<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2000
Commission File Number: 0-25761
LOG ON AMERICA, INC.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 05-0496586
------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Cookson Place, 6th Floor, Providence, Rhode Island 02903
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(401) 453-6100
--------------
(Registrant's telephone number, including area code)
3 Regency Plaza, Providence, Rhode Island 02903
-----------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Check mark whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
/X/ Yes / / No
As of May 1, 2000, a total of 8,328,534 shares of the Registrants Common Stock,
$.01 par value, were issued and outstanding.
1
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LOG ON AMERICA, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 2000 and December 31, 1999................................ 3
Statements of Operations for the Three Months Ended March 31, 2000 and 1999............... 4
Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999.............. 5
Notes to Financial Statements............................................................. 6
Item 2. Management's Discussion and Analysis or Plan of Operation........................................ 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................................................... 11
Item 2. Changes in Securities and Use of Proceeds................................................. 11
Item 3. Defaults in Senior Securities............................................................. 11
Item 4. Submission of Matters to a Vote of Security Holders....................................... 11
Item 5. Other Information......................................................................... 11
Item 6. Exhibits and Reports on Form 8-K.......................................................... 11
Signatures.................................................................................................. 12
</TABLE>
2
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Part 1. Financial Information
LOG ON AMERICA, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
2000 1999
--------------- ---------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................................................ $ 14,814,247 $ 7,844,860
Available-for-sale securities........................................................ 12,717,380 11,203,853
Accounts receivable, net of allowance of $71,488 and $66,448, respectively........... 428,870 319,915
Notes receivable from officers and related parties................................... 1,562,757 1,562,757
Other current assets................................................................. 1,045,770 558,514
--------------- ---------------
TOTAL CURRENT ASSETS............................................................... 30,569,024 21,489,899
--------------- ---------------
PROPERTY & EQUIPMENT, net............................................................... 7,736,799 4,967,968
OTHER ASSETS
Goodwill and other intangible assets, net............................................ 11,696,565 10,708,990
Financing costs, net................................................................. 585,714 -
Other assets......................................................................... 97,891 11,558
--------------- ---------------
TOTAL OTHER ASSETS................................................................ 12,380,170 10,720,548
--------------- ---------------
TOTAL ASSETS............................................................................ $ 50,685,993 $ 37,178,415
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of capital lease obligations.......................................... $ 490,299 $ 454,954
Accounts payable and accrued expenses................................................. 2,168,074 2,356,965
Deferred revenue...................................................................... 1,152,319 1,135,651
--------------- ---------------
TOTAL CURRENT LIABILITIES............................................................ 3,810,692 3,947,570
--------------- ---------------
LONG-TERM LIABILITIES
Borrowings under line of credit....................................................... 725,000 725,000
Advances under multiple term advance term loan agreement.............................. 2,321,598 1,439,582
Capital lease obligations............................................................. 517,829 640,179
--------------- ---------------
TOTAL LONG-TERM LIABILITIES.......................................................... 3,564,427 2,804,761
--------------- ---------------
TOTAL LIABILITIES....................................................................... 7,375,119 6,752,331
--------------- ---------------
Redeemable convertible preferred stock, $.01 par value; authorized 15,000,000 shares,
Series A 15,000 shares issued and outstanding at March 31, 2000...................... 7,500,000 -
Commitments............................................................................. - -
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 125,000,000 shares, 8,328,534 and
8,289,793 issued and outstanding at March 31, 2000 and December 31, 1999,
respectively....................................................................... 83,285 82,898
Additional paid-in capital........................................................... 44,160,810 36,095,697
Accumulated other comprehensive loss................................................. (9,090) (38,676)
Accumulated deficit.................................................................. (8,424,131) (5,713,835)
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY.......................................................... 35,810,874 30,426,084
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................................. $ 50,685,993 $ 37,178,415
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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LOG ON AMERICA, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------
2000 1999
------------------ ----------------
<S> <C> <C>
REVENUES......................................................... $ 2,388,357 $ 238,644
OPERATING EXPENSES
Costs of revenue............................................... 1,006,527 119,941
Selling, general and administrative............................ 3,496,688 287,849
Depreciation and amortization.................................. 865,306 19,338
------------------ ----------------
Total operating expenses...................................... 5,368,521 427,128
------------------ ----------------
LOSS FROM OPERATIONS............................................. (2,980,164) (188,484)
------------------ ----------------
OTHER INCOME (EXPENSE)
Interest expense............................................... (61,993) (280)
Interest income................................................ 331,861 743
------------------ ----------------
Net other income (expense)..................................... 269,868 463
------------------ ----------------
NET LOSS......................................................... $ (2,710,296) $ (188,021)
================== ================
WEIGHTED AVERAGE COMMON
SHARES USED IN COMPUTING BASIC
AND DILUTED LOSS PER SHARE........................................ 8,302,990 4,610,716
================== ================
BASIC AND DILUTED LOSS PER COMMON SHARE.......................... (0.33) (0.04)
================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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LOG ON AMERICA, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------
2000 1999
------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................................... $ (2,710,296) $ (188,021)
Adjustments to reconcile net loss to net cash used in operating activities:
Notes receivable officers forgiven............................................... - 7,845
Depreciation and amortization.................................................... 865,306 19,336
Bad debt provision............................................................... 5,040 1,660
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable............................................................ (113,995) (7,233)
Other current assets........................................................... (296,777) (207,915)
Other assets................................................................... (86,333) (17,586)
Accounts payable and accrued expenses.......................................... (502,891) 1,988
Deferred revenue............................................................... 16,668 (3,389)
------------------- ------------------
Total adjustments............................................................ (112,982) (205,294)
------------------- ------------------
NET CASH USED IN OPERATING ACTIVITIES................................................ (2,823,278) (393,315)
------------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment.............................................. (2,195,889) (22,680)
Purchases of available-for-sale securities......................................... (1,483,941) -
Acquisitions....................................................................... (1,100,500) -
------------------- ------------------
NET CASH USED IN INVESTING ACTIVITIES................................................ (4,780,330) (22,680)
------------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of redeemable convertible preferred stock and stock warrants. 15,000,000 -
Issuance costs on preferred stock................................................... (40,000) -
Issuance costs on long term debt.................................................... (300,000) -
Payments on notes payable........................................................... - (1,502)
Principal payments on capital lease obligations..................................... (87,005)
------------------- ------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES................................... 14,572,995 (1,502)
------------------- ------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................................. 6,969,387 (417,497)
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD......................................... 7,844,860 630,131
------------------- ------------------
CASH AND CASH EQUIVALENTS END OF PERIOD............................................... $ 14,814,247 $ 212,634
=================== ==================
SUPPLEMENTAL SCHEDULES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest............................................................................ $ 61,993 $ -
=================== ==================
Income taxes........................................................................ $ - $ -
=================== ==================
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Details of acquisitions
Fair value of assets acquired....................................................... $ 100,000 $ -
=================== ==================
Intangibles established............................................................. 1,620,000 -
=================== ==================
Liabilities assumed................................................................. 14,000 -
=================== ==================
Common stock issued................................................................. 605,500 -
=================== ==================
Details of financing activities
Equipment acquired under Nortel financing agreement................................. $ 882,016 $ -
=================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Part 1. Financial Information
1. Notes to Financial Statements (Unaudited)
March 31, 2000
A. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to form 10-QSB and article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 2000
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2000.
The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on form 10-KSB for the
year ended December 31, 1999.
B. Earnings (Loss) Per Share
Basic earnings per share is computed by dividing income or loss applicable to
common shareholders by the weighted average number of shares of the Company's
common stock ("Common Stock"), after giving consideration to shares subject to
repurchase that are outstanding during the period.
Diluted earnings per share is determined in the same manner as basic earnings
per share except that the number of shares is increased assuming exercise of
dilutive stock options and warrants using the treasury stock method. The diluted
earnings per share amount has not been reported because the Company has a net
loss and the impact of the assumed exercise of the stock options and warrants is
not dilutive.
C. Financing Arrangements
On February 23, 2000, the Company sold 15,000 shares of Series A Redeemable
Convertible Preferred Stock (the "Preferred Shares") and issued 594,204 common
stock purchase warrants (the "Warrants") for an aggregate consideration of
$15,000,000. Subject to certain conditions, the Company can sell an additional
20,000 Preferred Shares and related Warrants for an additional $20,000,000. The
proceeds of the Preferred Shares has been allocated between the Warrants
($7,500,000 in Additional Paid-in Capital) and the Preferred Shares based on the
estimate of the fair value of these instruments at the time of the transaction.
Simultaneously, the Company entered into a Senior Secured Credit Agreement (the
"Credit Agreement") with Nortel Networks, Inc. ("Nortel"). Under the Credit
Agreement, Nortel has committed to an initial advance to the Company of up to
$30,000,000 and a second advance of up to an additional $15,000,000 to finance
the Company's commitment to purchase, by December 31, 2001, up to $47,000,000 of
equipment and services from Nortel. Under the Credit Agreement, the Company will
begin repayment of the facility over a five-year period upon completion of the
purchases from Nortel. The Company has granted a security interest in
substantially all of the Company's assets under the Credit Agreement. As of
March 31, 2000 Nortel has advanced $2,321,598 which has been considered advances
under the Credit Agreement.
6
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D. Acquisitions
During the three months ending March 31, 2000, the Company acquired certain
assets of three Internet service provider businesses for approximately
$1,720,000, including related acquisition costs. The total purchase price
included cash and 38,741 shares of the Company's common stock. The pro forma
impact of these acquisitions has not been presented as the impact would be
considered immaterial.
E. Comprehensive Loss
Components of comprehensive loss are as follows:
March 31, March 31,
2000 1999
------------ ------------
Net loss $ (2,710,296) $ (188,021)
Other comprehensive income (loss)-
Unrealized Gains (losses) on marketable
securities 29,586 --
------------ ----------
Comprehensive loss $ (2,680,710) $ (188,021)
============ ==========
Accumulated other comprehensive loss at March 31, 2000 and December 31, 1999
is composed of unrealized gains (losses) on marketable securities amounting to
losses of $9,090 and $38,676, respectively.
F. Subsequent Events
On April 28, 2000, the Company acquired certain assets of a telephone field
service provider in exchange for $500,000 in cash and 25,712 shares of our
Common Stock.
Item 2. Management's Discussion and Analysis.
Special Note Regarding Forward-Looking Statements
Any statements in this Quarterly Report on Form 10-QSB about our expectations,
beliefs, plans, objectives, assumptions or future events or performance are not
historical facts and are forward-looking statements. These statements are often,
but not always, made through the use of words or phrases such as "will," "will
likely result," "expect," "will continue," "anticipate," "estimate," "intend,"
"plan," "projection," "would," "should" and "outlook." Accordingly, these
statements involve estimates, assumptions and uncertainties which could cause
actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout this Report and our Annual Report on Form 10-KSB,
as amended, for the year ended December 31, 1999. The following cautionary
statements identify important factors that could cause our actual results to
differ materially from those projected in the forward-looking statements made in
this prospectus. Among the key factors that have a direct bearing on our results
of operations are:
o general economic and business conditions; the existence or absence of
adverse publicity; changes in, or failure to comply with, government
regulations; changes in marketing and technology; changes in political,
social and economic conditions;
o increased competition in the Internet ; Internet capacity; general
risks of the Internet;
o success of acquisitions and operating initiatives; changes in business
strategy or development plans; management of growth;
o availability, terms and deployment of capital;
o construction schedules; costs and other effects of legal and
administrative proceedings;
o dependence on senior management; business abilities and judgment of
personnel; availability of qualified personnel; labor and employee
benefit costs;
o development risks; risks relating to the availability of financing; and
7
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o other factors referenced in this Report and the Form 10-KSB, as
amended.
Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
Overview
Log On America, Inc. (the "Company") is a Northeast Regional Data Competitive
Local Exchange Carrier ("D-CLEC+") providing local dial tone, in-state toll,
long distance, and high-speed Internet access and cable programming solutions
over traditional copper wire using Digital Subscriber Line (xDSL) technology to
residential and commercial clients throughout the Northeast. The Company
completed the first phase of its growth plan in 1999, the acquisition phase,
which established a critical mass of customers throughout the New England
states. Concurrently, through a series of selectively targeted transactions, the
Company established partnerships with the best of breed in the communications
industry and secured the funding needed to implement the second phase of the
Company's business strategy, the deployment of an advanced communications
network. This included Nortel taking a 3.1% stake in the Company, representing
one of only three such direct equity investments ever made by Nortel.
Under the next phase of the Company's business strategy it plans to
systematically build-out a high-speed network, which will ultimately give the
Company one of the most powerful networks in the Northeast, connecting the
under-served, near urban markets. When complete, the Company will own the
customers, it will own the network and it will own the services provided on the
network, enabling it to further accelerate its revenue growth by expanding the
xDSL and other bundled broadband services offered.
Results of Operations
Three Months Ended March 31, 2000
versus Three Months Ended March 31, 1999
Revenues
Revenues increased by $2,149,713 or 901% to $2,388,357 for the three months
ended March 31, 2000 as compared to $238,644 for the comparable period in 1999.
The increase in revenue is due primarily to acquisitions, increased direct sales
efforts, organic growth, increased services offerings, and an aggressive
marketing campaign in both Rhode Island and Maine.
Costs of revenue
Costs of revenue increased by $886,586 or 739%, to $1,006,527 for the three
months ended March 31, 2000 as compared to $119,941 for the comparable period in
1999. This increase is due primarily to the variable and fixed network costs
associated with the increase in revenue.
Selling, general and administrative expense
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Selling, general and administrative expenses increased by $3,208,839 to
$3,496,688 for the three months ended March 31, 2000 as compared to $287,849 for
the comparable period in 1999. This increase is due primarily to the salaries
and related expenses for the development of our business, the establishment of
our management team and the development of corporate identification, promotional
and advertising materials. As the staffing levels and operations of the Company
have expanded over the past year, so have these expenses to support such growth.
Depreciation and amortization
Depreciation and amortization increased by $845,968 to $865,306 for the three
months ended March 31, 2000 as compared to $19,338 for the comparable period in
1999. This increase is due primarily to the amortization expense related to the
intangible assets associated with the acquisitions and the depreciation on the
equipment costs associated with the buildout of our ISP network backbone and the
internal infrastructure to accommodate the increased usage of our external and
internal network.
Other Income
Other income increased by $269,405 to $269,868 for the three months ended March
31, 2000 as compared to $463 for the comparable period in 1999. This increase is
due primarily to the investment income earned on the proceeds from the initial
public offering on April 22, 1999, the equity investment by Nortel on December
12, 1999, and proceeds from the issuance of Preferred Stock on February 23,
2000.
Liquidity and Capital Resources
The development and expansion of our business requires substantial capital
investment for the procurement, design and construction of our central office
collocation space improvements and cages, the purchase of telecommunications
equipment and the design and development of our networks. Capital expenditures
were approximately $2,195,889 for the three months ended March 31, 2000. The
Company expects capital expenditures to be significantly higher in future
periods arising primarily from payments of collocation fees and the purchase of
infrastructure equipment necessary for the development and expansion of our
network.
The Company's capital requirements may vary based upon the timing and success of
our rollout and as a result of regulatory, technological, and competitive
developments, or if;
- demand for the Company's services or our anticipated cash flow from
operations is less or more than expected; or
- development plans or projections change or prove to be inaccurate; or
- the Company engages in any acquisitions; or
- the Company accelerates deployment of our network services or otherwise
alters the schedule or targets of our rollout plan.
As of March 31, 2000, the Company had an accumulated operating deficit of
$8,424,131 and cash and cash equivalents and available-for-sale securities of
$27,531,627. Net cash used in operating activities was $2,823,278 and $385,836
for the three months ended March 31, 2000 and 1999, respectively. The net cash
used in operations was primarily due to net losses, offset in part by increases
in depreciation and amortization expenses, accrued expenses and deferred revenue
for the three months ended March 31, 2000, and by an increase in depreciation
and amortization expenses, officer notes forgiven, accrued expenses, and
accounts payable for the three months ended March 31, 1999. The net cash used in
investing activities was $4,780,330 for the three months ended March 31, 2000,
related primarily to the purchase of available-for-sale securities, acquisitions
and purchases of property and equipment. The net cash used in investing
activities was $22,680 for the three months ended March 31, 1999, and related to
purchases of property and equipment. Net cash provided by financing activities
was $14,572,995 for the three months ended March 31, 2000 and was primarily due
to net proceeds from the issuance of Preferred Stock and
9
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common stock warrants and offset in part by issuance costs on the Senior Secured
Credit Agreement with Nortel. Net cash used in financing activities was $1,502
for the three months ended March 31, 1999 and was primarily related to payments
on notes outstanding.
The Company intends to continue to expand its operations at a rapid pace and
expects to continue to operate at a loss for the foreseeable future. The nature
of the expenses contributing to our future losses will include network and
service costs in existing and new markets; legal, marketing, and selling
expenses as we enter each new market; payroll-related expenses as we continue to
add employees; general overhead to support the operational increases; and
interest expense arising from financing our expenditures.
The Company believes that the existing capital resources will be sufficient to
fund its expansion and operating deficits through 2000. The Company may decide
to seek additional capital earlier than the end of 2000, the timing of which
will depend upon market conditions, among other things. The actual amount and
timing of its future capital requirements may differ materially from our
estimates as a result of, among other things, the demand for our services and
regulatory, technological and competitive developments, including additional
market developments and new opportunities, in our industry. The Company may also
need additional financing if: the Company alters the schedule, targets or scope
of the network rollout plan; the plans or projections change or prove to be
inaccurate; or the Company acquires other companies or businesses. The Company
may obtain additional financing through commercial bank borrowings, equipment
financing or the private or public sale of equity or debt securities. The
Company may be unsuccessful in raising sufficient additional capital. In
particular, the Company may be unable to raise additional capital on terms that
we consider acceptable, that are within the limitations contained in the
Company's financing agreements and that will not impair the Company's ability to
develop its business. If the Company fails to raise sufficient funds, the
Company may need to modify, delay or abandon some of the planned future
expansion or expenditures, which could have a material adverse effect on the
business, prospects, financial condition and results of operations.
We have not paid any dividends to our shareholders and do not intend to pay
dividends in the foreseeable future.
Year 2000 Compliance
Many currently installed computer systems and software products were coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these code fields needed to accept four digit entries to distinguish 21st
century dates from 20th century dates, and the failure to do so could result in
the loss of revenues.
The Company implemented a Year 2000 program to ensure that the Company's
computer systems and applications would function properly beyond 1999. All of
the Company's hardware and software systems successfully transitioned to the
year 2000. The Company did not experience any significant problems as a result
of Year 2000 problems with its own systems or those of our vendors. However, the
potential still exists for a non-compliant system, either within the Company or
at a vendor, to malfunction due to the Year 2000 issue and cause a disruption to
the Company's business. Due to the uncertain nature of this issue, we can not
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our results of operations and financial condition. We
believe that, with the successful transition to the year 2000, the possibility
of significant interruptions of normal operations should be minimal. Actual
costs incurred were approximately $25,000. The Company's expenditures consisted
primarily of internal payroll costs related to the assessment and correction of
internal systems and assessment and communication with vendors. We do not
anticipate incurring further costs related to the project.
Recent Developments
In April 2000, we announced that Robert Annunziata joined our Board of Directors
and now serves as Chairman of our newly formed Advisory Board. Mr. Annunziata
served as Chief Executive Officer of Global Crossing Ltd. until March 2000, and
continues to serve as director of the company. Previously, he served as Chairman
and Chief Executive Officer of Teleport Communications Group before being
acquired by AT&T. At AT&T he was President
10
<PAGE>
of AT&T Business Solutions, which was AT&T's largest revenue producer.
PART II
OTHER INFORMATION
Item 1: Legal Proceedings
None.
Item 2: Changes in Securities and Use of Proceeds
On February 23, 2000, the Company sold 15,000 shares of Series A Redeemable
Convertible Preferred Stock (the "Preferred Shares") and issued 594,204 common
stock purchase warrants (the "Warrants") for an aggregate consideration of
$15,000,000. Subject to certain conditions, the Company can sell an additional
20,000 Preferred Shares and related Warrants for an additional $20,000,000. The
Company will utilize these proceeds for general corporate and working capital
purposes.
During the three months ending March 31, 2000, the Company acquired certain
assets of three Internet service provider businesses for approximately
$1,720,000, including related acquisition costs. The total purchase price
included cash and 38,741 shares of the Company's common stock.
The above-mentioned sales of the Company's Common Stock were private
transactions exempt from the registration provisions of the Securities Act of
1933, as amended, pursuant to section 4(2) and 4(6) of the Securities Act or
Regulation D Rule 506 promulgated under the Securities Act.
Item 3. Defaults in Senior Securities.
None.
Item 4: Submission of Matters to a Vote of Security Holders
None.
Item 5: Other Information
None.
Item 6: Exhibits and Reports on Form 8K
(1) Exhibits:
27.1 Financial Data Schedule
(2) Reports on Form 8-K:
On February 28, 2000, the Company filed a
current report on Form 8-K (File No. 000-25761) relating to a securities
purchase agreement among Log On America and certain buyers named therein
for the purchase of 15,000 shares of the Company's Series A Redeemable
Convertible Preferred Stock and
11
<PAGE>
594,204 Common Stock Purchase Warrants for an aggregate consideration of
$15,000,000, and relating to a loan facility of up to $45,000,000 with
Nortel.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LOG ON AMERICA, INC.
By: /S/ Kenneth M. Cornell
----------------------------
Date: May 15, 2000 Kenneth M. Cornell,
Chief Financial Officer (Principal
Financial and Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 14,814,247
<SECURITIES> 12,717,380
<RECEIVABLES> 500,358
<ALLOWANCES> 71,488
<INVENTORY> 0
<CURRENT-ASSETS> 30,569,024
<PP&E> 8,421,240
<DEPRECIATION> 684,441
<TOTAL-ASSETS> 50,685,993
<CURRENT-LIABILITIES> 3,810,692
<BONDS> 0
0
7,500,000
<COMMON> 83,285
<OTHER-SE> 35,727,589
<TOTAL-LIABILITY-AND-EQUITY> 50,685,993
<SALES> 2,388,357
<TOTAL-REVENUES> 2,388,357
<CGS> 1,006,527
<TOTAL-COSTS> 5,368,521
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,993
<INCOME-PRETAX> (2,710,296)
<INCOME-TAX> (2,710,296)
<INCOME-CONTINUING> (2,710,296)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,710,296)
<EPS-BASIC> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
