GLOWPOINT INC (Form: 10-K, Received: 06/06/2007 12:05:33)

We accounted for the reduction of the exercise price of 3,625,000 previously issued warrants held by the investors in this offering to $0.65 from a weighted average price of $3.38, and the extension of the expiration date of any such warrants to no earlier than three years after the offering date at fair value as a debt discount with an offsetting credit to paid in capital. A portion of the finance costs of the 10% Notes in March and April 2006 will be allocated to this transaction and charged to paid in capital. The estimated fair value of this modification is based on the excess of the fair value of these warrants at the date of the financings over the fair value of these warrants at their original terms. In the March and April 2006 financings $716,000 and $50,000, respectively, of the proceeds was attributed to the estimated fair value of the modification of price and term of these warrants. The $766,000 fair value of this modification will be treated as a discount of the Note and expensed, using the imputed interest method, over the 18 month period to the Note’s maturity date.

Financing Costs

The financing costs, which are included in other assets in the accompanying consolidated balance sheets, and accumulated amortization as of December 31, 2006, are as follows (in thousands):

	March 2006			April 2006			2006
Cash financing costs:
Placement agent fees - Burnham Hill Partners	$	440		$	40		$	480
Other financing costs		105			10			115
		545			50			595
Non-cash financing costs:
Placement agent warrants - Burnham Hill Partners		279			17			296

Financing costs charged to additional paid in capital		(101	)		(9	)		(110	)
Total financing costs	$	723		$	58			781
Accumulated amortization								(389	)
							$	392

The financing costs are being amortized over the 18 month period through September 30, 2007, the maturity date of the 10% Notes.

Our financing costs related to the 10% Notes were comprised of cash and non-cash charges. Our cash financing costs related to the issuance of the 10% Notes in March and April 2006 were $545,000, and $50,000, respectively, for a total of $595,000, a portion of which represents placement fees of $480,000 to Burnham Hill Partners, our placement agent. Our non-cash financing costs were based on the fair value of various components of the transactions. These included the convertibility of the 10% Notes, the issuance of the Series A warrants, modifications to previously issued warrants held by investors in the financing and the issuance to the placement agent of warrants. A portion of the finance costs of the 10% Notes in March and April 2006, $101,000 and $9,000, respectively, were allocated to the $766,000 fair value of the modification of warrant exercise prices and extension of expirations dates for 3,625,000 previously issued warrants held by the investors in this offering.

The issuance to Burnham Hill Partners of placement agent warrants to purchase 618,000 shares of our common stock at an exercise price of $0.55 per share was valued at $279,000 and $17,000 for the March and April 2006 financings, respectively. As a result of the issuance of the placement agent warrants we recognized Additional Paid in Capital of $296,000.

F-17

Accounting for Conversion Feature and Series A Warrants Derivative Liabilities

Activity for derivative liabilities during the year ended, and as of December 31, 2006 and 2005, was as follows (in thousands):

	Dec. 31, 2005			2006 Activity		Decrease in Fair Value			Dec. 31, 2006
Derivative financial instrument - February 2004 capital raise (See Note 12)	$	1,570		$	—	$	(334	)	$	1,236
Derivative financial instrument - Beneficial conversion feature - 10% notes		—			1,850		(184	)		1,666
Derivative financial instrument - Series A Warrants		—			2,873		(1,474	)		1,399
		1,570		$	4,723	$	(1,992	)		4,301
Current portion		(1,246	)							(4,301	)
	$	324							$	—

We accounted for the convertibility of the 10% Notes into common stock at a conversion rate of $0.50 per share as a derivative liability subject to SFAS No. 133. Management determined that the events or actions necessary to deliver registered shares are not controlled by the Company and that the holders have the right to demand that the Company pay the holders in cash, calculated as defined in the Senior Secured Convertible Promissory Note, under certain circumstances. Accordingly the Company accounted for the beneficial conversion feature as a derivative liability. The estimated fair value of the derivative liability is based on the prepayment amount that would be owed to a 10% Notes holder if payment is required. The prepayment amount is the greater of 125% of the value of the 10% Notes and accrued interest or the value if the 10% Notes and accrued interest are converted at $0.50 per share and then multiplied by the then current stock price. Since the 10% Notes are convertible at the issuance date an expense related to the derivative liability is recognized on that date. In the March and April 2006 financings $1,586,000 and $129,000, respectively, of the proceeds was attributed to the estimated fair value of the derivative liability and an expense of $1,715,000 was recognized. During the year unpaid interest on the 10% Notes was paid in additional 10% Notes and the estimated fair value of the derivative liability and an expense of $135,000 was recognized. We estimated the fair value of the derivative liability as of December 31, 2006 to be $1,666,000. During the year ended December 31, 2006 we recognized income of $184,000 for the decrease in the derivative liability.

We accounted for the issuance of the Series A warrants to purchase 6,180,000 shares of common stock at an exercise price of $0.65 per share as a derivative liability subject to SFAS No. 133. Management determined that the events or actions necessary to deliver registered shares are not controlled by the Company and that the holders have the right to demand that the Company pay the holders in cash, calculated as defined in the Series A warrant, under certain circumstances. Accordingly the Company accounted for the Series A warrants as a derivative liability. The estimated fair value of the derivative liability is calculated using the Black-Scholes formula and such estimates are revalued at each balance sheet date with changes in value recorded as other income or expense. In the March and April 2006 financings $2,708,000 and $165,000, respectively, of the proceeds was attributed to the estimated fair value of the derivative liability. The $2,873,000 expense for the derivative liability will be treated as a discount on the 10% Notes and expensed, using the imputed interest method, over the 18 month period to the 10% Notes’ maturity date. We estimated the fair value of the derivative liability as of December 31, 2006 to be $1,399,000. During the year ended December 31, 2006 we recognized income of $1,474,000 for the decrease in the derivative liability.

As management has determined that the Series B warrants are not exercisable because we achieved positive operating income, excluding the restructuring and non-cash charges identified in the Series B warrant, in the fourth quarter of 2006 there is no fair value charge for these warrants.

F-18

Note 10 - Interest Expense

The components of interest expense for the year ended December 31, 2006 are presented below (in thousands):

	2006
Beneficial conversion feature for 10% Notes	$	1,850
Accretion of discount on 10% Notes		1,359
Interest on 10% Notes		483
Interest expense for sales and use taxes and regulatory fees		277
	$	3,969

Note 11 - Subordinated Debentures

In December 2002, we raised net proceeds of $4,233,000 in a private placement offering of $4,888,000 principal amount of 8% convertible debentures. The debentures were convertible into 2,036,677 shares of common stock at $2.40 per share. The debentures were to mature in February 2004, or 90 days following the expiration (in May 2005) or earlier termination of the credit facility, whichever was later. We had the option of paying interest quarterly on the debentures in the form of either cash or shares of our common stock. Investors in the private placement offering also received five-year warrants to purchase 814,668 shares of common stock at an exercise price of $3.25 per share. The warrants are subject to certain anti-dilution adjustments. We also issued to our placement agent warrants to purchase 40,733 shares of common stock at an exercise price of $0.001 per share with an expiration date of January 31, 2003.

We allocated the proceeds received to the debentures and the related warrants based on the relative fair value method. The fair value of the debentures was determined based on the market value of the 2,036,677 common shares into which the debentures were convertible and the fair value of the warrants was determined using the Black Scholes pricing model. Of the proceeds, $1,292,000 was allocated to the warrants and was recorded as debt discount and additional paid-in capital and $3,596,000 was allocated to the debentures. Based on the market value of the common shares issuable upon conversion, as compared to the proceeds allocated to the debentures, further debt discount and additional paid-in capital of $2,107,000 was recorded for the beneficial conversion feature. The aggregate discount of $3,399,000 has been amortized over the term to maturity following the effective yield method.

In January 2004, in exchange for the cancellation and termination of debentures with an aggregate face value of $4,888,000 and forfeiture of any and all rights of collection, claim or demand under the debentures, we agreed to give the holders of the debentures: (i) an aggregate of 203.667 shares of Series B convertible preferred stock with a face value of $4,888,000; (ii) an aggregate of 250,000 shares of restricted common stock with a fair value of $675,000; and (iii) a reduction of the exercise price of the warrants issued pursuant to the original purchase agreement from $3.25 to $2.75 which had an incremental fair value of $68,000. As a result of the subsequent financings, the exercise price was reduced to $1.85.

The Company incurred costs of $609,000 in connection with the financing, which were allocated to the warrants and the convertible debentures based on their relative fair values. The portion allocated to the warrants was recorded as a reduction to additional paid-in capital and the portion allocated to the convertible debentures was recorded as deferred financing costs, which have been amortized consistently with the debt discount.

There are no subordinated debentures outstanding as of December 31, 2006 and 2005.

F-19

Note 12 - Stockholders’ Deficit

Common Stock

In February 2004, we raised net proceeds of $12,480,000 in a private placement offering of 6,100,000 shares of our common stock at $2.25 per share. We also issued warrants to the investors in the private placement offering to purchase 1,830,000 shares of our common stock at an exercise price of $2.75 per share. The warrants expire five and a half years after the closing date. The warrants are subject to certain anti-dilution protection (minimum price of $2.60) and as a result of the March 2005 financing, the exercise price was reduced to $2.60 (the incremental fair value was nominal). In addition, we issued to our placement agent five and a half year warrants to purchase 427,000 shares of common stock at an exercise price of $2.71 per share with an estimated fair value of $895,000. The placement agent warrants are subject to anti-dilution protection (minimum price of $2.60) and as a result of the March 2005 financing, the exercise price was reduced to $2.60 (the incremental fair value was nominal).

The registration rights agreement for the February 2004 financing provides for liquidated damages of 3% of the aggregate purchase price for the first month and 1.5% for each subsequent month if we failed to register the common stock and the shares of common stock underlying the warrants or maintain the effectiveness of such registration. We accounted for the registration rights agreement as a separate freestanding instrument and accounted for the liquidated damages provision as a derivative liability subject to SFAS No. 133. The estimated fair value of the derivative liability is based on estimates of the probability and costs expected to be incurred and such estimates are revalued at each balance sheet date with changes in value recorded as other income or expense. $1,164,000 of the proceeds of the financing was attributed to the estimated fair value of the derivative liability. We estimated the fair value of the derivative liability as of December 31, 2006, 2005 and 2004 to be $1,236,000, $1,570,000 and $1,299,000, respectively. For the year ended December 31, 2006 we recognized other income of $334,000 for a decrease in the fair value of the derivative liability and for the years ended December 31, 2005 and 2004 we recognized an expense of $271,000 and $134,000, respectively, respectively, for increases in the estimated fair value of the derivative liability.

In March 2005, we raised net proceeds of $9,376,000 in a private placement offering of 6,766,667 shares of our common stock at $1.50 per share. Investors in the private placement offering were also issued warrants to purchase 2,706,667 shares of common stock at an exercise price of $2.40 per share. The warrants expire five years after the closing date. The warrants are subject to certain anti-dilution protection (minimum price of $1.61). The warrants may be exercised by cash payment of the exercise price or by "cashless exercise”. As a result of subsequent financings, the conversion price of these warrants has been adjusted to $1.79 as of December 31, 2006.

Preferred Stock

Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock. Except for the 2,450 shares of Series A preferred stock issued prior to 2004 (all of which were converted into common stock prior to 2004) and the 203.667 shares of Series B convertible preferred stock issued in January 2004, the rights and privileges of the preferred stock have not yet been designated.

The Series B convertible preferred stock ranks senior to our common stock and subordinate to any indebtedness we may have outstanding. The Series B convertible preferred stockholders are entitled to receive dividends at the rate of eight percent (8%) of the stated value per share of $24,000 per year through July 21, 2005, increasing to twelve percent (12%) on July 22, 2005, payable annually at our option in cash or shares of common stock. We must obtain the affirmative vote of the holders of at least 75% of the outstanding shares of Series B convertible preferred stock in order to issue any securities ranking senior to or on parity with the Series B convertible preferred stock. Other than as described in the preceding sentence or as required by Delaware law, the Series B convertible preferred stock has no voting rights. If we liquidate, dissolve or wind up our affairs, the holders of the Series B convertible preferred stock are entitled to receive a liquidation preference equal to the stated value per share plus accrued and unpaid dividends. The Series B convertible preferred stock is convertible into our common stock at the conversion price of $2.40 per share of common stock and has anti-dilution rights. Upon a change of control, the holders of the Series B convertible preferred stock can require that we redeem their shares at the stated value per share plus accrued and unpaid dividends. Accordingly, the Series B convertible preferred stock is not classified in Stockholders’ Deficit. We also have the option to redeem the outstanding shares of Series B convertible preferred stock at a price per share equal to 110% of the stated value plus accrued and unpaid dividends. Accordingly the Series B Convertible Preferred Stock is presented outside of Stockholders’ Deficit.

F-20

As described in Note 11, in January 2004, in exchange for the cancellation and termination of convertible debentures with an aggregate face value of $4,888,000 and forfeiture of any and all rights of collection, claim or demand under the debentures, we agreed to give the holders of the debentures: (i) an aggregate of 203.667 shares of Series B convertible preferred stock; (ii) an aggregate of 250,000 shares of restricted common stock; and (iii) a reduction of the exercise price of the warrants issued pursuant to the original purchase agreement from $3.25 to $2.75.

As a result of this exchange, the unamortized discount on subordinated debentures and deferred financing costs were written off to expense, resulting in accretion of discount of $2,650,000 and amortization of deferred financing costs of $363,000 for the year ended December 31, 2004. Additionally, we recognized a $743,000 loss on the exchange in 2004. The investors have anti-dilution rights. As a result of the February 2004 and March 2005 financings the conversion price of the Series B convertible preferred stock and the exercise price of the 814,668 warrants have been adjusted as of December 31, 2005 to $2.22 and $2.47, respectively. We recognized deemed dividends of $115,000 for the year ended December 31, 2005. The corresponding amount in the 2004 period was nominal. Accordingly, as of December 31, 2005, the Series B convertible preferred shares outstanding were convertible into 1,301,000 shares of common stock. As a result of the March 2006 and April 2006 financings, the conversion price of the Series B convertible preferred stock and the exercise price of the warrants have been further adjusted to $1.67 and $1.85, respectively.

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

Note 13 - Stock options and warrants

Glowpoint 2000 Stock Incentive Plan

Pursuant to the Glowpoint 2000 Stock Incentive Plan (the “2000 Plan”), as amended, 4,400,000 shares of common stock have been reserved for issuance thereunder. The 2000 Plan permits the grant of incentive stock options (“ISOs”) to employees or employees of our subsidiaries. Non-qualified stock options (“NQSOs”) may be granted to employees, directors and consultants. As of December 31, 2006, options to purchase a total of 3,440,000 shares were outstanding and 522,000 shares remained available for future issuance under the 2000 Plan.

The exercise price of the awards is established by the administrator of the plan and, in the case of ISOs issued to employees who are less than 10% stockholders, the per share exercise price must be equal to at least 100% of the fair market value of a share of the common stock on the date of grant or not less than 110% of the fair market value of the shares in the case of an employee who is a 10% stockholder. The administrator of the plan determines the terms and provisions of each award granted under the 2000 Plan, including the vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment, payment contingencies and satisfaction of any performance criteria.

F-21

1996 Stock Option Plan

Under the 1996 Stock Option Plan (the “1996 Plan”), as amended, 2,475,000 shares of common stock have been reserved for issuance thereunder. The 1996 Plan provides for the granting of options to officers, directors, employees and advisors. The exercise price of incentive stock options (“ISOs”) issued to employees who are less than 10% stockholders shall not be less than the fair market value of the underlying shares on the date of grant or not less than 110% of the fair market value of the shares in the case of an employee who is a 10% stockholder. The exercise price of restricted stock options shall not be less than the par value of the shares to which the option relates. Options are not exercisable for a period of one year from the date of grant. Under the 1996 Plan, no individual will be granted ISOs corresponding to shares with an aggregate exercise price in excess of $100,000 in any calendar year less the aggregate exercise price of shares under other stock options granted to that individual that vest in such calendar year. No options were granted under the 1996 Plan in years ended December 31, 2006, 2005 and 2004. As of December 31, 2006, options to purchase a total of 28,000 shares were outstanding and no shares remained available for future issuance under the 1996 Plan.

VTI Stock Option Plans

As part of the merger with View Tech, Inc. (“VTI”) in May 2000, we assumed the outstanding options of the four stock option plans maintained by VTI. These plans generally require the exercise price of options to be not less than the estimated fair market value of the stock at the date of grant. Options vest over a maximum period of four years and may be exercised in varying amounts over their respective terms. In accordance with the provisions of such plans, all outstanding options become immediately exercisable upon a change of control, as defined, of VTI. The plans will terminate in 2009. Options assumed as part of the merger with VTI totaled 361,605. No options were granted under these Plans in years ended December 31, 2006, 2005 and 2004. As of December 31, 2006, options to purchase a total of 223,000 shares of Glowpoint’s common stock were outstanding and no shares remained available for future issuance.

Options outside our Qualified Plans

We have also issued stock options outside of our qualified plans in prior years though none in the years ended December 31, 2006, 2005 and 2004. At December 31, 2006, the total of these options outstanding was 1,410,000.

Other Option Information

The weighted average fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions during the years ended December 31, 2006, 2005 and 2004:

	2006			2005			2004
Risk free interest rate		4.8	%		4.1	%		3.5	%
Expected option lives		5 Years			5 Years			5 Years
Expected volatility		95.4	%		108.2	%		113.2	%
Estimated forfeiture rate		20	%		20	%		20	%
Expected dividend yields		None			None			None
Weighted average grant date fair value of options	$	0.30		$	1.12		$	1.05

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

F-22

A summary of options granted, exercised, expired and forfeited under our plans and options outstanding as of December 31, 2006, 2005 and 2004, is presented below (options in thousands):

	Outstanding					Exercisable
	Number of Options			Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
Options outstanding, January 1, 2004		5,793		$	3.12
Granted		1,626			1.31
Exercised		(782	)		0.73
Forfeited		(1,539	)		3.90
Options outstanding, December 31, 2004		5,098			2.68
Granted		943			1.35
Exercised		(50	)		1.46
Forfeited		(995	)		2.35
Options outstanding, December 31, 2005		4,996			2.51		3,614	$	2.92
Granted		1,134			0.41
Exercised		—			0.00
Expired		(11	)		5.41
Forfeited		(1,019	)		1.36
Options outstanding, December 31, 2006		5,100		$	2.26		3,664	$	2.86

Shares of common stock available for future grant under company plans		522

Additional information as of December 31, 2006 with respect to all outstanding options is as follows (options in thousands):

	Outstanding						Exercisable
Range of price	Number of Options		Weighted Average Remaining Contractual Life (In Years)		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
$ 0.36 - 1.10		1,145		9.38	$	0.47		94	$	0.78
1.13 - 2.15		1,345		6.80		1.45		997		1.48
2.20 - 3.10		1,345		0.67		3.01		1,343		3.01
3.39 - 4.13		1,107		4.54		3.78		1,072		3.79
4.40 - 6.00		158		3.82		5.26		158		5.26
$ 0.36 - 6.00		5,100		5.18	$	2.26		3,664	$	2.86

F-23

A summary of nonvested options at December 31, 2006 and changes during the year ended December 31, 2006, is presented below (options in thousands):

	Options			Weighted Average Grant Date Fair Value
Nonvested options outstanding, January 1, 2006		1,380		$	1.16
Granted		1,134			0.30
Vested		(416	)		1.15
Forfeited		(662	)		0.95
Nonvested options outstanding, December 31, 2006		1,436		$	0.59

At January 1 and December 31, 2006, there was $873,000 and $161,000, respectively, of total unrecognized compensation costs related to non-vested options granted prior to January 1, 2006 that are expected to be recognized over a weighted-average period of 1.34 and 0.90 years, respectively. The Company has recorded $781,000 related to its stock-based expenses in general and administrative expenses for the year ended December 31, 2006. There was no income tax benefit recognized for stock-based compensation for the year ended December 31, 2006. No compensation costs were capitalized as part of the cost of an asset.

The fair value of nonvested options at January 1 and December 31, 2006 was $1,601,000 and $844,000, respectively.

Restricted Stock

A summary of restricted stock granted, vested, forfeited and unvested restricted stock outstanding during the year ended December 31, 2006, is presented below (restricted shares in thousands):

	Restricted Shares			Weighted Average Exercise Price
Unvested restricted shares outstanding, January 1, 2006		313		$	2.44
Granted		363			0.43
Vested		(299	)		1.89
Forfeited		(60	)		2.20
Unvested restricted shares outstanding, December 31, 2006		317		$	0.71

F-24

Warrants

The exercise price of 12,496,000 warrants at December 31, 2006 are subject to further anti-dilution protection. A summary of warrants granted, exercised and forfeited and warrants outstanding as of December 31, 2006, 2005 and 2004, is presented below (warrants in thousands):

	Warrants			Weighted Average Exercise Price
Warrants outstanding, January 1, 2004		5,211		$	6.09
Granted		2,257			2.74
Exercised		—			—
Forfeited		—			—
Warrants outstanding, December 31, 2004		7,468			4.64
Granted		3,340			2.37
Exercised		—			—
Forfeited		(1,052	)		6.53
Warrants outstanding, December 31, 2005		9,756			3.42
Granted		6,798			0.64
Exercised		—			—
Forfeited		(1,805	)		3.15
Warrants outstanding, December 31, 2006		14,749		$	1.28

Additional information as of December 31, 2006 with respect to all outstanding warrants is as follows (warrants in thousands):

Range of Price	Number Outstanding		Weighted Average Remaining Contractual Life (In Years)		Weighted Average Exercise Price
$ 0.001		103		0.87	$	.001
0.50 - 1.00		10,573		3.70		0.64
1.79 - 2.60		3,653		2.73		2.17
10.00		420		0.03		10.00
$ 0.001 - 10.00		14,749		3.34	$	1.28

Note 14 - Income Taxes

We had no tax provision for the years ended December 31, 2006, 2005 and 2004. Our effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2006, 2005 and 2004 as shown in the following table (in thousands):

F-25

	2006			2005			2004
U.S. federal income taxes at the statutory rate	$	(3,782	)	$	(5,587	)	$	(5,401	)
State taxes, net of federal effects		(667	)		(986	)		(953	)
Nondeductible expenses		722			311			—
Beneficial conversion feature		618			—			1,060
Nondeductible loss on extinguishment of debt		—			—			297
Change in valuation allowance		2,888			6,243			4,401
Adjustments to prior years’ options and other charges		221			—			419
Other		—			19			177
	$	—		$	—		$	—

The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2006 and 2005 is presented below (in thousands):

Deferred tax assets:	2006			2005
Tax benefit of operating loss carry forward	$	44,392		$	42,586
Reserves and allowances		1,620			1,261
Accrued expenses		72			252
Goodwill		665			736
Warrants issued for services		575			—
Equity based compensation		369			807
Fixed assets		285			118
Fair value adjustments to derivative financial instruments		703			162
Restricted stock		106			—
Total deferred tax assets		48,787			45,922
Valuation allowance		( 48,787	)		( 45,922	)
Net deferred tax assets	$	—		$	—

We and our subsidiaries file federal returns on a consolidated basis and separate state tax returns. At December 31, 2006, we have net operating loss (“NOL”) carry-forwards of $113,864,000 for federal income tax purposes which expire in various amounts through 2026. The utilization of a portion of our NOL is limited each year as a result of an "ownership change" (as defined by Section 382 of the Internal Revenue Code of 1986, as amended). Our NOL's may be subject to further limitation due to past and future issuances of stock. We provide a full valuation allowance, which increased by $2,888,000 and by $6,243,000 during 2006 and 2005, respectively, against our deferred tax assets due to the uncertainly about the realization of such assets.

Note 15 - 401(k) Plan

We have adopted a 401(k) retirement plan under Section 401(k) of the Internal Revenue Code. The 401(k) plan covers substantially all employees who met minimum age and service requirements. The plan was non-contributory on our part. Effective with the merger with VTI, we assumed the 401(k) Plan of VTI, combined its assets with those of the existing plan and began making contributions to the new plan. Employer contributions to the 401(k) plan for the years ended December 31, 2006, 2005 and 2004 were $38,000, $43,000 and $26,000, respectively.

F-26

Note 16 - Related Parties

We receive consulting and tax services from an accounting firm in which one of our directors is a partner. Management believes that such transactions are at arm’s-length and for terms that would have been obtained from unaffiliated third parties. For the years ended December 31, 2006, 2005 and 2004, we incurred fees for these services of $32,000, $10,000 and $23,000, respectively.

Note 17 - Quarterly Financial Data (Unaudited) - See Note 1

The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2006, 2005 and 2004 (in thousands, except per share amounts):

1 ^st Quarter	2006			2005			2004
Revenue	$	4,721		$	4,202		$	3,186
Gross margin (loss)		1,235			516			(353	)
Loss from operations		(4,418	)		(3,934	)		(3,759	)
Net loss		(6,029	)		(3,594	)		(7,653	)
Net loss attributable to common stockholders		(6,114	)		(4,965	)		(7,727	)
Net loss per share - basic and diluted	$	(0.13	)	$	(0.13	)	$	(0.24	)
Weighted average number of common shares - basic and diluted		46,046			39,100			32,363

2 ^nd Quarter
Revenue	$	4,981		$	4,397		$	4,179
Gross margin		1,631			391			107
Loss from operations		(2,022	)		(4,553	)		(3,803	)
Net loss		(3,493	)		(4,562	)		(3,814	)
Net loss attributable to common stockholders		(3,580	)		(4,620	)		(3,911	)
Net loss per share - basic and diluted	$	(0.08	)	$	(0.10	)	$	(0.10	)
Weighted average number of common shares - basic and diluted		46,207			46,046			37,390

3 ^rd Quarter
Revenue	$	4,850		$	4,558		$	4,383
Gross margin		1,558			883			143
Loss from operations		(1,570	)		(4,394	)		(4,219	)
Net loss		(7	)		(4,384	)		(4,106	)
Net loss attributable to common stockholders		(94	)		(4,442	)		(4,205	)
Net loss per share - basic and diluted	$	(0.00	)	$	(0.10	)	$	(0.11	)
Weighted average number of common shares - basic and diluted		46,361			46,046			37,921

4 ^th Quarter
Revenue	$	4,959		$	4,578		$	4,119
Gross margin (loss)		1,504			961			(49	)
Loss from operations		(497	)		(3,758	)		(5,312	)
Net loss		(1,261	)		(3,894	)		(334	)
Net loss attributable to common stockholders		(1,349	)		(4,004	)		(433	)
Net loss per share - basic and diluted	$	(0.03	)	$	(0.09	)	$	(0.01	)
Weighted average number of common shares - basic and diluted		46,350			46,046			37,916

F-27

Net loss per share is computed independently for each of the quarters presented. The sum of the quarterly net loss per share figures in the years ended December 31, 2005 and 2004 does not equal the total computed for that year.

Note 18 - March 2006 Restructuring

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

Accrual as of December 31, 2005	$	0
Provision for severance		1,200
Less: amounts paid		(988	)
Accrual as of December 31, 2006	$	212

Note 19 - Commitments and Contingencies

Employment Agreements

We had employment agreements with our prior President and Chief Executive Officer ("CEO") and our prior Executive Vice President and Chief Financial Officer ("CFO"), both of whom left Glowpoint in April 2006. We also have agreements with our Executive Vice President and Chief Technology Officer ("CTO"), who became Chief Operating Officer in March 2006 and then President and Chief Executive Officer in April 2006, our Chief Operating Officer (“COO”) and our Executive Vice President and General Counsel (“GC”) such employment agreements provide for:

President and Chief Executive Officer -We entered into an agreement with the then CTO Michael Brandofino having a three-year term commencing January 1, 2001, which has been subsequently amended numerous times to reflect agreed upon annual base salary, incentive compensation and other stock option grants. Under the amended three year agreement, dated July 1, 2004, the CTO is entitled to an annual base salary in each year, an ability to earn annual incentive compensation in an amount equivalent to forty percent (40%) of his then annual base salary, subject to the achievement of goals and metrics established by the CEO, with such goals and metrics being updated on an annual basis. Compensation expense of $267,000, 253,000 and $249,000 was recorded during the years ended December 31, 2006, 2005 and 2004, respectively. In addition, the CTO's agreement stipulates that if we enter into a sale agreement during the term of the agreement and the CTO realizes less than $200,000 from the exercise of all outstanding options, then he is entitled to a bonus in an amount equal to the difference between $200,000 and the amount realized. The agreement also provides for a grant of an option to purchase 100,000 shares of common stock under the 2000 Plan, with 25% vesting immediately and the remaining options vesting in three equal annual installments at the anniversary date of the agreement. Either we or the CTO may terminate his employment at any time, for any reason or no reason at all; however, if the CTO is terminated without cause or resigns for good reason or if he dies, he is entitled to one year of his then annual base salary and one year of accelerated vesting of the stock options granted under the amended employment agreement. If the CTO's employment is terminated with cause or if he voluntarily resigns, he is entitled to his base salary and other benefits through the last day actually worked (see Note 20 - Subsequent Events).

F-28

Chief Operating Officer - In March 2004, we entered into an employment agreement with Joseph Laezza under which he became the Vice President, Operations (“VPO”). Under the agreement, the VPO is entitled to an annual base salary and, subject to the sole discretion of our Compensation Committee, annual incentive compensation in an amount equivalent to forty percent (40%) of his then-annual base salary, taking into consideration the achievement of goals and metrics established by the President and CEO, which goals and metrics shall be updated on an annual basis. In March 2006 he became Chief Operating Officer. Compensation expense of $228,000 was recorded during the year ended December 31, 2006. The agreement also provides for a grant to Mr. Laezza of 55,000 restricted shares of the Company’s common stock, with one-third of such restricted shares of common stock vesting on March 11 of each of the following years. Either we or the VPO may terminate his employment at any time, for any reason or no reason at all; however, if the VPO is terminated without cause or resigns for good reason or if he dies, he is entitled to twelve months of his then-annual base salary, as well as the pro-rated amount of incentive compensation due as of the effective date of termination and one year of accelerated vesting of the restricted stock under the employment agreement. If the VPO’s employment is terminated with cause or if he voluntarily resigns, he is entitled to his base salary and other benefits through the last day actually worked (see Note 20 - Subsequent Events).

Executive Vice President and General Counsel - In May 2006, we entered into a two-year employment agreement with David Robinson. Under the agreement, the GC is entitled to an annual base salary and, subject to the sole discretion of our Compensation Committee, annual incentive compensation in an amount equivalent to forty percent (40%) of his then-annual base salary, taking into consideration the achievement of goals and metrics established by the President and CEO, which goals and metrics shall be updated on an annual basis. Compensation expense of $154,000, was recorded during the year ended December 31, 2006 The agreement also provided for a grant of 200,000 shares of restricted common stock, with 60,000 shares vesting upon commencement of employment and one-third of the remaining restricted shares (or 46,666 shares) vesting annually thereafter. Either we or the GC may terminate his employment at any time, for any reason or no reason at all; however, if the GC is terminated without cause or resigns for good reason or if he dies, he is entitled to six months of his then-annual base salary, as well as the pro-rated amount of incentive compensation due as of the effective date of termination and one year of accelerated vesting of the restricted stock under the employment agreement. If the GC’s employment is terminated with cause or if he voluntarily resigns, he is entitled to his base salary and other benefits through the last day actually worked.

Chief Financial Officer - In January 2007 we entered into a two-year employment agreement with Edwin Heinen (see Note 20 - Subsequent Events).

Operating Leases

We lease several facilities under operating leases expiring through 2007. Certain leases require us to pay increases in real estate taxes, operating costs and repairs over certain base year amounts. Lease payments for the years ended December 31, 2006, 2005 and 2004 were $288,000, $299,000 and $304,000, respectively.

F-29

Future minimum rental commitments under all non-cancelable operating leases are as follows (in thousands):

Year Ending December 31
2007	$	287
2008		3
2009		3
	$	293

Capital Lease Obligations

We lease certain equipment under non-cancelable lease agreements. These leases are accounted for as capital leases. Future minimum lease payments under capital lease obligations at December 31, 2004 of $35,000 were paid during 2005.

Commercial Commitments

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

Glowpoint believes that it will meet its commercial commitments. In certain instances where Glowpoint did not meet the minimum commitments no such penalties for minimum commitments have been assessed and the Company has entered into new agreements. It has been our experience that the prices and terms of successor agreement are similar to those offered by other carriers.

Glowpoint does not believe that any loss contingency related to a potential shortfall should be recorded in the financial statements because it is not probable, from the information available and from prior experience, that Glowpoint has incurred a liability.

Future minimum commercial commitments under carrier agreements are as follows (in thousands):

Year Ending December 31
2007	$	3,811
2008		2,131
2009		1,194
	$	7,136

Note 20 - Subsequent Events

In January 2007, we entered into a two-year employment agreement with Edwin F. Heinen, our Chief Financial Officer. Under the employment agreement, Mr. Heinen is entitled to a base salary of not less than $200,000 per calendar year and, at the discretion of the Board of Directors and based on meeting certain corporate and personal goals, he is eligible to receive an annual incentive bonus of up to 40% of his base salary. The agreement also provides for a grant to Mr. Heinen of 200,000 restricted shares of the Company’s common stock, with one-third of such restricted shares of common stock vesting on January 30 of each of the following three years.

In May 2007, we amended the employment agreements of Michael Brandofino, our Chief Executive Officer and President, and Joseph Laezza, our Chief Operating Officer. Mr. Brandofino’s agreement was amended to (i) reflect his title as Chief Executive Officer and President, (ii) grant 400,000 restricted shares of the Company’s common stock, with one-half of such restricted shares vesting on each of May 15, 2009 and May 15, 2011, and (iii) grant an option to purchase 200,000 shares of the Company’s common stock, with one-half of such options vesting immediately and the remaining 100,000 options vesting in equal installments on May 15, 2008, May 15, 2009, and May 15, 2010.

F-30

Mr. Laezza’s agreement was amended to (i) reflect his title as Chief Operating Officer, (ii) grant 100,000 restricted shares of the Company’s common stock, with one-half of such restricted shares vesting on each of May 15, 2009 and May 15, 2011, and (iii) grant an option to purchase 250,000 shares of the Company’s common stock, with one-half of such options vesting immediately and the remaining 125,000 options vesting in equal installments on May 15, 2008, May 15, 2009, and May 15, 2010.

F-31

Delaware		77-0312442
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

225 Long Avenue, Hillside, NJ		07205
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (312) 235-3888

Securities registered under Section 12(b) of the Exchange Act: None

Title of each class		Name of each exchange on which registered
None		Not applicable

	TABLE OF CONTENTS

Item		Page
	PART I

1.	Business	1
1A	Risk Factors	18
1B	Unresolved Staff Comments	25
2.	Properties	25
3.	Legal Proceedings	26
4.	Submission of Matters to a Vote of Security Holders	26

	PART II

5.	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	26
6.	Selected Financial Data	29
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
7A.	Quantitative and Qualitative Disclosures about Market Risk	41
8.	Financial Statements and Supplementary Data	41
9.	Changes in Disagreements with Accountants on Accounting and Financial Disclosure	41
9A	Controls and Procedures	42
9B	Other Information	42

	PART III

10.	Directors, Executive Officers and Corporate Governance	43
11.	Executive Compensation	47
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	47
13.	Certain Relationships and Related Transactions, and Director Independence	49
14.	Principal Accounting Fees and Services	49

	PART IV

15.	Exhibits, Financial Statement Schedules	50
	Signatures	54

	Glowpoint
	Common Stock
	High		Low
Year Ended December 31, 2005
First Quarter	$	2.50	$	1.35
Second Quarter		1.84		1.23
Third Quarter		1.71		0.92
Forth Quarter		1.16		0.66

Year Ended December 31, 2006
First Quarter	$	0.74	$	0.51
Second Quarter		0.67		0.35
Third Quarter		0.65		0.37
Forth Quarter		0.38		0.25

Quarter Ended March 31, 2007	$	0.74	$	0.38

Indexed Stock Quotes	12/31/2002		12/31/2003		12/31/2004		12/31/2005		12/31/2006
The Nasdaq National Market Index		100.000		102.716		111.538		113.070		123.836
Nasdaq Telecommunications Index		100.000		77.577		83.781		77.737		99.320
Glowpoint, Inc.		100.000		28.135		24.920		10.772		6.109

Stock Quotes		12/31/2002		12/31/2003		12/31/2004		12/31/2005		12/31/2006
The Nasdaq National Market Index		1,335.510		2,003.370		2,175.440		2,205.320		2,415.290
Nasdaq Telecommunications Index		108.790		183.570		198.250		183.950		235.020
Glowpoint, Inc.		2.790		1.750		1.550		0.670		0.380

	Years Ended December 31,
										Derived from Unaudited Financial Information
	2006			2005			2004			2003(1)			2002(1)
Statement of Operations Information:	(in thousands, except per share data)
Revenue	$	19,511		$	17,735		$	15,867		$	10,250		$	5,599
Cost of revenue		13,583			14,984			16,019			13,247			6,937
Gross margin (loss)		5,928			2,751			(152	)		(2,997	)		(1,338	)
Operating expenses:
Research and development		816			1,242			1,078			1,261			1,024
Sales and marketing		2,570			4,028			3,265			5,693			3,830
General and administrative		11,049			14,120			12,598			6,424			3,882
Amortization of goodwill		—			—			—			—			2,548
Total operating expenses		14,435			19,390			16,941			13,378			11,284
Loss from continuing operations		(8,507	)		(16,639	)		(17,093	)		(16,375	)		(12,622	)
Other expense (income):
Interest expense		3,969			3			63			2,024			471
Amortization of deferred financing costs		389			—			448			286			123
(Decrease) increase in fair value of derivative financial instruments		(1,992	)		271			134			—			—
Interest income		(83	)		(100	)		(92	)		(7	)		(72	)
Other income		—			—			(5,000	)		—			—
Amortization of discount on subordinated debentures		—			—			2,650			—			—
Gain on marketable equity securities		—			—			(132	)		(53	)		—
Gain on settlement with Gores		—			(379	)		—			—			—
Loss on exchange of debt		—			—			743			—			—
Total other expense (income), net		2,283			(205	)		(1,186	)		2,250			522
Net loss from continuing operations	$	(10,790	)	$	(16,434	)	$	(15,907	)	$	(18,625	)	$	(13,144	)

Net loss from continuing operations per share:
Basic and diluted	$	(0.23	)	$	(0.37	)	$	(0.44	)	$	(0.63	)	$	(0.46	)
Weighted average number of common shares and share equivalents outstanding:
Basic and diluted		46,242			44,348			36,416			29,456			28,792

	Schedule A Adj.		4 ^th Quarter 2006
Loss from operations			$	( 497	)

Schedule A adjustments:
1. Severance payments		71
2. Termination liabilities		—
3. Capital raise costs		—
4. Depreciation		457
5. Deferred non-cash compensation		125
Total Schedule A adjustments				653
Adjusted Positive Operating Income			$	156

Contractual Obligations:	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long term debt - 10% Notes	$	6,606	$	6,606	$	-	$	-	$	-
Derivative liabilities		4,301		4,301		-		-		-
Commercial commitments		7,136		3,811		3,325		-		-
Operating lease obligations		293		287		6		-		-
Total	$	18,336	$	15,005	$	3,331	$	-	$	-

Name	Age	Position with Company

Aziz Ahmad (5)	44	Class III Director
Bami Bastani (1)(2)(3)	53	Class II Director
Michael Brandofino	42	Chief Executive Officer, President and Class II Director
Dean Hiltzik (2)(3)	53	Class III Director
James S. Lusk (1)(2)	51	Class I Director
Richard Reiss	50	Class III Director
Peter Rust (1)(3)(4)	53	Class I Director

Non-Director Executive Officers:
Edwin F. Heinen	55	Chief Financial Officer and Executive Vice President, Finance
Joseph Laezza	37	Chief Operating Officer
David W. Robinson	38	Executive Vice President and General Counsel

(3)	Member of the Nominating Committee.
(4)	Alternate Member of the Compensation Committee
(5)	Alternate Member of the Audit, Compensation and Nominating Committees

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflecting in Column (a))
Equity compensation plans approved by security holders		3,690,554	$	1.99		521,890
Equity compensation plans not approved by security holders		1,409,643		2.98		—
Total		5,100,197	$	2.26		521,890

NAME AND ADDRESS OF BENEFICIAL OWNERS (1)	NUMBER OF SHARES OWNED (2)			PERCENTAGE OF OUTSTANDING SHARES

Executive Officers and Directors:
Michael Brandofino		878,243	(3)		1.8	%
Joseph Laezza		330,000	(4)		*
Edwin F. Heinen		299,666	(5)		*
David W. Robinson		233,333	(6)		*
Aziz Ahmad		86,000	(7)		*
Bami Bastani		84,000	(8)		*
Dean Hiltzik		174,000	(9)		*
James Lusk		84,000	(10)		*
Richard Reiss		3,578,250	(11)		7.5	%
Peter Rust		90,500	(12)		*
David Trachtenberg		360,000			*

All directors and executive officers as a group (11 people)		6,197,992	(13)		12.6	%

5% Owners:
North Sound Capital LLC 20 Horseneck Lane, Greenwich, Connecticut 06830		13,697,324	(14)		23.3	%
Coghill Capital Management LLC One North Wacker Drive, New York, New York 10006		9,789,628	(15)		18.6	%
Vicis Capita 126 East 56 ^th Street, New York, New York 10022		5,656,800	(16)		10.7	%

* Less than 1%

		Page
Report of Independent Registered Public Accounting Firm, Amper, Politziner and Mattia, P.C.		F-1
Report of Independent Registered Public Accounting Firm, Eisner LLP		F-2
Consolidated Balance Sheets at December 31, 2006 and 2005		F-3
Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004		F-4
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2006, 2005 and 2004		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004		F-6
Notes to Consolidated Financial Statements		F-8

Exhibit Number
			Description
3.1			Amended and Restated Certificate of Incorporation. ⁽¹⁾
3.2			Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Wire One Technologies, Inc. changing its name to Glowpoint, Inc. ⁽¹¹⁾
3.3			Certificate of Designations, Preferences and Rights of Series B Preferred Stock. ⁽¹¹⁾
3.4			Amended and Restated Bylaws. ⁽¹¹⁾
4.1			Specimen Common Stock Certificate. ⁽²⁰⁾
10.1			Glowpoint, Inc. 2000 Stock Incentive Plan. ⁽²⁾
10.2			Form of Warrant to purchase Common Stock, dated January 10, 2002. ⁽³⁾
10.3			Lease Agreement for premises located at 225 Long Avenue, Hillside, New Jersey, dated March 20, 1997, between Registrant and Vitamin Realty Associates, L.L.C. ⁽⁴⁾
10.4			First Amendment to Lease Agreement, dated as of December 1997, between Registrant and Vitamin Realty Associates, L.L.C. ⁽¹⁾
10.5			Second Amendment to Lease Agreement, dated as of December 20,1999, between Registrant and Vitamin Realty Associates, L.L.C. ⁽¹⁾
10.6			Third Amendment to Lease Agreement, dated as of June 1, 2000, between Registrant and Vitamin Realty Associates, L.L.C. ⁽⁷⁾
10.7			Fourth Amendment to Lease Agreement, dated as of August 29, 2000, between Registrant and Vitamin Realty Associates, L.L.C. ⁽²⁾
10.8			Fifth Amendment to Lease Agreement, dated as of May 1, 2001, between Registrant and Vitamin Realty Associates, L.L.C. ⁽⁷⁾
10.9			Sixth Amendment to Lease Agreement, dated as of May 1, 2002, between Registrant and Vitamin Realty Associates, L.L.C. ⁽⁷⁾
10.10			Seventh Amendment to Lease Agreement, dated as of April 22, 2005, between Registrant and Vitamin Realty Associates, L.L.C. ⁽²⁰⁾
10.11			Form of Warrant to Purchase Shares of common stock of Registrant. ⁽⁵⁾
10.12			Registration Rights Agreement dated as of December 17, 2002, between Registrant and the Purchasers set forth therein. ⁽⁵⁾
10.13			Note and Warrant Purchase Agreement dated as of December 17, 2002, between Registrant and the Purchasers set forth therein. ⁽⁵⁾
10.14			Warrant to Purchase Shares of common stock of Glowpoint, Inc. ⁽⁶⁾
10.15			Common Stock Purchase Agreement between Registrant and the Purchasers Listed on Exhibit A. ⁽⁶⁾
10.16			Placement Agent Agreement, dated August 4, 2003, between Registrant and Burnham Hill Partners, as amended as of January 29, 2004. ⁽¹¹⁾
10.17			Form of Class A Warrant to Purchase common stock of Registrant. ⁽⁸⁾

10.18		Form of Class B Warrant to Purchase common stock of Registrant. ⁽⁸⁾
10.19		Form of Warrant to Purchase Common Stock, dated August 8, 2001. ⁽⁹⁾
10.20		Form of Warrant to Purchase Common Stock, dated August 8, 2001. ⁽⁹⁾
10.21		Form of Warrant to Purchase Common Stock, dated June 14, 2000. ⁽¹⁰⁾
10.22		Warrant to Purchase common stock issued to JPMorgan Chase on March 6, 2003. ⁽⁷⁾
10.23		Employment Agreement with Joseph Laezza, dated as of March 11, 2004. ⁽¹¹⁾
10.24		Amended and Restated Employment Agreement with Michael Brandofino, dated July 1, 2004. ⁽¹²⁾
10.25		Form of Common Stock Purchase Agreement, dated March 14, 2005. ⁽¹³⁾
10.26		Form of Warrant to Purchase Common Stock, dated March 14, 2005. ⁽¹³⁾
10.27		Form of Exchange Agreement, dated March 14, 2005. ⁽¹⁴⁾
10.28		Placement Agent Agreement, dated March 19, 2005, between Registrant and Burnham Hill Partners. ⁽²⁰⁾
10.29		Settlement and Release Agreement between Glowpoint, Inc. and Gores Technology Group, dated March 4, 2005. ⁽¹⁴⁾

10.30		Third Amended and Restated Employment Agreement with Richard Reiss, dated December 31, 2005. ⁽¹⁵⁾
10.31		Separation Agreement with Rod Dorsey, dated March 28, 2006. ⁽²⁰⁾
10.32		Separation Agreement with Stuart Gold, dated as of April 5, 2006. ⁽²⁰⁾
10.33		Separation Agreement with David C. Trachtenberg dated as of April 6, 2006. ⁽²⁰⁾
10.34		Note and Warrant Purchase Agreement, dated as of March 31, 2006, between Glowpoint and the purchasers set forth therein, which reflects the same terms as the Note and Warrant Purchase Agreement, dated April 12, 2006. ⁽¹⁶⁾
10.35		10% Senior Secured Convertible Promissory Note, dated as of March 31, 2006, which reflects the same terms as the 10% Senior Secured Convertible Promissory Note, dated April 12, 2006. ⁽¹⁶⁾
10.36		Form of Series A Warrant to Purchase Common Stock dated as of March 31, 2006, which reflects the same terms as the Series A Warrant to Purchase Common Stock, dated April 12, 2006. ⁽¹⁶⁾
10.37		Form of Series B Warrant to Purchase Common Stock dated as of March 31, 2006, which reflects the same terms as the Series B Warrant to Purchase Common Stock, dated April 12, 2006. ⁽¹⁶⁾
10.38		Registration Rights Agreement, dated as of March 31, 2006, between Glowpoint and the purchasers set forth therein, which reflects the same terms as the Registration Rights Agreement, dated April 12, 2006. ⁽¹⁶⁾
10.39		Security Agreement, dated as of March 31, 2006, between Glowpoint and the secured parties set forth therein, to which a joinder agreement was executed on April 12, 2006. ⁽¹⁶⁾
10.40		Form of Placement Agent Warrant, dated as of March 31, 2006, between Glowpoint and the parties set forth therein. ⁽¹⁶⁾
10.41		Employment Agreement with David W. Robinson, dated May 1, 2006 ⁽¹⁷⁾
10.42		Form of Restricted Stock Award Agreement with Schedule of Recently Reported Restricted Stock Awards. ⁽²⁰⁾
10.43		Employment Agreement with Edwin F. Heinen, dated January 30, 2007. ⁽¹⁸⁾
10.44		Employment Agreement Amendment with David W. Robinson, dated April 24, 2007. ⁽¹⁹⁾
10.45		Employment Agreement Amendment with Edwin F. Heinen, dated April 24, 2007. ⁽¹⁹⁾
10.46		Employment Agreement Amendment with Michael Brandofino, dated May 15, 2007 ⁽¹⁹⁾
10.47		Employment Agreement Amendment with Joseph Laezza, dated May 15, 2007. ⁽¹⁹⁾
21.1		Subsidiaries of Glowpoint, Inc. ⁽²⁰⁾
31.1		Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer. ⁽²⁰⁾
31.2		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer. ⁽²⁰⁾
32.1		Section 1350 Certification of the Chief Executive Officer. ⁽²⁰⁾
32.2		Section 1350 Certification of the Chief Financial Officer. ⁽²⁰⁾

_______________________
(1)	Filed as an appendix to View Tech, Inc.’s Registration Statement on Form S-4 (File No. 333-95145) and incorporated herein by reference.
(2)	Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000, and incorporated herein by reference.
(3)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 15, 2002, and incorporated herein by reference.
(4)	Filed as an exhibit to Registrant’s Registration Statement on Form SB-2 (Registration No. 333-21069), and incorporated herein by reference.
(5)	Filed as an exhibit to Registrant’s Current Report on Form 8-K, dated December 23, 2002, and incorporated herein by reference.
(6)	Filed as an exhibit to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2004, and incorporated herein by reference.
(7)	Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, and incorporated herein by reference.
(8)	Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2001, and incorporated herein by reference.


	GLOWPOINT, INC.

June 6, 2007	By:	/s/ Michael Brandofino
		Michael Brandofino Chief Executive Officer


/s/ Michael Brandofino			Chief Executive Officer (Principal Executive Officer)
Michael Brandofino


/s/ Edwin F. Heinen			Chief Financial Officer (Principal Financial Officer)
Edwin F. Heinen

	Year Ended December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	2,153		$	2,023
Accounts receivable, net of allowance for doubtful accounts of $121 and $145; respectively		2,748			2,171
Prepaid expenses and other current assets		327			510
Total current assets		5,228			4,704
Property and equipment, net		2,762			4,117
Other assets		403			216
Total assets	$	8,393		$	9,037

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,957		$	1,586
Accrued expenses		2,008			1,961
Accrued sales taxes and regulatory fees		4,216			3,063
Current portion of derivative financial instruments		4,301			1,246
10% Convertible notes, net of discount of $2,280		4,326			—
Deferred revenue		288			374
Total current liabilities		17,096			8,230

Long term liabilities:
Derivative financial instruments, less current portion		—			324
Total liabilities		17,096			8,554

Preferred stock, $.0001 par value; 5,000 shares authorized and redeemable; 0.120 Series B shares issued and outstanding, (stated value of $2,888; liquidation value of $3,735 and $3,388), respectively		2,888			2,888

Commitments and contingencies

Stockholders’ deficit:
Common stock, $.0001 par value; 100,000 shares authorized; 46,390 shares issued and 46,086 shares issued and issuable; 46,350 and 46,046 shares outstanding, respectively		5			5
Additional paid-in capital		161,267			160,219
Accumulated deficit		(172,623	)		(161,833	)
Deferred compensation		—			(556	)
		(11,351	)		(2,165	)
Less: Treasury stock, 40 common shares at cost		(240	)		(240	)
Total stockholders’ deficit		(11,591	)		(2,405	)
Total liabilities and stockholders’ deficit	$	8,393		$	9,037

	Common Stock					Additional Paid In			Accumulated			Comprehensive			Deferred			Treasury Stock
	Shares			Amount		Capital			Deficit			Income			Comp.			Shares		Amount			Total
Balance at January 1, 2004		30,555		$	3	$	135,730		$	(129,492	)	$	78		$	(1,498	)		40	$	(240	)	$	4,581
Net loss		—			—		—			(15,907	)		—			—			—		—			(15,907	)
Reversal of unrealized loss upon sale of marketable securities		—			—		—			—			(78	)		—			—		—			(78	)
Comprehensive loss		—			—		—			—			—			—			—		—			(15,985	)
Deferred compensation related to the issuance of restricted stock (including 80 shares issuable which were issued in 2005)		270			—		511			—			—			(511	)		—		—			—
Amortization of deferred compensation from the issuance of restricted stock		—			—		—			—			—			699			—		—			699
Forfeiture of deferred stock compensation		(40	)		—		(134	)		—			—			134			—		—			—
Extension of expiration date of stock options services		—			—		67			—			—			—			—		—			67
Issuance of stock options for consulting services		—			—		32			—			—			—			—		—			32
Exercise of stock options		782			—		570			—			—			—			—		—			570
Exchange of subordinated debentures for preferred stock, common stock and modification of warrants		250			—		743			—			—			—			—		—			743
Issuance of common stock and warrants in connection with private placement		6,100			1		11,315			—			—			—			—		—			11,316
Issuance of shares in lieu of interest on subordinated debentures		18			—		45			—			—			—			—		—			45
Preferred stock dividends		—			—		(369	)		—			—			—			—		—			(369	)
Balance at December 31, 2004		37,935			4		148,510			(145,399	)		—			(1,176	)		40		(240	)		1,699
Net loss		—			—		—			(16,434	)		—			—			—		—			(16,434	)
Comprehensive loss		—			—		—			—			—			—			—		—			(16,434	)
Amortization of deferred compensation from the issuance of restricted stock		—			—		—			—			—			620			—		—			620
Compensation from extension of stock options		—			—		48			—			—			—			—		—			48
Issuance and extension of warrants for consulting services		—			—		196			—			—			—			—		—			196
Issuance of stock options for consulting services		—			—		148			—			—			—			—		—			148
Exercise of stock options		50			—		74			—			—			—			—		—			74
Exchange of subordinated debentures for preferred stock, common stock and modification of warrants		1,334			—		2,000			—			—			—			—		—			2,000
Issuance of common stock and warrants in connection with private placement		6,767			1		9,375			—			—			—			—		—			9,376
Fair value of inducement to convert preferred stock and accrued dividends of $183		—			—		1,350			—			—			—			—		—			1,350
Deemed dividend for inducement to convert preferred stock		—			—		(1,167	)		—			—			—			—		—			(1,167	)
Preferred stock dividends		—			—		(315	)		—			—			—			—		—			(315	)
Balance at December 31, 2005		46,086			5		160,219			(161,833	)		—			(556	)		40		(240	)		(2,405	)
Net loss		—			—		—			(10,790	)		—			—			—		—			(10,790	)
Comprehensive loss		—			—		—			—			—			—			—		—			(10,790	)
Reclassification of deferred compensation		—			—		(556	)		—			—			556			—		—			—
Issuance of restricted stock		364			—		354			—			—			—			—		—			354
Stock-based compensation		—			—		473			—			—			—			—		—			473
Restricted stock compensation and modification of option terms related to restructuring		—			—		217			—			—			—			—		—			217
Forfeiture of restricted stock		(60	)		—		(45	)		—			—			—			—		—			(45	)
Placement agent warrants - 10% Notes		—			—		296			—			—			—			—		—			296
Warrant price and term modification - 10% Notes, net of financing costs of $110		—			—		656			—			—			—			—		—			656
Preferred stock dividends		—			—		(347	)		—			—			—			—		—			(347	)
Balance at December 31, 2006		46,390		$	5	$	161,267		$	(172,623	)	$	—		$	—			40	$	(240	)	$	(11,591	)

Revenue	$	16,857
Gross margin		361
Net loss		(15,602	)
Net loss attributable to common stockholders		(15,971	)
Net loss attributable to common stockholders per share	$	(0.44	)

	2006		2005
Prepaid maintenance contracts	$	135	$	136
Prepaid insurance		—		95
Deferred installation costs		53		63
Due from vendors and tax authorities		34		134
Other prepaid expenses		105		82
	$	327	$	510

	2006			2005			Estimated Useful Life
Network equipment and software	$	7,695		$	7,849			3 to 5 Years
Computer equipment and software		1,995			1,906			3 to 4 Years
Bridging equipment		1,828			1,828			5 Years
Leasehold improvements		214			214			5 Years
Office furniture and equipment		166			359			5 Years
Videoconferencing equipment		74			74			3 Years
		11,972			12,230
Accumulated depreciation and amortization		( 9,210	)		( 8,113	)
	$	2,762		$	4,117

	2006		2005
Accrued dividends	$	847	$	501
Accrued compensation		417		787
Restructuring costs		212		—
Other accrued expenses		532		673
	$	2,008	$	1,961

				Total
Principal of 10% Notes:
March 2006 financing	$	5,665
April 2006 financing		515
Additional 10% Notes		426
				$	6,606
Discount:
Derivative financial instrument - Series A Warrants		(2,873	)
Reduction of exercise price and extension of expiration dates of warrants		(766	)
		(3,639	)
Accretion of discount		1,359
					(2,280	)
10% Notes, net of discount				$	4,326

	Sincerely,

	/s/ Rochelle A B Wilson

	Rochelle A B Wilson,
	Director, Human Resources
	Glowpoint

Grantee’s Name and Address:		_____________________
		_____________________
		_____________________

Award Number		RS-____
Date of Award		_____________________
Vesting Commencement Date		_____________________
Total Number of Shares
of Common Stock Awarded		_____________________
Aggregate Current Fair
Market Value of Shares		_____________________

GRANTEE	:	_____________________
COMPANY	:	GLOWPOINT, INC.
SECURITY	:	COMMON STOCK
AMOUNT	:	_____________________
DATE	:	_____________________

Name	Agreement Number	Date of Award	Amount of Restricted Shares Awarded
David W. Robinson	RS-10	May 4, 2006	200,000
Peter Rust	RS-11	May 10, 2006	80,000
Aziz Ahmad	RS-12	June 20, 2006	80,000
Edwin F. Heinen	RS-13	January 30, 2007	200,000
Bamdad (Bami) Bastani	RS-14	February 28, 2007	80,000
James S. Lusk	RS-15	February 28, 2007	80,000
Michael Brandofino	RS-16	May 15, 2007	400,000
Joseph Laezza	RS-17	May 15, 2007	100,000

Date: June 6, 2007
	By:	/s/ Michael Brandofino
		Chief Executive Officer and President

Date: June 6, 2007
	By:	/s/ Edwin F. Heinen
		Chief Financial Officer