-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbTr9K4RSeiMPSa5F6QkS2VdzrnPT5keBMmzRMWOKVfu3ifr9jOVZYOpnfYHMJEM IepGaziZGcueN489NIufwQ== 0000889812-00-002301.txt : 20000516 0000889812-00-002301.hdr.sgml : 20000516 ACCESSION NUMBER: 0000889812-00-002301 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOG ON AMERICA INC CENTRAL INDEX KEY: 0001074927 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 050496586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25761 FILM NUMBER: 635075 BUSINESS ADDRESS: STREET 1: 3 REGENCY PLAZA CITY: PROVIDENCE STATE: RI ZIP: 02903 BUSINESS PHONE: 4015498200 MAIL ADDRESS: STREET 1: 3 REGENCY PLAZA CITY: PROVIDENCE STATE: RI ZIP: 02903 10QSB 1 QUARTERLY REPORT 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 LOG ON AMERICA, INC. INDEX
Page No. 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
2 Part 1. Financial Information LOG ON AMERICA, INC. BALANCE SHEETS
(Unaudited) (Audited) March 31, December 31, 2000 1999 --------------- --------------- ASSETS 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 =============== ===============
The accompanying notes are an integral part of these financial statements. 3 LOG ON AMERICA, INC. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ------------------------------------ 2000 1999 ------------------ ---------------- 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) ================== ================
The accompanying notes are an integral part of these financial statements. 4 LOG ON AMERICA, INC. STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, --------------------------------------- 2000 1999 ------------------- ------------------ 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 $ - =================== ==================
The accompanying notes are an integral part of these financial statements. 5 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 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 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 8 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 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 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 11 594,204 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 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 14,814,247 12,717,380 500,358 71,488 0 30,569,024 8,421,240 684,441 50,685,993 3,810,692 0 0 7,500,000 83,285 35,727,589 50,685,993 2,388,357 2,388,357 1,006,527 5,368,521 0 0 61,993 (2,710,296) (2,710,296) (2,710,296) 0 0 0 (2,710,296) (0.33) (0.33)
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