




The
      Company has recorded $62,000 and $155,000 related to its restricted stock
      compensation in general and administrative expenses for the three months ended
      March 31, 2007 and 2006, respectively. There was no income tax benefit
      recognized for stock-based compensation for the three months ended March 31,
      2007 and 2006, respectively. No compensation costs were capitalized as part
      of
      the cost of an asset.





**Note
      3 - 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, 2007 and 2006 is the same as basic loss per share. Potential shares
      of
      common stock associated with 17,956,000 and 20,777,000 outstanding options
      and
      warrants, 1,729,000 and 1,699,000 shares issuable upon the conversion of our
      Series B convertible preferred stock and 13,542,000 and 11,330,000 shares
      issuable upon conversion of the 10% Notes as of March 31, 2007 and 2006,
      respectively, have been excluded from the calculation of diluted loss per share
      because the effects would be anti-dilutive.





**Note
      4** **- Stockholders’ Deficit**





In
      February 2004, we raised net proceeds of $12,480,000 in a private placement
      of
      6,100,000 shares of our common stock at $2.25 per share. 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 $1,223,000 and $1,236,000 as of March 31, 2007 and December 31, 2006. We
      recognized other income of $13,000 and $23,000 for the three months ended March
      31, 2007 and 2006, respectively.





9


**Note
      5 - 10% Senior Secured Convertible Notes**





**10%
      Senior Secured Convertible Notes and 10% Note Discount**





In
      March
      and April 2006, we issued our 10% Senior Secured Convertible Notes (“10% Notes”)
      in a private placement to private investors. Activity for the 10% Notes and
      10%
      Notes discount during the three months ended, and as of March 31, 2007, was
      as
      follows (in thousands):




Dec.
                31, 2006
            
            Activity
            
            Mar.
                31, 2007Principal
                of 10% Notes:March
                2006 financing
            
            $
            5,665
            
            $
            —
            
            $
            5,665April
                2006 financing
            
            
            515
            
            
            —
            
            
            515Additional
                10% Notes
            
            
            426
            
            
            165
            
            
            5916,606
            
            
            165
            
            
            6,771Discount:Derivative
                financial instrument - Series A Warrants
            
            
            (2,873
            )
            
            —
            
            
            (2,873
            )Reduction
                of exercise price and extension of expiration dates of
                warrants
            
            
            (766
            )
            
            —
            
            
            (766
            )(3,639
            )
            
            —
            
            
            (3,639
            )Accretion
                of discount
            
            
            1,359
            
            
            628
            
            
            1,987(2,280
            )
            
            628
            
            
            (1,652
            )10%
                Notes, net of discount
            
            $
            4,326
            
            $
            793
            
            $
            5,119






In
      the
      March and April 2006 transactions, we issued $5,665,000 and $515,000,
      respectively, with a total aggregate principal amount of $6,180,000 of our
      10%
      Notes and Series A warrants to purchase 6,180,000 shares of common stock at
      an
      exercise price of $0.65 per share. The warrants are subject to certain
      anti-dilution protection. We also agreed to reduce the exercise price of
      3,625,000 previously issued warrants held by the investors in this offering
      to
      $0.65 from a weighted average price of $3.38, and to extend the expiration
      date
      of any such warrants to no earlier than three years after the offering date.
      The
      new weighted average expiration date of the warrants will be 3.5 years from
      a
      previous weighted average expiration date of 2.9 years. 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 warrants are
      subject to certain anti-dilution protection. The $5,585,000 net proceeds of
      the
      March and April 2006 financings are being used to support our corporate
      restructuring program and for working capital.





The
      10%
      Notes bear interest at 10% per annum, increasing to 12% in April 2007 and mature
      on September 30, 2007. They are convertible into common stock at a conversion
      rate of $0.50 per share. We have the option to pay the accrued interest for
      the
      10% Notes in cash or additional 10% Notes. The Series A warrants are exercisable
      for a period of 5 years.





We
      accounted for the reduction of the exercise price of 3,625,000 previously issued
      warrants held by the investors in this offering to $0.65 from a weighted average
      price of $3.38, and the extension of the expiration date of any such warrants
      to
      no earlier than three years after the offering date at fair value as a debt
      discount with an offsetting credit to paid in capital. A portion of the finance
      costs of the 10% Notes in March and April 2006 will be allocated to this
      transaction and charged to paid in capital. The estimated fair value of this
      modification is based on the excess of the fair value of these warrants at
      the
      date of the financings over the fair value of these warrants at their original
      terms. In the March and April 2006 financings $766,000 of the proceeds was
      attributed to the estimated fair value of the modification of price and term
      of
      these warrants. The $766,000 fair value of this modification will be treated
      as
      a discount of the 10% Notes and expensed, using the imputed interest method,
      over the 18 month period to the 10% Note’s maturity date.





During
      the three months ended March 31, 2007 and 2006 the accretion of discount was
      $628,000 and $0, respectively.





10


**Financing
      Costs**





The
      financing costs, which were included in the other assets in the accompanying
      balance sheets, and accumulated amortization as of March 31, 2007, are as
      follows (in thousands):




March
                31, 2007Cash
                financing costs:Placement
                agent fees - Burnham Hill Partners
            
            $
            480Other
                financing costs
            
            
            115595Placement
                agent warrants - Burnham Hill Partners
            
            
            296Financing
                costs charged to additional paid in capital
            
            
            (110
            )Total
                financing costs
            
            
            781Accumulated
                amortization
            
            
            (519
            )$
            262




The
      financing costs are being amortized over the 18 month period through September
      30, 2007, the maturity date of the 10% Notes. During the three months ended
      March 31, 2007 and 2006 the amortization of financing costs was $130,000 and
      $0,
      respectively.





**Accounting
      for Conversion Feature and Series A Warrant Derivative
      Liabilities**





Activity
      for derivative liabilities during the quarter ended March 31, 2007 and December
      31, 2006, was as follows (in thousands):





Dec.
                31, 2006
            
            Additions
            
            Increase
                (decrease) in Fair Value
            
            Mar.
                31, 2007Derivative
                financial instrument - February 2004 capital raise
            
            $
            1,236
            
            $
            —
            
            $
            (13
            )
            $
            1,223Derivative
                financial instrument - Beneficial conversion feature - 10%
                notes
            
            
            1,666
            
            
            41
            
            
            —
            
            
            1,707Derivative
                financial instrument - Series A Warrants
            
            
            1,399
            
            
            —
            
            
            627
            
            
            2,026$
            4,301
            
            $
            41
            
            $
            614
            
            $
            4,956




We
      accounted for the convertibility of the 10% Notes into common stock at a
      conversion rate of $0.50 per share as a derivative liability subject to SFAS
      No.
      133. Management determined that the events or actions necessary to deliver
      registered shares are not controlled by the Company and that the holders have
      the
      right to demand that the Company pay the holders in cash, calculated as defined
      in the Senior Secured Convertible Promissory Note , under
      certain circumstances. Accordingly, the Company accounted for the beneficial
      conversion feature as a derivative liability. The estimated fair value of the
      derivative liability is based on the prepayment amount that would be owed to
      a
      10% Notes holder if payment is required. The prepayment amount is the greater
      of
      125% of the value of the 10% Notes and accrued interest or the value if the
      10%
      Notes and accrued interest are converted at $0.50 per share and then multiplied
      by the then current stock price. Since the 10% Notes are convertible at the
      issuance date an expense related to the derivative liability is recognized
      on
      that date. During the three months ended March 31, 2007 and 2006 unpaid interest
      on the 10% Notes was paid in additional 10% Notes and the estimated fair value
      of the derivative liability and an expense of $41,000 and $0 was recognized,
      respectively. We estimated the fair value of the derivative liability as of
      March 31, 2007 and December 31, 2006 to be $1,707,000 and $1,666,000,
      respectively.





11


We
      accounted for the issuance of the Series A warrants to purchase 6,180,000 shares
      of common stock at an exercise price of $0.65 per share as a derivative
      liability subject to SFAS No. 133. Management determined that the events or
      actions necessary to deliver registered shares are not controlled by the Company
      and that the holders have
      the
      right to demand that the Company pay the holders in cash, calculated as defined
      in the Series A warrant, under
      certain circumstances. Accordingly the Company accounted for the Series A
      warrants as a derivative liability. The estimated fair value of the derivative
      liability is calculated using the Black-Scholes formula and such estimates
      are
      revalued at each balance sheet date with changes in value recorded as other
      income or expense. We estimated the fair value of the derivative liability
      as of
      March 31, 2007 and December 31, 2006 to be $2,026,000 and $1,399,000,
      respectively. During the three months ended March 31, 2007 and 2006 we
      recognized an expense of $627,000 and $0 respectively for the increase in the
      derivative liability.





**Note
      6 - Interest Expense**





The
      components of interest expense for the three months ended March 31, 2007 and
      2006 are presented below (in thousands):




2007
            
            2006Accretion
                of discount on 10% Notes
            
            $
            628
            
            $
            —Interest
                on 10% Notes
            
            
            167
            
            
            —Beneficial
                conversion feature - 10% Notes
            
            
            41
            
            
            1,586Interest
                expense for sales and use taxes and regulatory fees
            
            
            78
            
            
            52Other
                interest expense
            
            
            1
            
            
            —$
            915
            
            $
            1,638




**Note
      7- March 2006 Restructuring**





In
      March
      2006, we implemented a corporate restructuring plan designed to reduce certain
      operating, sales and marketing and general and administrative costs. The costs
      of this restructuring, approximately $1,200,000, consisting of severance
      payments, acceleration of vesting of stock options and benefit reimbursements,
      were recorded in the first quarter of 2006 and will be paid through April 2007.
      As of March 31, 2007 the unpaid portion was $14,000. As part of the
      restructuring initiative, we implemented management changes, including the
      departure of twenty-one employees and the promotion of Michael Brandofino to
      Chief Operating Officer. David Trachtenberg, President and Chief Executive
      Officer since October 2003, and Gerard Dorsey, Executive Vice President and
      Chief Financial Officer since December 2004 had left Glowpoint. In connection
      with their separation, Messrs. Trachtenberg and Dorsey were paid severance
      based
      upon their employment agreements of approximately $500,000 and $155,000,
      respectively, over the following year and receive other benefits (e.g.,
      accelerated vesting of restricted stock or options) valued at approximately
      $180,000 and $7,000, respectively. The amount paid to them is a portion of
      the
      $1,200,000 of restructuring costs recorded in the first quarter of 2006.





**Note
      8 - Commitments and Contingencies**





We
      have
      entered into a number of agreements with telecommunications companies to
      purchase communications services. Some of the agreements require a minimum
      amount of services purchased over the life of the agreement, or during a
      specified period of time.





Glowpoint
      believes that it will meet its commercial commitments. In certain instances
      where Glowpoint did not meet the minimum commitments no such penalties for
      minimum commitments have been assessed and the Company has entered into new
      agreements. It has been our experience that the prices and terms of successor
      agreement are similar to those offered by other carriers. Glowpoint is in
      discussion with one carrier where the Company’s computation differs from that of
      the Carrier. Glowpoint believes that it will ultimately complete negotiations
      with the Carrier that will result in no penalty under the current arrangement.
      Glowpoint does not believe that any loss contingency related to a potential
      shortfall should be recorded in the financial statements because it is not
      probable, from the information available and from prior experience, that
      Glowpoint has incurred a liability.





12


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





*Certain
      statements in this Quarterly Report on Form 10-Q, or the Report, are
“forward-looking statements.” These forward-looking statements include, but are
      not limited to, statements about the plans, objectives, expectations and
      intentions of Glowpoint, Inc.* *(“Glowpoint”
      or “we” or “us”)* *.,
      a
      Delaware corporation and other statements contained in this Report that are
      not
      historical facts. Forward-looking statements in this Report or hereafter
      included in other publicly available documents filed with the Securities and
      Exchange Commission, or the Commission, reports to our stockholders and other
      publicly available statements issued or released by us involve known and unknown
      risks, uncertainties and other factors which could cause our actual results,
      performance (financial or operating) or achievements to differ from the future
      results, performance (financial or operating) or achievements expressed or
      implied by such forward-looking statements. Such future results are based upon
      management's best estimates based upon current conditions and the most recent
      results of operations. When used in this Report, the words “expect,”
“anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” and similar
      expressions are generally intended to identify forward-looking statements,
      because these forward-looking statements involve risks and uncertainties. There
      are important factors that could cause actual results to differ materially
      from
      those expressed or implied by these forward-looking statements, including our
      plans, objectives, expectations and intentions and other factors that are
      discussed*  *under
      the section entitled “Risk Factors,” in item 7of our* *consolidated financial statements and the footnotes thereto for the fiscal
      year
      ended December 31, 2006 as filed with the Securities and Exchange Commission
      as
      an exhibit to Form 10-K on June 6, 2007.* **





*The
      following discussion and analysis should be read in conjunction with the
      consolidated financial statements and related notes included elsewhere in this
      Report.*





**Overview**





Glowpoint,
      Inc. (“Glowpoint” or “we” or “us”), a Delaware corporation, is a premiere
      broadcast-quality, IP (Internet Protocol)-based managed video services provider.
      We offer a vast array of managed video services, including video application
      services, managed network services, IP and ISDN videoconferencing services,
      multi-point conferencing (bridging), technology hosting and management, and
      professional services. We provide these services to a wide variety of companies,
      from large enterprises and governmental entities to small and medium-sized
      businesses. Glowpoint is exclusively focused on high quality two-way video
      communications and has been supporting millions of video calls since its launch
      in 2000. We have bundled some of our managed services to offer video
      communication solutions for broadcast/media content acquisition and for video
      call center applications. Recently, with the advent of HD (High Definition)
      Telepresence solutions, we have combined various components of our features
      and
      services into a comprehensive “white glove” service offering that can support
      any of the telepresence solutions on the market today.





**Critical
      Accounting Policies**





There
      have been no changes to our critical accounting policies in the three months
      ended March 31, 2007. Critical accounting policies and the significant estimates
      made in accordance with them are regularly discussed with our Audit Committee.
      Those policies are discussed under “Critical Accounting Policies” in our
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” included in Item 7 of our consolidated financial statements and the
      footnotes thereto for the fiscal year ended December 31, 2006 as filed with
      the
      Securities and Exchange Commission as an exhibit to Form 10-K on June 6, 2007.





13


**Results
      of Operations**





The
      following table sets forth for the three months ended March 31, 2007 and 2006;
      information derived from our condensed consolidated financial statements as
      expressed as a percentage of revenue:




(Unaudited)
              Three
                Months Ended
              March
                31,2007
            
            2006Revenue
            
            
            100.0
            %
            
            100.0
            %Cost
                of revenue
            
            
            69.1
            
            
            73.8Gross
                margin
            
            
            30.9
            
            
            26.2Operating
                expenses:Research
                and development
            
            
            2.8
            
            
            5.7Sales
                and marketing
            
            
            11.4
            
            
            15.4General
                and administrative
            
            
            34.5
            
            
            98.6Total
                operating expenses
            
            
            48.7
            
            
            119.7Loss
                from operations
            
            
            (17.8
            )
            
            (93.5
            )Other
                expense (income):Interest
                expense
            
            
            16.2
            
            
            34.6Amortization
                of deferred financing costs
            
            
            2.3
            
            
            ──Increase
                (decrease) in fair value of derivative financial
                instruments
            
            
            10.8
            
            
            (0.5
            )Interest
                income
            
            
            (0.3
            )
            
            ──Total
                other expense, net
            
            
            29.0
            
            
            34.1Net
                loss
            
            
            (46.8
            )
            
            (127.6
            )Preferred
                stock dividends
            
            
            (1.5
            )
            
            (1.8
            )Net
                loss attributable to common stockholders
            
            
            (48.3
            )%
            
            (129.4
            )%




**Three
      Months Ended March 31, 2007 (the “2007 quarter”) Compared to Three Months Ended
      March 31, 2006 (the “2006 quarter”).**





**Revenue** -
      Revenue increased $940,000, or 19.9%, in the 2007 quarter to $5,661,000 from
      $4,721,000 in the 2006 quarter. Subscription and related revenue increased
      $268,000, or 8.4%, in the 2007 quarter to $3,444,000 from $3,176,000 in the
      2006
      quarter.  The increased subscription and related revenue is caused by
      increases in installed subscription circuits and in revenue per
      circuit.   Non-subscription revenue consisting of bridging, services,
      special events
      and other one-time fees increased $672,000 in the 2007 quarter to $2,217,000
      from $1,545,000 in the 2006 quarter.  The primary cause was $430,000 of
      one-time integration services on equipment required by a broadcast customer
      as
      part of the implementation of their two-year agreement.  Glowpoint was
      asked to facilitate the procurement and integration of equipment on behalf
      of a
      broadcast customer and agreed to do so as a pass through service.
 Therefore all equipment integrated into the solution was billed to a
      broadcast customer at cost and the related costs are included in cost of
      revenue.  In addition, bridging services increased $180,000, or 27.4%, in
      the 2007 quarter to $837,000 from $657,000 in the 2006 quarter.  This was a
      result of a concerted effort by the company to grow revenue from bridging
      services and was facilitated by the hiring of a Product Manager who focused
      on
      the bridging business.





**Cost
      of revenue** - Cost
      of revenue for the 2007 quarter increased $423,000, or 12.1%, to $3,909,000
      from
      $3,486,000 in the 2006 quarter. The primary components of this increase were
      $436,000 of sales taxes and regulatory fees that until the fourth quarter of
      2006 were not properly collected and remitted and, as a result we had accrued
      this liability in general and administrative expenses. Subsequently, these
      sales
      taxes and regulatory fees were being properly collected and remitted to the
      taxing authorities and that expense is now included in cost of revenues. The
      other component was $430,000 of one-time integration services on equipment
      required by a broadcast customer, discussed in the revenue section. These
      increases were partially offset by the continuing efforts to eliminate costs
      in
      our network and our on-going activity involving the renegotiation of rates
      and
      the migration of service to lower cost providers where possible.





14


**Gross
      margin** - Gross
      margin for the 2007 quarter increased by $517,000, or 41.9%, to $1,752,000
      from
      $1,235,000 in the 2006 quarter. The savings discussed in Cost of Revenue section
      caused our gross margin to increase to 30.9% in the 2007 quarter from 26.2%
      in
      the 2006 quarter. Excluding the broadcast customer integration transaction
      our
      gross margin percentage is 33.5% in the 2007 quarter. The rate of increase
      in
      our gross margin percentage is not indicative of results expected to be achieved
      in subsequent quarters.





**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, decreased by $110,000, or 40.6% in the 2007 quarter to $161,000 from
      $271,000 in the 2006 quarter. Salaries and benefits were reduced $51,000 as
      a
      result of the corporate restructuring that took place in March 2006. In
      addition, we capitalized $57,000 of software development costs related to our
      “Customer Connect” software that is to be sold, leased or licensed to third
      parties in the future. As a percentage of revenue, it was 2.8% for the 2007
      quarter, 5.7% for the 2006 quarter.





**Sales
      and marketing** - Sales
      and marketing expenses, which include sales salaries, commissions, overhead
      and
      marketing costs, were reduced by $83,000, or 11.4%, in the 2007 quarter to
      $646,000 from $729,000 in the 2006 quarter. Salaries and benefits were reduced
      $76,000 as a result of the corporate restructuring that took place in March
      2006
      and consultant fees decreased by $20,000. These reductions were partially offset
      by an $18,000 increase in agent commissions. Sales and marketing expense, as
      a
      percentage of revenue, was 11.4% for the 2007 quarter and 15.4% for the 2006
      quarter.





**General
      and administrative** -
      General and administrative expenses decreased by $2,702,000, or 58.1%, in the
      2007 quarter to $1,951,000 from $4,653,000 in the 2006 period. The primary
      components of this decrease were reductions of $1,200,000 for the accrual of
      the
      March 2006 restructuring program, $503,000 of salaries and benefits as a result
      of the March 2006 restructuring program, $417,000 in professional fees related
      to the restatements of prior period financial statements, $313,000 of accrued
      sales taxes and regulatory fees that are now included in cost of revenue,
      $152,000 in the amortization of deferred compensation related to option grants
      and restricted stock held by employees eliminated in the March 2006
      restructuring and $93,000 of equipment rental. General and administrative
      expenses as a percentage of revenue were 34.5% in the 2007 quarter and 98.6%
      in
      the 2006 quarter.





**Other
      expense (income)** - Other
      expense in the 2007 quarter of $1,644,000 principally reflects interest expense
      of $915,000 which is comprised of $628,000 for the accretion of the discount
      related to the 10% Notes, $167,000 of accrued interest expense related to the
      10% Notes, $41,000 for the expensing of the beneficial conversion feature
      related to additional 10% Notes, $78,000 of interest related to sales and use
      taxes and regulatory fees and $1,000 of other interest. The $614,000 net
      increase in fair value of derivative financial instruments was comprised of
      an
      increase in the fair value of derivative financial instruments related to the
      Series A warrants and a decrease related to the February 2004 capital raise.
      Amortization of deferred financing costs incurred in connection with the 10%
      Notes was $130,000. Those expenses are partially offset by a $15,000 of interest
      income. Other expense in the 2006 quarter of $1,611,000 principally reflects
      interest expense of $1,638,000 which is comprised of $1,586,000 for the
      expensing of the beneficial conversion feature related to the 10% Notes and
      interest related to sales and use taxes and regulatory fees of $52,000 reduced
      by a $23,000 decrease in the fair value of derivative financial instruments
      related to the February 2004 capital raise and interest income of $4,000.





**Income
      taxes -** As
      a
      result of our losses we recorded no provision for incomes taxes in the three
      months ended March 31, 2007 and 2006. Any deferred
      tax asset that would be related to our losses has been fully reserved under
      a
      valuation allowance, reflecting the uncertainties as to realization evidenced
      by
      the Company’s historical results and restrictions on the usage of the net
      operating loss carryforwards.





**Net
      loss** -
      Net
      loss decreased by $3,379,000, or 56.0%, to $2,650,000 in the 2007 quarter from
      $6,029,000 in the 2006 quarter.





**Preferred
      stock dividends** -
      We
      recognized preferred stock dividends of $85,000 for the 2007 quarter and $85,000
      for the 2006 quarter.





**Net
      loss attributable to common stockholders** - Net
      loss attributable to common stockholders decreased by $3,379,000, or 55.3%
      in
      the 2007 quarter to $2,735,000, or $0.06 per basic and diluted share from
      $6,114,000, or $0.13 per basic and diluted share, in the 2006 quarter.


15


**Liquidity
      and Capital Resources**





Our
      condensed consolidated financial statements have been prepared assuming we
      will
      continue as a going concern. We have incurred recurring operating losses and
      negative operating cash flows since our inception including a net loss
      attributable to common stockholders of $2,735,000 for the three months ended
      March 31, 2007. At March 31, 2007, we had a working capital deficit of
      $14,201,000. Excluding $657,000 of one-time customer deposits and an early
      payment for services provided in March, we would have had $1,633,000 in cash
      and
      cash equivalents at March 31, 2007 and cash used in operating activities of
      $218,000 for the three months ended March 31, 2007. Additionally, the 10% Notes
      (see Note 5) mature in September 2007. These factors raise substantial doubt
      as
      to our ability to continue as a going concern. In March 2006 we implemented
      a
      corporate restructuring plan designed to reduce certain operating, sales and
      marketing and general and administrative costs (see Note 7). Assuming we realize
      all of the savings from our restructured operating activities, assuming we
      are
      able to negotiate favorable terms with the authorities regarding our sales
      and
      use taxes and regulatory fees and assuming we are able to renegotiate or
      refinance the 10% Notes, we believe that our available capital as of March
      31,
      2007 will enable us to continue as a going concern through March 31, 2008.
      There
      are no assurances, however that we will be able to raise additional capital
      as
      needed, or upon acceptable terms nor any assurances that we will be able
      renegotiate the terms and maturity date of the 10% Notes. If we are unable
      to
      renegotiate the maturity of the 10% Notes or issue new securities on favorable
      terms to repay them, it would have a material adverse effect on the Company.
      The
      accompanying financial statements do not include any adjustments that might
      result from this uncertainty.





Net
      cash
      provided by operating activities was $439,000 for the 2007 quarter. The primary
      components of the net cash provided by operations were $675,000 for an increase
      in accounts payable and accrued expenses, sales taxes and regulatory fees,
      $628,000 for the accretion of the discount on the 10% Notes, $614,000 for the
      increase in the fair value of derivative financial instruments, $429,000 of
      depreciation and amortization, $398,000 for a decrease in accounts receivable,
      $227,000 for an increase in customer deposits, $145,000 of stock-based
      compensation, $130,000 for the amortization of deferred financing costs and
      $41,000 for expensing the beneficial conversion on the additional 10% Notes.
      These were partially offset by $2,650,000 for the net loss, $200,000 for in
      increase in prepaid expenses and other current assets. The cash provided by
      operating activities includes the effects of $657,000 of customer deposits
      and
      an early payment for services provided in March.





During
      the quarter ended March 31, 2007, there were no material changes in our
      contractual obligations.





Cash
      used
      in investing activities in the 2007 quarter for the purchase of property,
      equipment and leasehold improvements was $302,000. We have no commitments to
      make significant capital expenditures in 2007.





**Commitments
      and Contingencies**





During
      the three months ended March 31, 2007, there were no other items except as
      shown
      below that significantly impacted our commitments and contingencies as discussed
      in our consolidated
      financial statements and the footnotes thereto for the fiscal year ended
      December 31, 2006 as filed with the Securities and Exchange Commission as an
      exhibit to Form 10-K on June 6, 2007. The following table summarizes our
      contractual cash obligations and commercial commitments at March 31, 2007,
      and
      the effect such obligations are expected to have on liquidity and cash flow
      in
      future periods (in thousands).




Contractual
                Obligations:
            
            Total
            
            Less
                Than 1 Year
            
            1-3
                Years
            
            3-5
                Years
            
            More
                than 5 Years10%
                Notes
            
            $
            6,771
            
            $
            6,771
            
            $
            —
            
            $
            —
            
            $
            —Derivative
                liabilities
            
            
            4,956
            
            
            4,956
            
            
            —
            
            
            —
            
            
            —Operating
                lease obligations
            
            
            213
            
            
            207
            
            
            6
            
            
            —
            
            
            —Commercial
                commitments
            
            
            6,080
            
            
            3,343
            
            
            2,737
            
            
            —
            
            
            —Total
            
            $
            18,020
            
            $
            15,277
            
            $
            2,743
            
            $
            —
            
            $
            —




**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. We have certain derivative
      financial instruments related to the 10% Notes and the February 2004 capital
      raise. As the financial instruments are revalued each period these will cause
      fluctuations in our results from operations and if the 10% Notes are not
      converted and we are unable to register our common stock, ultimately cash flow
      from their settlement.





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





**Item
      4. Controls and Procedures**





During
      the 2007 and 2006 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 insufficient number of technical accounting
      and public company reporting personnel in the finance department and lack of
      an
      externally maintained warrant registry.





Our
      current management team has instituted improved internal accounting controls,
      used outside resources with technical accounting and public company experience
      to assist the finance department while we attempt to hire employees with that
      type of experience and maintain the warrant registry internally. We are
      continuing to evaluate and improve our internal control procedures, where
      applicable.





Another
      material weakness is that the Company does not release timely financial
      information to the general public. The restatements of prior periods delayed
      the
      filing of current periods and Management is in the process of hiring additional
      staff to assist in completing the prior financial statements to allow the
      Company to focus on, and issue, current financial statements.





There
      were no other changes in the internal controls during the 2007
      period.





**PART
      II - OTHER INFORMATION**





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





We
      are
      not currently defending any suit or claim.





**Item
      1A. Risk Factors**





The
      risk
      factors set forth in Item 1A of our 2006 Form 10-K filed on June 6, 2007, are
      incorporated herein by reference.





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





There
      have been no sales of securities in the past three years that have not been
      previously reported in a Quarterly Report on Form 10-Q or in a Current Report
      on
      Form 8-K.





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





None.





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




None.





17


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





The
      Company will have its 2007 Annual Meeting of Stockholders on Tuesday, August
      14,
      2007.  Holders of record on July 6, 2007 will be mailed a proxy,
      Annual Report on Form 10-K, and meeting details.  Any stockholder who
      intends to present a proposal at the 2007 Annual Meeting of Stockholders must
      deliver the proposal to the Corporate Secretary, Glowpoint, Inc., 225 Long
      Avenue, Hillside, New Jersey 07205, no later than July 9, 2007 if such proposal
      is to be considered for inclusion in our proxy materials for that meeting. 
Our by-laws provide that, in order for a stockholder to propose business for
      consideration at an annual meeting of stockholders and in the event the meeting
      date is not within 30 days of the anniversary date of our last meeting, the
      stockholder must give written notice to our Corporate Secretary at our principal
      executive offices not later than the close of business on the 10th day following
      the day on which such notice of the date of the annual meeting was mailed or
      such public disclosure of the date the annual meeting was made, whichever occurs
      first.  Public disclosure of the annual meeting date is hereby first
      made on June 26, 2007 on this Form 10-Q.





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




31.1
            Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer31.2
            Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
            Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
            Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002






18


**(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:
                June 26, 2007
            By:
            /s/ Michael
              BrandofinoMichael
                Brandofino, Chief Executive Officer
              (principal
                executive officer)


Date:
                  June 26, 2007
              By:
              /s/ Edwin
                F.
                HeinenEdwin
                    F. Heinen, Chief Financial Officer
                  (principal
                    financial and accounting officer)




19