----

----

| x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2009. |
|---|--------------------------------------------------------------------------------------------------------------------------------------|

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

| Delaware(State or other Jurisdiction ofIncorporation or Organization) | 77-0312442(I.R.S. Employer Number) |
|-----------------------------------------------------------------------|------------------------------------|

|  Large accelerated filer |  o |  Accelerated filer          |  o |
|-------------------------------|---------|---------------------------------------|---------|
|  Non-accelerated filer   |  o |  Smaller reporting company  |  x |

----

----

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Index

| PART I – FINANCIAL INFORMATION                                                                                      |   |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                      |   |   |
| Item 1. Financial Statements                                                                                              |   | 1      |
|                                                                                                                      |   |   |
| Condensed Consolidated Balance Sheets at September 30, 2009 (unaudited) and December 31, 2008*                            |   | 1      |
|                                                                                                                      |   |   |
| Unaudited Condensed Consolidated Statements of Operations for the nine and three months ended September 30, 2009 and 2008 |   | 2      |
|                                                                                                                      |   |   |
| Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the nine months ended September 30, 2009   |   | 3      |
|                                                                                                                      |   |   |
| Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008           |   | 4      |
|                                                                                                                      |   |   |
| Notes to Condensed Consolidated Financial Statements                                                                      |   | 5      |
|                                                                                                                      |   |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                       |   | 28     |
|                                                                                                                      |   |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                        |   | 38     |
|                                                                                                                      |   |   |
| Item 4. Controls and Procedures                                                                                           |   | 38     |
|                                                                                                                      |   |   |
| PART II – OTHER INFORMATION                                                                                         |   |   |
|                                                                                                                      |   |   |
| Item 1. Legal Proceedings                                                                                                 |   | 39     |
|                                                                                                                      |   |   |
| Item 1A. Risk Factors                                                                                                     |   | 39     |
|                                                                                                                      |   |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                       |   | 39     |
|                                                                                                                      |   |   |
| Item 3. Defaults upon Senior Securities                                                                                   |   | 39     |
|                                                                                                                      |   |   |
| Item 4. Submission of Matters to a Vote of Security Holders                                                               |   | 39     |
|                                                                                                                      |   |   |
| Item 5. Other Information                                                                                                 |   | 39     |
|                                                                                                                      |   |   |
| Item 6. Exhibits                                                                                                          |   | 39     |
|                                                                                                                      |   |   |
| Signatures                                                                                                                |   | 40     |
| Certifications                                                                                                            |   |   |

| * | The Condensed Consolidated Balance Sheet at December 31, 2008 has been derived from the auditedconsolidated financial statements filed as an exhibit to our Report on Form 10-K on March 31, 2009. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

CONSOLIDATED 

|                                                                                                                                                                                                                                                                                                           |   | September 30,2009 |     |   | December 31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                         |   | (Unaudited)       |     |   |             |   |
| Current assets:                                                                                                                                                                                                                                                                                                |   |              |     |   |             |   |
| Cash and cash equivalents                                                                                                                                                                                                                                                                                      |   | $                 | 1,124    |   |             | $      | 1,227 |   |
| Accounts receivable, net of allowance for doubtful accounts of $260 and $301, respectively                                                                                                                                                                                                                     |   |              | 2,895    |   |             |   | 3,090 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                                                                                                      |   |              | 403      |   |             |   | 294 |   |
| Total current assets                                                                                                                                                                                                                                                                                           |   |              | 4,422    |   |             |   | 4,611 |   |
| Property and equipment, net                                                                                                                                                                                                                                                                                    |   |              | 2,739    |   |             |   | 2,533 |   |
| Other assets                                                                                                                                                                                                                                                                                                   |   |              | 31       |   |             |   | 33 |   |
| Total assets                                                                                                                                                                                                                                                                                                   |   | $                 | 7,192    |   |             | $      | 7,177 |   |
|                                                                                                                                                                                                                                                                                                           |   |              |     |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                                                                                                                    |   |              |     |   |             |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                           |   |              |     |   |             |   |   |   |
| Accounts payable                                                                                                                                                                                                                                                                                               |   | $                 | 2,855    |   |             | $      | 2,367 |   |
| Accrued expenses                                                                                                                                                                                                                                                                                               |   |              | 989      |   |             |   | 842 |   |
| Accrued sales taxes and regulatory fees                                                                                                                                                                                                                                                                        |   |              | 4,088    |   |             |   | 4,535 |   |
| Customer deposits                                                                                                                                                                                                                                                                                              |   |              | 472      |   |             |   | 606 |   |
| Deferred revenue                                                                                                                                                                                                                                                                                               |   |              | 257      |   |             |   | 325 |   |
| Current portion of capital lease                                                                                                                                                                                                                                                                               |   |              | 116      |   |             |   | 161 |   |
| Total current liabilities                                                                                                                                                                                                                                                                                      |   |              | 8,777    |   |             |   | 8,836 |   |
| Long term liabilities:                                                                                                                                                                                                                                                                                         |   |              |     |   |             |   |   |   |
| Senior Secured Notes, net of discount of $240                                                                                                                                                                                                                                                                  |   |              | —  |   |             |   | 1,482 |   |
| Capital lease, less current portion                                                                                                                                                                                                                                                                            |   |              | —  |   |             |   | 72 |   |
| Total long term liabilities                                                                                                                                                                                                                                                                                    |   |              | —  |   |             |   | 1,554 |   |
| Total liabilities                                                                                                                                                                                                                                                                                              |   |              | 8,777    |   |             |   | 10,390 |   |
|                                                                                                                                                                                                                                                                                                           |   |              |     |   |             |   |   |   |
| Commitments and contingencies                                                                                                                                                                                                                                                                                  |   |              |     |   |             |   |   |   |
|                                                                                                                                                                                                                                                                                                           |   |              |     |   |             |   |   |   |
| Stockholders’ deficit:                                                                                                                                                                                                                                                                                   |   |              |     |   |             |   |   |   |
| Preferred stock, $.0001 par value 7,500 shares authorized and convertible; and 4,509 and 3,790 shares issued and outstanding recorded at fair value, respectively (liquidation value of $33,815 and $28,423, respectively) (see Note 14 for information related to Insider Purchasers – related parties) |   |              | 14,275   |   |             |   | 11,574 |   |
| Common stock, $.0001 par value;150,000,000 shares authorized; 66,542,353 and 48,374,954 shares issued; 64,977,462 and 46,810,063 shares outstanding, respectively                                                                                                                                              |   |              | 7        |   |             |   | 5 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                                     |   |              | 150,532  |   |             |   | 172,000 |   |
| Accumulated deficit                                                                                                                                                                                                                                                                                            |   |              | (165,016 | )      |             |   | (185,409 | ) |
|                                                                                                                                                                                                                                                                                                           |   |              | (202     | )      |             |   | (1,830 | ) |
| Less: Treasury stock, 1,564,891 shares at cost                                                                                                                                                                                                                                                                 |   |              | (1,383   | )      |             |   | (1,383 | ) |
| Total stockholders’ deficit                                                                                                                                                                                                                                                                              |   |              | (1,585   | )      |             |   | (3,213 | ) |
| Total liabilities and stockholders’ deficit                                                                                                                                                                                                                                                              |   | $                 | 7,192    |   |             | $      | 7,177 |   |
|                                                                                                                                                                                                                                                                                                           |   |              |     |   |             |   |   |   |

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per 

|                                                                                                  |   | Nine Months EndedSeptember 30, |    |   | Three Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|----------------------------------|--------|
|                                                                                                  |   | 2009                           |    |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Revenue                                                                                               |   | $                              | 19,928  |   |                             | $      | 18,557 |   |   | $ | 6,541 |   |   | $ | 6,066 |   |
| Cost of revenue                                                                                       |   |                           | 10,157  |   |                             |   | 10,757 |   |   |   | 3,321 |   |   |   | 3,630 |   |
| Gross margin                                                                                          |   |                           | 9,771   |   |                             |   | 7,800 |   |   |   | 3,220 |   |   |   | 2,436 |   |
|                                                                                                  |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                                   |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing                                                                                   |   |                           | 2,656   |   |                             |   | 2,717 |   |   |   | 791 |   |   |   | 811 |   |
| General and administrative                                                                            |   |                           | 7,898   |   |                             |   | 6,565 |   |   |   | 2,291 |   |   |   | 2,269 |   |
| Total operating expense                                                                               |   |                           | 10,554  |   |                             |   | 9,282 |   |   |   | 3,082 |   |   |   | 3,080 |   |
| Income (loss) from operations                                                                         |   |                           | (783    | )      |                             |   | (1,482 | ) |   |   | 138 |   |   |   | (644 | ) |
|                                                                                                  |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest and other expense (income):                                                                  |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense, including $0, $111, $0 and $44, respectively, for Insider Purchasers                |   |                           | 273     |   |                             |   | 3,425 |   |   |   | 60 |   |   |   | 1,293 |   |
| Loss on extinguishment of debt                                                                        |   |                           | 254     |   |                             |   | — |   |   |   | — |   |   |   | — |   |
| Interest income                                                                                       |   |                           | — |   |                             |   | (19 | ) |   |   | — |   |   |   | (3 | ) |
| Increase (decrease) in fair value of derivative financial instruments                                 |   |                           | 1,848   |   |                             |   | (153 | ) |   |   | 1,157 |   |   |   | (211 | ) |
| Amortization of deferred financing costs, including $37 and $13, respectively, for Insider Purchasers |   |                           | — |   |                             |   | 368 |   |   |   | — |   |   |   | 130 |   |
| Total interest and other expense, net                                                                 |   |                           | 2,375   |   |                             |   | 3,621 |   |   |   | 1,217 |   |   |   | 1,209 |   |
| Net loss                                                                                              |   |                           | (3,158  | )      |                             |   | (5,103 | ) |   |   | (1,079 | ) |   |   | (1,853 | ) |
| Gain (loss) on redemption of preferred stock                                                          |   |                           | (64     | )      |                             |   | — |   |   |   | 1,935 |   |   |   | — |   |
| Net income  (loss) attributable to common stockholders                                      |   | $                              | (3,222  | )      |                             | $      | (5,103 | ) |   | $ | 856 |   |   | $ | (1,853 | ) |
|                                                                                                  |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to common stockholders per share:                                      |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                 |   | $                              | (0.07   | )      |                             | $      | (0.11 | ) |   | $ | 0.02 |   |   | $ | (0.04 | ) |
| Diluted                                                                                               |   | $                              | (0.07   | )      |                             | $      | (0.11 | ) |   | $ | 0.01 |   |   | $ | (0.04 | ) |
|                                                                                                  |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares:                                                             |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                 |   |                           | 49,273  |   |                             |   | 45,440 |   |   |   | 55,861 |   |   |   | 45,590 |   |
| Diluted                                                                                               |   |                           | 49,273  |   |                             |   | 45,440 |   |   |   | 102,901 |   |   |   | 45,590 |   |
|                                                                                                  |   |                           |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |

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STOCKHOLDERS’ 

|                                                                            |   |         |    | Additional |   |        |   | Series A-2 (Note A) |    |           |   |
|---------------------------------------------------------------------------------|--------|--------------|---------|------------|--------|-------------|--------|---------------------|---------|----------------|--------|
|                                                                            |   | Common Stock |    | Paid In    |   | Accumulated |   | Preferred Stock     |    | Treasury Stock |   |   |   |
|                                                                            |   | Shares       |    | Amount     |   | Capital     |   | Deficit             |    | Shares         |   | Amount |   | Shares |   | Amount |   | Total |   |
| Balance at January 1, 2009                                                      |   |         | 48,375  |       | $      | 5           |   | $                   | 172,000 |           | $      | (185,409 | ) |   | 4 |   | $ | 11,574 |   |   | 1,565 |   | $ | (1,383 | ) | $ | (3,213 | ) |
| Cumulative effect of reclassification of warrants (ASC Topic 815)               |   |         | — |       |   | —     |   |                | (26,173 | )              |   | 23,551 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (2,622 | ) |
| Balance at January 1, 2009, as adjusted                                         |   |         | 48,375  |       |   | 5           |   |                | 145,827 |           |   | (161,858 | ) |   | 4 |   |   | 11,574 |   |   | 1,565 |   |   | (1,383 | ) |   | (5,835 | ) |
| Net loss                                                                        |   |         | — |       |   | —     |   |                | — |           |   | (3,158 | ) |   | — |   |   | — |   |   | — |   |   | — |   |   | (3,158 | ) |
| Stock-based compensation  - stock options                             |   |         | — |       |   | —     |   |                | 213     |           |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 213 |   |
| Stock-based compensation  - restricted stock                          |   |         | 775     |       |   | —     |   |                | 225     |           |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 225 |   |
| August 2009 Warrant Exchange                                                    |   |         | 17,372  |       |   | 2           |   |                | (2      | )              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Exercise of stock options                                                       |   |         | 20      |       |   | —     |   |                | 8       |           |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 8 |   |
| Series A-1 Preferred Stock issued in connection with the 2009 Private Placement |   |         | — |       |   | —     |   |                | — |           |   | — |   |   | 1 |   |   | 2,637 |   |   | — |   |   | — |   |   | 2,637 |   |
| Elimination of derivative liabilities                                           |   |         | — |       |   | —     |   |                | 4,751   |           |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 4,751 |   |
| Loss on redemption of Series A  Preferred Stock                       |   |         | — |       |   | —     |   |                | (1,999  | )              |   | — |   |   | — |   |   | 1,999 |   |   | — |   |   | — |   |   | — |   |
| Gain on redemption of Series A-1  Preferred Stock                     |   |         | — |       |   | —     |   |                | 1,935   |           |   | — |   |   | — |   |   | (1,935 | ) |   | — |   |   | — |   |   | — |   |
| Costs related to 2009 Private Placement, warrant and Preferred Stock exchange   |   |         | — |       |   | —     |   |                | (426    | )              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (426 | ) |
| Balance at September 30, 2009                                                   |   |         | 66,542  |       | $      | 7           |   | $                   | 150,532 |           | $      | (165,016 | ) |   | 5 |   | $ | 14,275 |   |   | 1,565 |   | $ | (1,383 | ) | $ | (1,585 | ) |
|                                                                            |   |         |    |       |   |        |   |                |    |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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STATEMENTS 

|                                                                                                          | Nine Months Ended September 30, |
|---------------------------------------------------------------------------------------------------------------|---------------------------------|
|                                                                                                          | 2009                            |   |   | 2008 |
| Cash flows from Operating Activities:                                                                         |                            |   |   |   |
| Net loss                                                                                                      |                            | $ | (3,158 | ) |   | $ | (5,103 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities:                               |                            |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                 |                            |   | 790 |   |   |   | 959 |   |
| Other expense recognized for the increase in the estimated fair value of the derivative financial instruments |                            |   | 1,848 |   |   |   | (153 | ) |
| Amortization of deferred financing costs                                                                      |                            |   | — |   |   |   | 368 |   |
| Bad debt expense                                                                                              |                            |   | 191 |   |   |   | 85 |   |
| Accretion of discount on Senior Secured Notes                                                                 |                            |   | 23 |   |   |   | 2,158 |   |
| Loss on disposal of equipment                                                                                 |                            |   | 8 |   |   |   | 17 |   |
| Loss on extinguishment of debt                                                                                |                            |   | 254 |   |   |   | — |   |
| Stock-based compensation                                                                                      |                            |   | 438 |   |   |   | 436 |   |
| Increase (decrease) attributable to changes in assets and liabilities:                                        |                            |   |   |   |   |   |   |   |
| Accounts receivable                                                                                           |                            |   | 4 |   |   |   | (442 | ) |
| Prepaid expenses and other current assets                                                                     |                            |   | (109 | ) |   |   | (18 | ) |
| Other assets                                                                                                  |                            |   | 2 |   |   |   | 3 |   |
| Accounts payable                                                                                              |                            |   | 488 |   |   |   | 1,293 |   |
| Customer deposits                                                                                             |                            |   | (134 | ) |   |   | (114 | ) |
| Accrued expenses, sales taxes and regulatory fees                                                             |                            |   | (232 | ) |   |   | 842 |   |
| Deferred revenue                                                                                              |                            |   | (68 | ) |   |   | 10 |   |
| Net cash provided by operating activities                                                                     |                            |   | 345 |   |   |   | 341 |   |
|                                                                                                          |                            |   |   |   |   |   |   |   |
| Cash flows from Investing Activities:                                                                         |                            |   |   |   |   |   |   |   |
| Purchases of property and equipment                                                                           |                            |   | (1,004 | ) |   |   | (847 | ) |
| Net cash used in investing activities                                                                         |                            |   | (1,004 | ) |   |   | (847 | ) |
|                                                                                                          |                            |   |   |   |   |   |   |   |
| Cash flows from Financing Activities:                                                                         |                            |   |   |   |   |   |   |   |
| Proceeds from preferred stock offering                                                                        |                            |   | 1,800 |   |   |   | — |   |
| Proceeds from exercise of stock options                                                                       |                            |   | 8 |   |   |   | — |   |
| Principal payments for capital lease                                                                          |                            |   | (118 | ) |   |   | (91 | ) |
| Purchase of Senior Secured Notes                                                                              |                            |   | (750 | ) |   |   | — |   |
| Costs related to private placement                                                                            |                            |   | (384 | ) |   |   | — |   |
| Net cash provided by (used in) financing activities                                                           |                            |   | 556 |   |   |   | (91 | ) |
|                                                                                                          |                            |   |   |   |   |   |   |   |
| Decrease in cash and cash equivalents                                                                         |                            |   | (103 | ) |   |   | (597 | ) |
| Cash and cash equivalents at beginning of period                                                              |                            |   | 1,227 |   |   |   | 2,312 |   |
| Cash and cash equivalents at end of period                                                                    |                            | $ | 1,124 |   |   | $ | 1,715 |   |
|                                                                                                          |                            |   |   |   |   |   |   |   |
| Supplement disclosures of cash flow information:                                                              |                            |   |   |   |   |   |   |   |
| Cash paid during the period for                                                                               |                            |   |   |   |   |   |   |   |
|     Interest                                                                              |                            | $ | 108 |   |   | $ | 91 |   |
|                                                                                                          |                            |   |   |   |   |   |   |   |
| Non-cash investing and financing activities:                                                                  |                            |   |   |   |   |   |   |   |
| Exchange of Senior Secured Notes for Series A-1 Preferred Stock                                               |                            | $ | 1,076  |   |   | $ | — |   |
| Additional Senior Secured Notes issued as payment for interest                                                |                            |   | 55  |   |   |   | 1,020 |   |
| Costs related to private placement incurred by issuance of placement agent warrants                           |                            |   | 42  |   |   |   | — |   |
| Settlement of accrued 2007 management bonus with restricted stock                                             |                            |   | —  |   |   |   | 179 |   |
|                                                                                                          |                            |
| See accompanying notes to condensed consolidated financial statements.                                        |                            |

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FINANCIAL 

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|                |   | Nine Months Ended September 30, |   |   | Three Months Ended September 30, |   |
|---------------------|--------|---------------------------------|--------|--------|----------------------------------|--------|
|                |   | 2009                            |   |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Consulting Services |   | $                               | 26     |   |                             | $      | 153 |   |   | $ | — |   |   | $ | 72 |   |
|                |   |                            |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Video Services      |   | $                               | 231    |   |                             | $      | 230 |   |   | $ | 73 |   |   | $ | 72 |   |
|                |   |                            |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                               |   | Sale of Series A-1 Preferred Stock |   |   | Preferred Stock Exchange |   |    | Senior Secured Note Exchange |   |   | Senior Secured Note Purchase |   |   | Placement AgentWarrant Fee |   |   | Total  |   |
|------------------------------------|--------|------------------------------------|--------|--------|--------------------------|--------|---------|------------------------------|--------|--------|------------------------------|--------|--------|----------------------------|--------|--------|--------|--------|
| Consideration received by Company: |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |
| Cash                               |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |
| Amount received                    |   | $                                  | 1,800  |   |                     | $      | -       |                         |   | $      | -                            |   |   | $                          | (750   | )      |   | $      | - |   |   | $ | 1,050 |   |
| Senior Secured Notes               |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |
| Carrying amount                    |   | $                                  | -      |   |                     | $      | -       |                         |   | $      | (1,076                       | )      |   | $                          | (713   | )      |   | $      | - |   |   | $ | (1,789 | ) |
| Series A-1 Preferred Stock         |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |
| Shares                             |   |                               | -      |   |                     |   | (3,790  | )                            |   |   | -                            |   |   |                       | -      |   |   |   | - |   |   |   | (3,790 | ) |
| Carrying amount                    |   | $                                  | -      |   |                     | $      | (11,574 | )                            |   | $      | -                            |   |   | $                          | -      |   |   | $      | - |   |   | $ | (11,574 | ) |
|                               |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |
| Consideration provided to holders: |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |
| Series A-3 Warrants issued:        |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |
| Shares                             |   |                               | 2,250  |   |                     |   | -       |                         |   |   | 594                          |   |   |                       | -      |   |   |   | 500 |   |   |   | 3,344 |   |
| Carrying amount                    |   | $                                  | 189    |   |                     | $      | -       |                         |   | $      | 50                           |   |   | $                          | -      |   |   | $      | 42 |   |   | $ | 281 |   |
|                               |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |
| Series A-1 Preferred Stock issued: |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |
| Shares                             |   |                               | 450    |   |                     |   | 3,790   |                         |   |   | 269                          |   |   |                       | -      |   |   |   | - |   |   |   | 4,509 |   |
| Carrying amount                    |   | $                                  | 1,611  |   |                     | $      | 13,573  |                         |   | $      | 1,026                        |   |   | $                          | -      |   |   | $      | - |   |   | $ | 16,210 |   |
|                               |   |                               |   |   |                     |   |    |                         |   |   |                         |   |   |                       |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                                           |   | Total Costs |   |
|------------------------------------------------|--------|-------------|--------|
| Cash financing costs:                          |   |        |   |
| Burnham Hill Partners placement agent fees     |   | $           | 201    |   |
| Legal and other professional fees              |   |        | 85     |   |
|                                           |   |        | 286    |   |
| Non-cash financing costs:                      |   |        |   |   |
| Burnham Hill Partners placement agent warrants |   |        | 42     |   |
|                                           |   | $           | 328    |   |
|                                           |   |        |   |   |

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Table of Contents

|                               |   | Preferred Stock Exchange |    |   | Warrant Exchange |   |   | Total  |   |
|------------------------------------|--------|--------------------------|---------|--------|------------------|--------|--------|--------|--------|
| Consideration received by Company: |   |                     |    |   |             |   |   |   |   |
| Series A-1 Preferred Stock         |   |                     |    |   |             |   |   |   |   |
| Shares                             |   |                     | (4,509  | )      |             |   | -      |   |   |   | (4,509 | ) |
| Carrying amount                    |   | $                        | (16,210 | )      |             | $      | -      |   |   | $ | (16,210 | ) |
| Warrants Shares               |   |                     | -       |   |             |   | 39,088 |   |   |   | 39,088 |   |
|                               |   |                     |    |   |             |   |   |   |   |   |   |   |
| Consideration provided to holders: |   |                     |    |   |             |   |   |   |   |   |   |   |
| Common Stock                       |   |                     |    |   |             |   |   |   |   |   |   |   |
| Shares                             |   |                     | -       |   |             |   | 17,372 |   |   |   | 17,372 |   |
| Carrying amount                    |   | $                        | -       |   |             | $      | 2      |   |   | $ | 2 |   |
|                               |   |                     |    |   |             |   |   |   |   |   |   |   |
| Series A-2 Preferred Stock issued: |   |                     |    |   |             |   |   |   |   |   |   |   |
| Shares                             |   |                     | 4,509   |   |             |   | -      |   |   |   | 4,509 |   |
| Carrying amount                    |   | $                        | 14,275  |   |             | $      | -      |   |   | $ | 14,275 |   |
|                               |   |                     |    |   |             |   |   |   |   |   |   |   |

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Table of Contents

|                                       |   | Total Costs |   |
|--------------------------------------------|--------|-------------|--------|
| Cash financing costs:                      |   |        |   |
| Burnham Hill Partners placement agent fees |   | $           | 75     |   |
| Legal and other professional fees          |   |        | 23     |   |
|                                       |   | $           | 98     |   |
|                                       |   |        |   |   |

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Table of Contents

|                                              |   | Nine Months EndedSeptember 30, |   |   | Three Months EndedSeptember 30, |   |
|---------------------------------------------------|--------|--------------------------------|--------|--------|---------------------------------|--------|
|                                              |   | 2009                           |   |   | 2008                            |   |   | 2009 |   |   | 2008 |   |
| Risk free interest rate                           |   |                           | 2.0    | %      |                            |   | 3.2 | % |   |   | 2.4 | % |   |   | 3.0 | % |
| Expected option lives                             |   | 5 Years                        |   |   | 5 Years                         |   |   | 5 Years |   |   | 5 Years |   |
| Expected volatility                               |   |                           | 113.3  | %      |                            |   | 95.4 | % |   |   | 114.6 | % |   |   | 96.2 | % |
| Estimated forfeiture rate                         |   |                           | 10     | %      |                            |   | 10 | % |   |   | 10 | % |   |   | 10 | % |
| Expected dividend yields                          |   | None                           |   |   | None                            |   |   | None |   |   | None |   |
| Weighted average grant date fair value of options |   | $                              | 0.32   |   |                            | $      | 0.39 |   |   | $ | 0.37 |   |   | $ | 0.40 |   |
|                                              |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |

|                                    |   | Outstanding       |    |   | Exercisable                  |   |
|-----------------------------------------|--------|-------------------|---------|--------|------------------------------|--------|
|                                    |   | Number of Options |    |   | WeightedAverageExercisePrice |   |   | Number of Options |   |   | WeightedAverageExercisePrice |   |
| Options outstanding, January 1, 2009    |   |              | 4,973   |   |                         | $      | 1.31 |   |   |   | 3,334 |   |   | $ | 1.72 |   |
| Granted                                 |   |              | 1,065   |   |                         |   | 0.42 |   |   |   |   |   |   |   |   |   |
| Exercised                               |   |              | (20     | )      |                         |   | 0.41 |   |   |   |   |   |   |   |   |   |
| Expired                                 |   |              | — |   |                         |   | — |   |   |   |   |   |   |   |   |   |
| Forfeited                               |   |              | (1,063  | )      |                         |   | 2.27 |   |   |   |   |   |   |   |   |   |
| Options outstanding, September 30, 2009 |   |              | 4,955   |   |                         | $      | 0.92 |   |   |   | 3,000 |   |   | $ | 1.22 |   |
|                                    |   |              |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                       |   | Nine Months Ended September 30, |   |   | Three Months Ended September 30, |   |
|----------------------------|--------|---------------------------------|--------|--------|----------------------------------|--------|
|                       |   | 2009                            |   |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| Cost of revenue            |   | $                               | 13     |   |                             | $      | 15 |   |   | $ | 5 |   |   | $ | 5 |   |
| Sales and marketing        |   |                            | 35     |   |                             |   | 51 |   |   |   | 11 |   |   |   | 16 |   |
| General and administrative |   |                            | 165    |   |                             |   | 211 |   |   |   | 42 |   |   |   | 50 |   |
|                       |   | $                               | 213    |   |                             | $      | 277 |   |   | $ | 58 |   |   | $ | 71 |   |
|                       |   |                            |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |

|                                                       |   | Restricted Shares |   |   | Weighted AverageExercise Price |   |
|------------------------------------------------------------|--------|-------------------|--------|--------|-------------------------------------|--------|
| Unvested restricted shares outstanding, January 1, 2009    |   |              | 1,220  |   |                                | $      | 0.49 |   |
| Granted                                                    |   |              | 1,225  |   |                                |   | 0.34 |   |
| Vested                                                     |   |              | (723   | )      |                                |   | 0.42 |   |
| Forfeited                                                  |   |              | (450   | )      |                                |   | 0.50 |   |
| Unvested restricted shares outstanding, September 30, 2009 |   |              | 1,272  |   |                                | $      | 0.38 |   |
|                                                       |   |              |   |   |                                |   |   |   |

|                       |   | Nine Months Ended September 30, |   |   | Three Months Ended September 30, |   |
|----------------------------|--------|---------------------------------|--------|--------|----------------------------------|--------|
|                       |   | 2009                            |   |   | 2008                             |   |   | 2009 |   |   | 2008 |   |
| General and administrative |   | $                               | 216    |   |                             | $      | 156 |   |   | $ | 55 |   |   | $ | 48 |   |
| Sales and marketing        |   |                            | 9      |   |                             |   | 3 |   |   |   | 3 |   |   |   | 2 |   |
|                       |   | $                               | 225    |   |                             | $      | 159 |   |   | $ | 58 |   |   | $ | 50 |   |

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Table of Contents

|                                     |   | Warrants |    |   | Weighted AverageExercise Price |   |
|------------------------------------------|--------|----------|---------|--------|-------------------------------------|--------|
| Warrants outstanding, January 1, 2009    |   |     | 40,917  |   |                                | $      | 0.54 |   |
| Granted                                  |   |     | 3,344   |   |                                |   | 0.40 |   |
| Exercised                                |   |     | — |   |                                |   | — |   |
| Exchanged – Note 4                 |   |     | (39,088 | )      |                                |   | 0.40 |   |
| Forfeited                                |   |     | (1,709  | )      |                                |   | 2.56 |   |
| Warrants outstanding, September 30, 2009 |   |     | 3,464   |   |                                | $      | 0.97 |   |
|                                     |   |     |    |   |                                |   |   |   |

| Exercise Prices |   |   | NumberOutstanding |   | Expiration Date |   | ExercisePrice |   | Subject to Anti-dilution Protection |
|-----------------|--------|--------|-------------------|--------|-----------------|--------|---------------|--------|-------------------------------------|
| $               | 0.40   |   |              |   | 1,824           |   | 11/25/2013    |   | $                                   | 0.40 |   | Yes |
|            | 1.61   |   |              |   | 1,640           |   | 3/14/2010     |   |                                | 1.61 |   | No |
|            |   |   |              |   | 3,464           |   |          |   |                                |   |   |   |

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|                                       |   | September 30, |    |
|--------------------------------------------|--------|---------------|---------|
|                                       |   | 2009          |    |   | 2008 |   |
| Series A-2 Preferred Stock            |   |          | 45,087  |   |   |   | — |   |
| Warrants                              |   |          | 3,464   |   |   |   | 22,875 |   |
| Options                                    |   |          | 4,955   |   |   |   | 4,591 |   |
| Unvested restricted stock                  |   |          | 1,272   |   |   |   | 960 |   |
| Senior Secured Notes                       |   |          | — |   |   |   | 24,052 |   |
| Series C Convertible Preferred Stock  |   |          | — |   |   |   | 4,748 |   |
|                                       |   |          | 54,778  |   |   |   | 57,226 |   |
|                                       |   |          |    |   |   |   |   |   |

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|                                                |   | December 31, 2008 |   |   | 2009 Activity |   |    | 2009 Private Placements Entries, Net |   |   | September 30, 2009 |   |
|-----------------------------------------------------|--------|-------------------|--------|--------|---------------|--------|---------|--------------------------------------|--------|--------|--------------------|--------|
| Principal of Senior Secured Notes:                  |   |              |   |   |          |   |    |                                 |   |   |               |   |
| 2006 Private Placements                             |   | $                 | 1,500  |   |          | $      | — |                                 |   | $      | (1,500             | )      |   | $ | — |   |
| Senior Secured Notes issued as payment for interest |   |              | 222    |   |          |   | 55      |                                 |   |   | (277               | )      |   |   | — |   |
|                                                |   |              | 1,722  |   |          |   | 55      |                                 |   |   | (1,777             | )      |   |   | — |   |
| Discount:                                           |   |              |   |   |          |   |    |                                 |   |   |               |   |   |   |   |   |
| Series A-3 warrants                                 |   |              | (260   | )      |          |   | — |                                 |   |   | 260                |   |   |   | — |   |
|                                                |   |              | (260   | )      |          |   | — |                                 |   |   | 260                |   |   |   | — |   |
| Accretion of discount                               |   |              | 20     |   |          |   | 23      |                                 |   |   | (43                | )      |   |   | — |   |
|                                                |   |              | (240   | )      |          |   | 23      |                                 |   |   | 217                |   |   |   | — |   |
| Senior Secured Notes, net of discount               |   | $                 | 1,482  |   |          | $      | 78      |                                 |   | $      | (1,560             | )      |   | $ | — |   |
|                                                |   |              |   |   |          |   |    |                                 |   |   |               |   |   |   |   |   |

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|                                                              |   | Nine Months EndedSeptember 30, |    |   | Three Months EndedSeptember 30, |   |
|-------------------------------------------------------------------|--------|--------------------------------|---------|--------|---------------------------------|--------|
|                                                              |   | 2009                           |    |   | 2008                            |   |   | 2009 |   |   | 2008 |   |
| Interest for sales and use taxes and regulatory fees              |   | $                              | 100     |   |                            | $      | 131 |   |   | $ | 34 |   |   | $ | 40 |   |
| Interest on Senior Secured Notes                                  |   |                           | 57      |   |                            |   | 1,013 |   |   |   | — |   |   |   | 389 |   |
| Accretion of discount on Senior Secured Notes                     |   |                           | 23      |   |                            |   | 2,047 |   |   |   | — |   |   |   | 778 |   |
| Interest on capital lease                                         |   |                           | 35      |   |                            |   | 62 |   |   |   | 9 |   |   |   | 18 |   |
| Other interest expense                                            |   |                           | 58      |   |                            |   | 26 |   |   |   | 17 |   |   |   | 12 |   |
| Accretion of discount on Senior Secured Notes, Insider Purchasers |   |                           | — |   |                            |   | 111 |   |   |   | — |   |   |   | 44 |   |
| Interest on Senior Secured Notes, Insider Purchasers              |   |                           | — |   |                            |   | 35 |   |   |   | — |   |   |   | 12 |   |
|                                                              |   | $                              | 273     |   |                            | $      | 3,425 |   |   | $ | 60 |   |   | $ | 1,293 |   |
|                                                              |   |                           |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |

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|                                                                        |   | December 31, 2008 |    |   | Cumulative Effect of Change in Accounting Principle |   |   | Activity during the period |   |   | Increase in Fair Value |   |   | Elimination of Derivative Liability |   |   | September 30, 2009 |   |
|-----------------------------------------------------------------------------|--------|-------------------|---------|--------|-----------------------------------------------------|--------|--------|----------------------------|--------|--------|------------------------|--------|--------|-------------------------------------|--------|--------|--------------------|--------|
| Derivative financial instrument – warrants                            |   | $                 | — |   |                                                | $      | 2,546  |                       |   | $      | 281                    |   |   | $                                   | 1,797  |   |               | $      | (4,624 | ) |   | $ | — |   |
| Derivative financial instrument – warrants – insider purchasers |   |              | — |   |                                                |   | 76     |                       |   |   | —                |   |   |                                | 51     |   |               |   | (127 | ) |   |   | — |   |
|                                                                        |   | $                 | — |   |                                                | $      | 2,622  |                       |   | $      | 281                    |   |   | $                                   | 1,848  |   |               | $      | (4,751 | ) |   | $ | — |   |

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|   | • | Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 2 - inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 3 - unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | Fair Value as of September 30,2009 |    |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |    | Significant other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   | Increases (decreases) during the three months ended September 30, 2009 |    |   | Increases (decreases) during the nine months ended September 30, 2009 |   |
|----------------------------------|--------|------------------------------------|---------|--------|----------------------------------------------------------------|--------|---------|-----------------------------------------------|--------|--------|------------------------------------------|--------|--------|------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------|--------|
| Liabilities:                     |   |                               |    |   |                                                           |   |    |                                          |   |   |                                     |   |   |                                                                   |    |   |                                                                  |   |
| Derivative financial instruments |   | $                                  | — |   |                                                           | $      | — |                                          |   | $      | —                                  |   |   | $                                                                      | — |   |                                                                  | $      | 1,157 |   |   | $ | 1,848 |   |
|                             |   |                               |    |   |                                                           |   |    |                                          |   |   |                                     |   |   |                                                                   |    |   |                                                                  |   |   |   |   |   |   |   |

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Table of Contents

|                                                       |   | Increases (decreases) during the nine months ended September 30, 2009 |    |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------|---------|
| Liabilities:                                               |   |                                                                  |    |
| Balance as of January 1, 2009                              |   | $                                                                     | 2,622   |   |
| Initial measurement of warrants issued in the period       |   |                                                                  | 281     |   |
| Elimination of derivative liability                        |   |                                                                  | (4,751  | ) |
| Increase in fair value of derivative liability of warrants |   |                                                                  | 1,848   |   |
| Balance as of September 30, 2009                           |   | $                                                                     | — |   |
|                                                       |   |                                                                  |    |   |

|                            |   | Original Value |   |   | December31, 2008 |   |   | March16, 2009 |   |   | August11,2009 |   |
|---------------------------------|--------|----------------|--------|--------|------------------|--------|--------|---------------|--------|--------|---------------|--------|
| Number of warrants              |   |           | 40,917 |   |             |   | 40,917 |          |   |   | 3,344         |   |   |   | 44,262 |   |
| Exercise price                  |   | $              | 0.97   |   |             | $      | 0.54   |          |   | $      | 0.40          |   |   | $ | 0.53 |   |
| Risk free interest rate         |   |           | 3.3    | %      |             |   | 0.7    | %             |   |   | 1.0           | %      |   |   | 0.7 | % |
| Expected warrant lives in years |   |           | 5.0    |   |             |   | 1.9    |          |   |   | 1.8           |   |   |   | 1.3 |   |
| Expected volatility             |   |           | 102.7  | %      |             |   | 132.3  | %             |   |   | 139.0         | %      |   |   | 143.3 | % |
| Expected dividend yields        |   | None           |   |   | None             |   |   | None          |   |   | None          |   |
| Fair value per share            |   | $              | 0.64   |   |             | $      | 0.06   |          |   | $      | 0.08          |   |   | $ | 0.11 |   |
| Common stock price              |   | $              | 0.83   |   |             | $      | 0.15   |          |   | $      | 0.17          |   |   | $ | 0.23 |   |
| Fair value of warrants          |   | $              | 26,173 |   |             | $      | 2,622  |          |   | $      | 281           |   |   | $ | 4,763 |   |
|                            |   |           |   |   |             |   |   |          |   |   |          |   |   |   |   |   |

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Table of Contents

|                                |   | Fair Value at Measurement Date |   |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |    | Significant other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   | Gains(losses) |   |
|-------------------------------------|--------|--------------------------------|--------|--------|----------------------------------------------------------------|--------|---------|-----------------------------------------------|--------|--------|------------------------------------------|--------|--------|---------------|--------|
| Liabilities:                        |   |                           |   |   |                                                           |   |    |                                          |   |   |                                     |   |   |          |   |
| Warrants issued in connection with: |   |                           |   |   |                                                           |   |    |                                          |   |   |                                     |   |   |          |   |
| Sale of Series A-1 Preferred Stock  |   | $                              | 189    |   |                                                           | $      | — |                                          |   | $      | —                                  |   |   | $             | 189    |   |   | $ | — |   |
| Senior Secured Note Exchange        |   |                           | 50     |   |                                                           |   | — |                                          |   |   | —                                  |   |   |          | 50     |   |   |   | — |   |
| Placement agent warrant fee         |   |                           | 42     |   |                                                           |   | — |                                          |   |   | —                                  |   |   |          | 42     |   |   |   | — |   |
|                                |   | $                              | 281    |   |                                                           | $      | — |                                          |   | $      | —                                  |   |   | $             | 281    |   |   | $ | — |   |
|                                |   |                           |   |   |                                                           |   |    |                                          |   |   |                                     |   |   |          |   |   |   |   |   |   |

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|                                                                       |   |   |   |
|----------------------------------------------------------------------------|--------|--------|--------|
| Severance pay plus payroll taxes                                           |   | $      | 300    |   |
| Restricted stock award and extension of exercise period for vested options |   |   | 57     |   |
| Other benefits and costs                                                   |   |   | 36     |   |
|                                                                       |   |   | 393    |   |
| Less:                                                                      |   |   |   |   |
| Amounts paid or vested                                                     |   |   | (229   | ) |
| Reduction in severance amounts                                             |   |   | (75    | ) |
| Accrual as of September 30, 2009                                           |   | $      | 89     |   |
|                                                                       |   |   |   |   |

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Table of Contents

|                       |   | Series A as of December 31, 2008Note A |   |   | 2009 Private Placement |   |    | Series A & A-1 ExchangeNote B |   |   | Series A-1 & A-2 Exchange Note C |   |   | Series A-2 as of September 30, 2009 |    |
|----------------------------|--------|----------------------------------------|--------|--------|------------------------|--------|---------|-----------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------------------------|---------|
| Shares of Preferred Stock: |   |                                   |   |   |                   |   |    |                              |   |   |                                 |   |   |                                |    |
| Investors                  |   |                                   | 3,675  |   |                   |   | 719     |                              |   |   | —                              |   |   |                                | — |   |   |   | 4,394 |   |
| Insider Purchasers         |   |                                   | 115    |   |                   |   | — |                              |   |   | —                              |   |   |                                | — |   |   |   | 115 |   |
|                       |   |                                   | 3,790  |   |                   |   | 719     |                              |   |   | —                              |   |   |                                | — |   |   |   | 4,509 |   |
| Book Value:                |   |                                   |   |   |                   |   |    |                              |   |   |                                 |   |   |                                |    |   |   |   |   |   |
| Investors                  |   | $                                      | 11,226 |   |                   | $      | 2,637   |                              |   | $      | 1,934                                |   |   | $                                   | (1,886  | ) |   | $ | 13,911 |   |
| Insider Purchasers         |   |                                   | 348    |   |                   |   | — |                              |   |   | 65                                   |   |   |                                | (49     | ) |   |   | 364 |   |
|                       |   | $                                      | 11,574 |   |                   | $      | 2,637   |                              |   | $      | 1,999                                |   |   | $                                   | (1,935  | ) |   | $ | 14,275 |   |
|                       |   |                                   |   |   |                   |   |    |                              |   |   |                                 |   |   |                                |    |   |   |   |   |   |
| Liquidation Value:         |   |                                   |   |   |                   |   |    |                              |   |   |                                 |   |   |                                |    |   |   |   |   |   |
| Investors                  |   | $                                      | 27,560 |   |                   | $      | 5,392   |                              |   | $      | —                              |   |   |                                | — |   |   | $ | 32,952 |   |
| Insider Purchasers         |   |                                   | 863    |   |                   |   | — |                              |   |   | —                              |   |   |                                | — |   |   |   | 863 |   |
|                       |   | $                                      | 28,423 |   |                   | $      | 5,392   |                              |   | $      | —                              |   |   |                                | — |   |   | $ | 33,815 |   |
|                       |   |                                   |   |   |                   |   |    |                              |   |   |                                 |   |   |                                |    |   |   |   |   |   |

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|                                                                                                   |   | (Unaudited)Nine Months EndedSeptember 30, |    |   | (Unaudited)Three Months EndedSeptember 30, |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|--------------------------------------------|--------|
|                                                                                                   |   | 2009                                      |    |   | 2008                                       |   |   | 2009 |   |   | 2008 |   |
| Revenue                                                                                                |   |                                      | 100.0   | %      |                                       |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |
| Cost of revenue                                                                                        |   |                                      | 51.0    |   |                                       |   | 58.0 |   |   |   | 50.8 |   |   |   | 59.8 |   |
|         Gross margin                                           |   |                                      | 49.0    |   |                                       |   | 42.0 |   |   |   | 49.2 |   |   |   | 40.2 |   |
|                                                                                                   |   |                                      |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                                    |   |                                      |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing                                                                                    |   |                                      | 13.3    |   |                                       |   | 14.6 |   |   |   | 12.1 |   |   |   | 13.4 |   |
| General and administrative                                                                             |   |                                      | 39.7    |   |                                       |   | 35.4 |   |   |   | 35.0 |   |   |   | 37.4 |   |
| Total operating expenses                                                                               |   |                                      | 53.0    |   |                                       |   | 50.0 |   |   |   | 47.1 |   |   |   | 50.8 |   |
| (Loss) income  from operations                                                               |   |                                      | (4.0    | )      |                                       |   | (8.0 | ) |   |   | 2.1 |   |   |   | (10.6 | ) |
| Interest and other expense (income):                                                                   |   |                                      |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense, including 0.0%, 0.6%, 0.0% and 0.7% respectively, for Insider Purchasers             |   |                                      | 1.3     |   |                                       |   | 18.4 |   |   |   | 0.9 |   |   |   | 21.3 |   |
| Loss on extinguishment of debt                                                                         |   |                                      | 1.3     |   |                                       |   | — |   |   |   | — |   |   |   | — |   |
| Interest income                                                                                        |   |                                      | — |   |                                       |   | (0.1 | ) |   |   | — |   |   |   | — |   |
| Increase (decrease) in fair value of derivative financial instruments                                  |   |                                      | 9.3     |   |                                       |   | (0.8 | ) |   |   | 17.7 |   |   |   | (3.5 | ) |
| Amortization of deferred financing costs, including 0.2% and 0.2% respectively, for Insider Purchasers |   |                                      | — |   |                                       |   | 2.0 |   |   |   | — |   |   |   | 2.1 |   |
| Total interest and other expense, net                                                                  |   |                                      | 11.9    |   |                                       |   | 19.5 |   |   |   | 18.6 |   |   |   | 19.9 |   |
| Net loss                                                                                               |   |                                      | (15.9   | )      |                                       |   | (27.5 | ) |   |   | (16.5 | ) |   |   | (30.5 | ) |
| Gain (loss) on redemption of preferred stock                                                           |   |                                      | (0.3    | )      |                                       |   | — |   |   |   | 29.6 |   |   |   | — |   |
| Net loss attributable to common stockholders                                                           |   |                                      | (16.2   | )%     |                                       |   | (27.5 | )% |   |   | 13.1 | % |   |   | (30.5 | )% |

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|                                                   |   | Nine Months Ended September 30, |   |
|--------------------------------------------------------|--------|---------------------------------|--------|
|                                                   |   | 2009                            |   |   | 2008 |   |   | Increase (Decrease) |   |   | % Change |   |
| Revenue                                                |   |                            |   |   |   |   |   |   |   |   |   |   |
| Core revenue:                                          |   |                            |   |   |   |   |   |   |   |   |   |   |
| Subscription and related revenue (Note A)              |   | $                               | 14,803 |   |   | $ | 12,923 |   |   | $ | 1,880 |   |   |   | 14.6 | % |
| Non-subscription revenue                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bridging (Note B)                                      |   |                            | 3,366  |   |   |   | 2,948 |   |   |   | 418 |   |   |   | 14.2 | % |
| Special events and professional services               |   |                            | 689    |   |   |   | 528 |   |   |   | 161 |   |   |   | 30.5 | % |
|                                                   |   |                            | 18,858 |   |   |   | 16,399 |   |   |   | 2,459 |   |   |   | 15.0 | % |
| Non-core revenue:                                      |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Integration services for a broadcast customer (Note C) |   |                            | 63     |   |   |   | 350 |   |   |   | (287 | ) |   |   | (82.0 | %) |
| ISDN resale revenue (Note D)                           |   |                            | 1,007  |   |   |   | 1,808 |   |   |   | (801 | ) |   |   | (44.3 | %) |
|                                                   |   |                            | 1,070  |   |   |   | 2,158 |   |   |   | (1,088 | ) |   |   | (50.4 | %) |
| Total revenue                                          |   | $                               | 19,928 |   |   | $ | 18,557 |   |   | $ | 1,371 |   |   |   | 7.4 | % |
|                                                   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                              |   | 2009   |   |   | % of 2009 Revenues |   |   | 2008   |   |   | % of 2008 Revenues |   |   | Increase (Decrease) |   |   | % Change |   |
|-----------------------------------|--------|--------|--------|--------|--------------------|--------|--------|--------|--------|--------|--------------------|--------|--------|---------------------|--------|--------|----------|--------|
| Telecommunication carrier charges |   | $      | 6,994  |   |               |   | 35.1   | %      |   | $      | 7,442              |   |   |                | 40.1   | %      |     | $      | (448 | ) |   |   | (6.0 | %) |
| Sales taxes and regulatory fees   |   |   | 1,340  |   |               |   | 6.7    | %      |   |   | 1,349              |   |   |                | 7.3    | %      |     |   | (9 | ) |   |   | (0.7 | %) |
| Salaries and benefits             |   |   | 940    |   |               |   | 4.7    | %      |   |   | 708                |   |   |                | 3.8    | %      |     |   | 232 |   |   |   | 32.8 | % |
| Depreciation                      |   |   | 573    |   |               |   | 2.9    | %      |   |   | 709                |   |   |                | 3.8    | %      |     |   | (136 | ) |   |   | (19.2 | %) |
| General overhead costs            |   |   | 265    |   |               |   | 1.4    | %      |   |   | 241                |   |   |                | 1.3    | %      |     |   | 24 |   |   |   | 10.0 | % |
| Integration costs                 |   |   | 45     |   |               |   | 0.2    | %      |   |   | 308                |   |   |                | 1.7    | %      |     |   | (263 | ) |   |   | (85.4 | %) |
|                              |   | $      | 10,157 |   |               |   | 51.0   | %      |   | $      | 10,757             |   |   |                | 58.0   | %      |     | $      | (600 | ) |   |   | (5.6 | %) |
|                              |   |   |   |   |               |   |   |   |   |   |               |   |   |                |   |   |     |   |   |   |   |   |   |   |

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|                                                   |   | Three Months Ended September 30, |    |
|--------------------------------------------------------|--------|----------------------------------|---------|
|                                                   |   | 2009                             |    |   | 2008 |   |   | Increase (Decrease) |   |   | % Change |   |
| Revenue                                                |   |                             |    |   |   |   |   |   |   |   |   |   |
| Core revenue:                                          |   |                             |    |   |   |   |   |   |   |   |   |   |
| Subscription and related revenue (Note A)              |   | $                                | 5,033   |   |   | $ | 4,332 |   |   | $ | 701 |   |   |   | 16.2 | % |
| Non-subscription revenue                               |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bridging (Note B)                                      |   |                             | 1,023   |   |   |   | 891 |   |   |   | 132 |   |   |   | 14.8 | % |
| Special events and professional services               |   |                             | 199     |   |   |   | 186 |   |   |   | 13 |   |   |   | 7.0 | % |
|                                                   |   |                             | 6,255   |   |   |   | 5,409 |   |   |   | 846 |   |   |   | 15.7 | % |
| Non-core revenue:                                      |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Integration services for a broadcast customer (Note C) |   |                             | — |   |   |   | 101 |   |   |   | (101 | ) |   |   | (100.0 | %) |
| ISDN resale revenue (Note D)                           |   |                             | 286     |   |   |   | 556 |   |   |   | (270 | ) |   |   | (48.6 | %) |
|                                                   |   |                             | 286     |   |   |   | 657 |   |   |   | (371 | ) |   |   | (56.5 | %) |
| Total revenue                                          |   | $                                | 6,541   |   |   | $ | 6,066 |   |   | $ | 475 |   |   |   | 7.8 | % |
|                                                   |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                              |   | 2009   |    |   | % of 2009 Revenues |   |    | 2008   |   |   | % of 2008 Revenues |   |   | Increase (Decrease) |   |   | % Change |   |
|-----------------------------------|--------|--------|---------|--------|--------------------|--------|---------|--------|--------|--------|--------------------|--------|--------|---------------------|--------|--------|----------|--------|
| Telecommunication carrier charges |   | $      | 2,311   |   |               |   | 34.1    | %      |   | $      | 2,550              |   |   |                | 42.0   | %      |     | $      | (239 | ) |   |   | (9.4 | %) |
| Sales taxes and regulatory fees   |   |   | 441     |   |               |   | 6.6     | %      |   |   | 456                |   |   |                | 7.5    | %      |     |   | (15 | ) |   |   | (3.3 | %) |
| Salaries and benefits             |   |   | 307     |   |               |   | 4.4     | %      |   |   | 244                |   |   |                | 4.0    | %      |     |   | 63 |   |   |   | 25.8 | % |
| Depreciation                      |   |   | 176     |   |               |   | 2.8     | %      |   |   | 228                |   |   |                | 3.8    | %      |     |   | (52 | ) |   |   | (22.8 | %) |
| General overhead costs            |   |   | 86      |   |               |   | 1.4     | %      |   |   | 93                 |   |   |                | 1.5    | %      |     |   | (7 | ) |   |   | (7.5 | %) |
| Integration costs                 |   |   | — |   |               |   | — |   |   |   | 59                 |   |   |                | 1.0    | %      |     |   | (59 | ) |   |   | (100.0 | %) |
|                              |   | $      | 3,321   |   |               |   | 49.3    | %      |   | $      | 3,630              |   |   |                | 59.8   | %      |     | $      | (309 | ) |   |   | (8.5 | %) |
|                              |   |   |    |   |               |   |    |   |   |   |               |   |   |                |   |   |     |   |   |   |   |   |   |   |

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| Contractual Obligations:    |   | Total  |   |   | Less Than1 Year |   |   | 1-3 Years |   |   | 3-5 Years |   |   | More than5 Years |    |
|-----------------------------|--------|--------|--------|--------|-----------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------------|---------|
| Operating lease obligations |   | $      | 304    |   |            | $      | 165    |      |   | $      | 139       |   |   | $                | — |   |   | $ | — |   |
| Capital lease obligations   |   |   | 122    |   |            |   | 122    |      |   |   | —   |   |   |             | — |   |   |   | — |   |
| Commercial commitments      |   |   | 299    |   |            |   | 299    |      |   |   | —   |   |   |             | — |   |   |   | — |   |
| Total                       |   | $      | 725    |   |            | $      | 586    |      |   | $      | 139       |   |   | $                | — |   |   | $ | — |   |
|                        |   |   |   |   |            |   |   |      |   |   |      |   |   |             |    |   |   |   |   |   |

Quantitative 

Controls 

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INFORMATION

| 31.1 |   | Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer                                                                                                                                                                 |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 |   | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                                               |
| 32.1 |   | 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 2002 |
| 32.2 |   | Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002       |

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Signatures

|                               | GLOWPOINT, INC.Registrant                                                                                                                                                                                                                                                                           |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                                                                                                |
| Date:  November 10, 2009 | By:  /s/ Joseph Laezza                                             |
|                               | Joseph Laezza, Co-Chief Executive Officer(principal executive officer)                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                |
| Date:  November 10, 2009 | By:  /s/ Edwin F. Heinen                                                               |
|                               | Edwin F. Heinen, Chief Financial Officer(principal financial and accounting officer)                                                                                                                                                                                                                |