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 June 30, 2001

                         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) 459-6550
               --------------------------------------------------
              (Registrant's telephone number, including area code)

               ___________________________________________________
              (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 July 20, 2001, a total of 8,795,704 shares of the Registrants Common
Stock, $.01 par value, were issued and outstanding.


<PAGE>

                              LOG ON AMERICA, INC.
                                      INDEX

                                                                        Page No.

PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements

            Balance Sheets as of June 30, 2001 and December 31, 2000........   3
            Statements of Operations for the Three Months
              and Six Months Ended June 30, 2001 and 2000...................   4
            Statements of Cash Flows for the Six Months
              Ended June 30, 2001 and 2000..................................   5
            Notes to Financial Statements...................................   6

  Item 2. Management's Discussion and Analysis. ............................   9

PART II. OTHER INFORMATION

  Item 1.   Legal Proceedings...............................................  13
  Item 2.   Changes in Securities and Use of Proceeds.......................  13
  Item 3.   Defaults in Senior Securities...................................  13
  Item 4.   Submission of Matters to a Vote of Security Holders.............  13
  Item 5.   Other Information...............................................  14
  Item 6.   Exhibits and Reports on Form 8-K................................  14

Signatures..................................................................  15


                                       2
<PAGE>

Part 1. Financial Information

<TABLE>
<CAPTION>
                                                                                                   (Unaudited)          (Audited)
                                                                                                     June 30,          December 31,
                                                                                                       2001                 2000
                                                                                                   ------------        ------------
                                        ASSETS
<S>                                                                                                <C>                 <C>
CURRENT ASSETS
   Cash and cash equivalents ...............................................................       $    731,240        $  7,858,973
   Available-for-sale securities ...........................................................                 --           1,749,335
   Accounts receivable, net of allowance of $757,193 and $750,000, respectively ............          1,252,690           1,612,818
   Notes receivable from officers and related parties, net of valuation
     allowance of $1,320,000 and $1,370,000 respectively ...................................            612,478             661,378
   Other current assets ....................................................................            935,846           1,362,285
                                                                                                   ------------        ------------
     TOTAL CURRENT ASSETS ..................................................................          3,532,254          13,244,789
                                                                                                   ------------        ------------
PROPERTY & EQUIPMENT, net ..................................................................          3,612,450          19,097,171

OTHER ASSETS
   Goodwill and other intangible assets, net ...............................................          3,276,568          10,836,502
   Financing costs, net ....................................................................                 --                  --
   Other assets ............................................................................             56,822              56,822
                                                                                                   ------------        ------------
      TOTAL OTHER ASSETS ...................................................................          3,333,390          10,893,324
                                                                                                   ============        ============
TOTAL ASSETS ...............................................................................       $ 10,478,094        $ 43,235,284
                                                                                                   ============        ============

                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of capital lease obligations .............................................       $    554,748        $    757,512
  Accounts payable .........................................................................          3,516,017           3,831,019
  Accrued expenses .........................................................................          4,157,876           3,779,543
  Borrowings under line of credit ..........................................................                 --             875,000
  Advances under multiple term loan agreement ..............................................                 --           4,868,247
  Deferred revenue .........................................................................            985,637           1,133,298
                                                                                                   ------------        ------------
   TOTAL CURRENT LIABILITIES ...............................................................          9,214,278          15,244,619
                                                                                                   ------------        ------------

LONG-TERM LIABILITIES
  Borrowings under line of credit ..........................................................                 --                  --
  Advances under multiple term loan agreement ..............................................                 --                  --
  Capital lease obligations ................................................................            299,444             422,075
                                                                                                   ------------        ------------
   TOTAL LONG-TERM LIABILITIES .............................................................            299,444             422,075
                                                                                                   ------------        ------------
TOTAL LIABILITIES ..........................................................................          9,513,722          15,666,694
                                                                                                   ------------        ------------
Redeemable convertible preferred stock, $.01 par value;
  authorized 15,000,000 shares, Series A 15,000 shares issued
  and outstanding at June 30, 2001 .........................................................         10,883,562           9,643,836
Commitments and contingencies ..............................................................                 --                  --

STOCKHOLDERS' EQUITY (DEFICIT)
  Common stock, $.01 par value; authorized 50,000,000 shares, 8,795,704
  issued and outstanding at June 30, 2001 and December 31, 2000 ............................             87,957              87,957
  Additional paid-in capital ...............................................................         39,398,466          41,233,260
  Accumulated other comprehensive income ...................................................                 --              14,217
  Accumulated deficit ......................................................................        (49,405,613)        (23,410,680)
                                                                                                   ------------        ------------
   TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ....................................................         (9,919,190)         17,924,754
                                                                                                   ============        ============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) .......................................       $ 10,478,094        $ 43,235,284
                                                                                                   ============        ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>

                              LOG ON AMERICA, INC.
                            STATEMENT OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                       Three Months Ended June 30,      Six Months Ended June 30,
                                                                       ----------------------------    ----------------------------
                                                                           2001            2000            2001            2000
                                                                       ------------    ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>                <C>
REVENUES ...........................................................   $  3,152,359    $  3,050,941    $  6,797,335       5,439,298

OPERATING EXPENSES
  Costs of revenue .................................................      2,904,849       1,762,031       5,644,328       2,768,558
  Selling, general and administrative ..............................      4,429,044       6,110,307       8,471,272       9,606,995
  Depreciation and amortization ....................................      1,370,669       1,055,513       3,043,530       1,920,819
  Impairment of customer lists, equipment and related costs ........     17,664,853              --      17,664,853              --
                                                                       ------------    ------------    ------------    ------------
   Total operating expenses ........................................     26,369,415       8,927,851      34,823,983      14,296,372
                                                                       ------------    ------------    ------------    ------------
LOSS FROM OPERATIONS ...............................................     23,217,056      (5,876,910)    (28,026,648)     (8,857,074)
                                                                       ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
  Interest expense .................................................         (9,862)       (103,924)        (75,189)       (148,464)
  Interest income ..................................................         50,116         392,007         178,098         723,868
  Other income (expense) ...........................................         12,486          (7,041)         18,823         (24,494)
                                                                       ------------    ------------    ------------    ------------
  Net other income (expense) .......................................         52,740         281,042         121,732         550,910
                                                                       ------------    ------------    ------------    ------------
LOSS BEFORE EXTRAORDINARY ITEM .....................................     23,164,316      (5,595,868)    (27,904,916)     (8,306,164)

EXTRAORDINARY ITEM:
    Gain on early extinguishment of debt ...........................      1,909,983              --       1,909,983              --
                                                                       ------------    ------------    ------------    ------------

NET LOSS ...........................................................    (21,254,333)     (5,595,868)    (25,994,933)     (8,306,164)
  Preferred stock dividends ........................................       (299,178)       (424,110)       (595,069)       (424,110)
  Preferred stock accretion ........................................       (623,288)       (883,562)     (1,239,726)       (883,562)
                                                                       ------------    ------------    ------------    ------------
Net loss applicable to common stockholders .........................   $(22,176,799)   $ (6,903,540)   $(27,829,728)   $ (9,613,836)
                                                                       ============    ============    ============    ============
WEIGHTED AVERAGE COMMON SHARES USED IN
COMPUTING BASIC AND DILUTED LOSS PER SHARE .........................      8,795,704       8,720,859       8,795,704       8,511,986
                                                                       ============    ============    ============    ============
BASIC AND DILUTED LOSS PER COMMON SHARE
    Loss before Extraordinary Item .................................          (2.74)          (0.79)          (3.38)          (1.13)
    Extraordinary Gain .............................................           0.22              --            0.22              --
                                                                       ------------    ------------    ------------    ------------
BASIC AND DILUTED  LOSS PER COMMON SHARE ...........................          (2.52)          (0.79)          (3.16)          (1.13)
                                                                       ============    ============    ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                                                       Six Months Ended June 31,
                                                                                                    --------------------------------
                                                                                                        2001               2000
                                                                                                    ------------       ------------
<S>                                                                                                  <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss ...................................................................................       (25,994,933)        (8,306,164)
  Adjustments to reconcile net loss to net cash used in operating activities:
   Capital equipment write-off ...............................................................           398,979                 --
   Impairment of customer lists, equipment and related costs .................................        17,664,853
   Extraordinary gain on early extinguishment of debt ........................................        (1,909,983)                --
   Realized loss on available-for-sale securities ............................................           (14,217)
    Depreciation and amortization ............................................................         3,043,530          1,920,819
    Bad debt provision .......................................................................         1,114,731             71,136
    Bad debt provision - notes ...............................................................           (50,000)                --
    Changes in operating assets and liabilities, net of effects of acquisitions:
      Accounts receivable ....................................................................          (754,603)          (763,300)
      Other current assets ...................................................................           186,756           (498,485)
      Other assets ...........................................................................                --            (89,214)
      Accounts payable and accrued expenses ..................................................           126,989            926,020
      Deferred revenue .......................................................................          (147,661)           168,418
                                                                                                    ------------       ------------
        Total adjustments ....................................................................        12,527,427          1,735,394
                                                                                                    ------------       ------------
NET CASH USED IN OPERATING ACTIVITIES ........................................................        (6,335,559)        (6,570,770)
                                                                                                    ------------       ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment ......................................................          (108,636)        (5,116,475)
  Issuance of notes receivable ...............................................................                --            (42,193)
  Notes receivable ...........................................................................            15,689                 --
  Sales of available-for-sale securities .....................................................         1,749,335          2,369,106
  Purchases of available-for-sale securities .................................................                --                 --
  Acquisitions ...............................................................................                --         (1,614,500)
                                                                                                    ------------       ------------
NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES ........................................         1,656,388         (4,404,062)
                                                                                                    ------------       ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of common stock .........................................................                --                 --
  Proceeds from issuance of redeemable convertible preferred stock and stock warrants ........                --         15,000,000
  Issuance costs on common stock .............................................................                --
  Issuance costs on preferred stock ..........................................................                --            (40,000)
  Issuance costs on long term debt ...........................................................                --           (430,025)
  Borrowings/(payments) under line of credit .................................................          (875,000)           150,000
  Payments under multiple term loan agreement ................................................        (1,200,000)                --
  Principal payments on capital lease obligations ............................................          (373,562)          (189,024)
  Payments on long term debt .................................................................                --                 --
                                                                                                    ------------       ------------
NET CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES ........................................        (2,448,562)        14,490,951
                                                                                                    ------------       ------------
NET INCREASE / (DECREASE IN) CASH AND CASH EQUIVALENTS .......................................        (7,127,733)         3,516,119
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD ................................................         7,858,973          7,844,860
                                                                                                    ------------       ------------
CASH AND CASH EQUIVALENTS END OF PERIOD ......................................................      $    731,240       $ 11,360,979
                                                                                                    ============       ============

SUPPLEMENTAL SCHEDULES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest ...................................................................................      $    125,225       $    123,459
                                                                                                    ============       ============
  Income taxes ...............................................................................      $         --       $         --
                                                                                                    ============       ============

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
   FINANCING ACTIVITIES:

Details of acquisitions
  Fair value of assets acquired ..............................................................      $         --       $    208,414
                                                                                                    ============       ============
  Intangibles established ....................................................................      $         --       $  2,261,586
                                                                                                    ============       ============
  Common stock issued ........................................................................      $         --       $    855,500
                                                                                                    ============       ============
Details of investing activities
  Write down of property and equipment .......................................................      $ 12,236,605       $         --
                                                                                                    ============       ============
Details of  financing activities
  Equipment acquired under captial lease obligations .........................................      $     48,167       $         --
                                                                                                    ============       ============
  Capital Equipment accrued ..................................................................      $         --       $    649,593
                                                                                                    ============       ============
  Equipment acquired under Nortel financing agreement ........................................      $         --       $  4,750,302
                                                                                                    ============       ============
  Extinguishment of multiple term loan agreement through return of equipment .................      $  3,668,247       $         --
                                                                                                    ============       ============

   The accompanying notes are an integral part of these financial statements.
</TABLE>


                                       6
<PAGE>

      1. Notes to Financial Statements (Unaudited).

June 30, 2001

A. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Log On
America, Inc. ("Log On, our, we or us") 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. 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
six month period ended, June 30, 2001 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2001.

The balance sheet at December 31, 2000 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 financial statements and footnotes thereto
included in our annual report on form 10-KSB for the year ended December 31,
2000.

Certain amounts in the prior period's financial statements have been
reclassified to conform to the current period presentation.

B. Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing income or loss
applicable to common stockholders by the weighted average number of common
shares of Log On's common stock outstanding during the period.

Diluted earnings (loss) per common share is determined in the same manner as
basic earnings (loss) per common share except that the number of common shares
is increased assuming exercise of dilutive stock options and warrants using the
treasury stock method. The diluted earnings per common share amount has not been
reported because we have a net loss and the impact of the assumed exercise of
our stock options and warrants is not dilutive.

C. Comprehensive Loss


                                       7
<PAGE>

Components of comprehensive loss are as follows:

                                                  Six Months        Six Months
                                                     Ended             Ended
                                                    June 30,          June 30,
                                                     2001              2000
                                                 ------------      ------------

Net loss                                         $(25,994,933)     $ (8,306,164)

Other comprehensive income (loss) -
Unrealized gains (losses) on marketable
securities                                            (14,217)           63,576
                                                 ------------      ------------

Comprehensive loss                               $(26,009,150)     $ (8,242,588)
                                                 ============      ============

Accumulated other comprehensive income at June 30, 2001 and December 31, 2000 is
composed of unrealized gains on marketable securities amounting to $63,576 and
$14,217, respectively.

D. Financing

On February 23, 2000 we sold 15,000 shares of Series A Convertible Preferred
Stock (The "Preferred Shares") and issued 594,204 common stock purchase warrants
(the "Warrants") for an aggregate consideration of $15,000,000. The proceeds of
the Preferred Shares have 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. The
Preferred Shares are redeemable no earlier than February 23, 2003 (unless
certain Triggering Events have occurred), at a minimum redemption price of
$1,000 per share plus accumulated and unpaid additional amounts, which accrue at
a rate of 8% per annum and are treated as dividends. Accrued dividends amounted
to $1,624,110 as of June 30, 2001.

The fair value of the Preferred Shares at issuance was recorded as $7,500,000,
which was less than the mandatory redemption amount at issuance. Therefore,
periodic accretions from stockholders' equity are made so that the carrying
amount equals the redemption amount on the maturity date. Accretions amounted to
$3,383,562 as of June 30, 2001.

On August 18, 2000, we commenced an action against the holders of the Preferred
Shares. Shortly thereafter, as a result of our action, certain of the holders of
the Preferred Shares sent us conversion notices and redemption notices. Based on
our claims as specified in our action, we have not nor do we intend to honor
these conversion notices or redemption notices.

Simultaneously with the sale of Preferred Shares, on February 23, 2000, we
entered into a Senior Secured Credit Agreement (the "Credit Agreement") with
Nortel Networks Inc. ("Nortel"). Under the Credit Agreement, Nortel committed to
an initial advance to us of up to $30,000,000 and subject to certain conditions,
a second advance of up to an additional $15,000,000 to finance our commitment to
purchase equipment and services from Nortel.

On November 14, 2000, we entered into an additional agreement with Nortel to
settle various claims arising out of certain professional services rendered by
Nortel. This agreement provided for a one-time cash payment of $3,500,000 by
Nortel to us, which was made in 2000. The agreement also provides for


                                       8
<PAGE>

certain  product and service  credits.  In addition,  Nortel provided a one-time
reduction of $5,000,000 on the outstanding balance of the Credit Agreement.

E. Impairment charges and Extraordinary Gain

On May 11, 2001 we reached a final settlement with Nortel in complete
satisfaction of all obligations owed to Nortel and termination of the Credit
Agreement. The settlement provided for payment by us of $1,200,000 in cash and
the return of all Nortel equipment to Nortel. This generated a one-time loss of
approximately $9.6 million related to the write-down of certain equipment no
longer held for use to its net realizable value and a one-time extraordinary
gain of approximately $1.9 million related to the early extinguishment of $4.8
million in debt outstanding under our Credit Agreement.

In May 2001, we generated a one-time loss of approximately $1 million for the
write off of certain intangible assets related to approximately 5,000 customers
which we no longer service.

During our 2001 second quarter we determined that the expected undiscounted cash
flows related to our long lived assets held for use was less than the carrying
value. As a result, we estimated the fair value of these long lived assets and
determined that the fair value was less than the carrying value, resulting in a
one-time write-down of approximately $7.1 million. The amount of the impairment
was based upon the related estimated future discounted cash flows over the
expected useful life of the long-lived assets.

F. Notes Receivable From Officers and Related Parties

Notes receivable consists of secured amounts loaned to our President and CEO and
secured amounts loaned to the former stockholders of cyberTours, Inc., which was
acquired by the us in 1999.

The notes receivable of $1,500,000 maturing on September 14, 2000 were extended
for a period of one year maturing on September 14, 2001. These notes are secured
by 421,333 shares of stock held by us as of June 1, 2000, and are interest free.
Also, in September 2000, our President and CEO executed a promissory note to us
in the amount of $500,000. The note was secured with 500,000 shares of stock
registered in the name of our President and CEO. The note is payable upon demand
and bears an annual interest rate of 9.5%

In 2000, our CEO was granted a bonus of $178,750, which was applied in reduction
of his promissory note. As of June 30, 2001 the balance on the note is $321,250,
plus accrued interest and the pledge has been reduced to 321,250 shares.

G. Commitments and Contingencies

On August 18, 2000, we commenced an action against Promethean Asset Management
LLC, HFTP Investment LLC, Fisher Capital LTD, Wingate Capital, LTD, Citadel
Limited Partnership and Marshall Capital Management, Inc. ("Defendants"), in the
United States District Court for the Southern District of New York alleging: (i)
violations of federal securities laws, including, but not limited to, insider
trading and stock manipulation through cross sales and short sales of our common
stock, (ii) breach of contract, (iii) fraud, and (iv) breach of the covenant of
good faith and fair dealing. The complaint seeks declaratory relief, injunctive
relief, compensatory and punitive damages in an amount to be determined at
trial.

After the complaint was filed, Defendants sent conversion and redemption notices
relating to the Preferred Shares to us. We have not honored these notices based
on the allegations contained in our complaint. As a


                                       9
<PAGE>

result, we have not converted or redeemed any Preferred Shares held by any of
the Defendants. The Defendants have filed a motion to dismiss our complaint,
which is presently pending before the court.

In a related action, one of the Defendants, HFTP Investment LLC, filed an action
in the Court of Delaware, HFTP Investments LLC v. Log On America, Inc. on June
14, 2001. We have filed a motion to dismiss asserting the position that all
issues set forth in the complaint are being heard in the Southern District of
New York as set forth above. We are waiting for HFTP Investment LLC to file
responsive documents.

On September 19, 2000, Belenos, Inc., a Delaware corporation ("Belenos") filed
suit against us alleging that certain sums are due it for work performed and
equipment provided to us. The suit was filed in the Superior Court of Suffolk
County, Commonwealth of Massachusetts. On May 11, 2001 we agreed to settle our
dispute by paying approximately $1,000,000.

H. Going Concern

As a result of the significant capital outlays mentioned previously, our
existing capital resources may not be sufficient to fund our operating deficits
through 2001. If we do not successfully continue the cost reduction programs
which we commenced in the beginning of year 2001, or if additional unanticipated
costs are incurred, we may not have sufficient funds to continue as a going
concern through December 31, 2001, without raising additional capital through an
equity or debt financing, which may or not be available to us or may not be
available to us at acceptable terms.

We may decide to seek additional capital earlier than the end of 2001, the
timing of which will depend upon, among other things, market conditions and
terms, which are acceptable to us.

The inability to obtain additional financing or funding, when needed, would have
a negative effect on us, including possibly requiring us to curtail or cease
operations. If any future financing involves the sale of our equity securities,
the shares of our common stock held by our stockholders would be substantially
diluted. If we incur indebtedness or otherwise issue debt securities, we will be
subject to risks associated with indebtedness, including the risk that interest
rates may fluctuate and the possibility that we may not be able to pay principal
and interest on the indebtedness.

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The conditions mentioned above
raise substantial doubt about our ability to continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should we be unable to continue as a going
concern.

I.  Subsequent Events

On June 30, 2001 we signed a definitive agreement with United Systems Access
("USA") to sell all of our residential voice resale accounts, subject to
regulatory approval, for a purchase price of $225,000. Upon USA's receipt of
approval, this transaction shall be finalized.

In August 2001, we settled our lawsuit against Credit Suisse First Boston
Corporation ("CSFB") and Marshall Capital Management Inc. ("Marshall"), the
holder of one half of the Preferred Shares. CSFB shall pay Log On America
$3,250,000 and Marshall will exchange its Preferred Shares and warrants for
297,102 shares of Common Stock for a new Series B Convertible Preferred stock
with a face value of $7,500,000.


                                       10
<PAGE>

The Series B Preferred Stock will be convertible into common stock of Log On at
a fixed conversion rate of $4.50 per share for a total of 1,666,667 common
shares. Log On will continue its pending lawsuit against the two remaining
holders of its Preferred Shares.

We have prepared below the Pro Forma effect of these two transactions on our
balance sheet as of June 30, 2001 assuming these transactions occurred as of
June 30, 2001.

<TABLE>
<CAPTION>
Assets                                                                                                     Pro forma
Current Assets                                                          June 30,          Proforma          June 30,
                                                                          2001           Adjustment           2001
                                                                    --------------------------------------------------
<S>                                                                 <C>                 <C>               <C>
   Cash and cash equivalents                                        $     731,240       $ 3,475,000       $  4,206,240
   Accounts receivable, net                                             1,252,690                 0          1,252,690
   Notes receivable from officers and related parties, net                612,478                 0            612,478
   Other current assets                                                   935,846                 0            935,846
                                                                    --------------------------------------------------
Total Current Assets                                                    3,532,254         3,475,000          7,007,254
Property & Equipment, net                                               3,612,450                 0          3,612,450
Other Assets, net                                                       3,333,390                 0          3,333,390
                                                                    --------------------------------------------------
Total Assets                                                        $  10,478,094       $ 3,475,000       $ 13,953,094
                                                                    ==================================================

Liabilities and Stockholders' Equity
Current Liabilities                                                 $   9,214,278       $ (812,055)       $  8,402,223
Long-term Liabilities                                                     299,444                0             299,444
                                                                    --------------------------------------------------
Total Liabilities                                                   $   9,513,722       $  (812,055)      $  8,701,667
                                                                    --------------------------------------------------
Redeemable convertible preferred stock, $.01 par value;
authorized 15,000,000 shares,
   Series A 7,500 proforma shares issued and outstanding
     at June 30, 2001                                                  10,883,562        (5,441,781)         5,441,781

Stockholders' Equity
  Common stock, $.01 par value; authorized 50,000,000
shares, 8,795,704 issued and outstanding at June 30, 2001
  and December 31, 2000                                                    87,957                 0             87,957
  Convertible stock, $.01 par value; authorized 15,000,000
   shares
     Series B 7,500 proforma shares issued and outstanding
       at June 30, 2001                                                         0                75                 75
  Additional paid-in capital                                           39,398,466         9,503,761         48,902,227
  Accumulated deficit                                                (49,405,613)           225,000        (49,180,613)
                                                                    --------------------------------------------------
Total Stockholders' Equity                                            (9,919,190)         9,728,836            190,354

Total Liabilities and Stockholders' Equity                          $  10,478,094       $ 3,475,000       $ 13,953,094
                                                                    ==================================================
</TABLE>

Item 2. Management's Discussion and Analysis

Overview

Log On America is a solutions-centric Integrated Network Services Provider
("INSP"), offering digital IP transport and integrated network solutions to
individuals and businesses throughout New England. Our core products include
traditional dial-up, IT/Telecom/PBX managed services, high-speed Internet
access,


                                       11
<PAGE>

web and data hosting, office productivity and security management application
services, local and long distance dial-tone and call management features
utilizing a wide range of system integration, broadband access, ASP technologies
and partnerships.

We have determined that the traditional competitive local exchange carrier /
direct local exchange carrier service delivery models do not adequately serve a
large portion of the growing communications marketplace in a cost effective
manner. We also have recognized that traditional communications products do not
fulfill the competitive business requirements of many of the fastest growing
business segments. Some of these segments have not been addressed nor identified
by the existing service providers. Two of the market segments, which will be
addressed by our highly leveraged, fully integrated end-to-end solutions based
business and management model will be the small to medium size business solution
market ("SMB markets") and the small office/home office market ("SOHO markets").

We have initiated penetrating target markets with assets that we already
possess, and we intend to build our delivery platform and our sales teams to
target the higher-end SMB markets. Using this approach, we should begin to
reduce our EBITDA losses at an accelerated pace, establish incumbency in the
local targeted markets, precisely build-out our infrastructure, strategically
utilize capital and operations funding, and position ourselves as the smart
solutions-based delivery provider.

Results of Operations.

Six Months Ended June 30, 2001
Versus Six Months Ended June 30, 2000

Three Months Ended June 30, 2001
Versus Three Months Ended June 30, 2000

Revenues.

Our Data and Telecom services revenue is comprised of monthly recurring charges,
additional features on those lines, usage charges and initial, non-recurring
charges typically derived from installing new lines and services.

Revenues increased by $101,418 or 3% to $3,152,359 for the three months ended,
June 30, 2001 as compared to $3,050,941 for the comparable period in 2000.
Revenues increased by $1,358,037 or 25% to $6,797,335 for the six months ended,
June 30, 2001 as compared to $5,439,298 for the comparable period in 2000. The
increase in revenue is due primarily to approximately 9,000 new residential
telecom customers added during the summer of 2000, additional field operations
and PBX installation sales and new commercial customers acquired during 2001.

Costs of revenue.

Costs of revenues are data and telecommunications expenses comprised primarily
of leased transport charges for facilities connecting our customers to our
network, our network to the Internet, our switch and physical co-locations.
Expenses are being incurred to the incumbent local exchange carrier for customer
lines, features on lines and usage.

Costs of revenue increased by $1,142,818 or 65%, to $2,904,849 for the three
months ended, June 30, 2001 as compared to $1,762,031 for the comparable period
in 2000. Costs of revenue increased by


                                       12
<PAGE>

$2,875,770 or 104%, to $5,644,328 for the six months ended, June 30, 2001 as
compared to $2,768,558 for the comparable period in 2000. This increase is
reflective of the costs associated with our customer base growth achieved
year-to-date and the costs associated with our high-speed data and telecom
network expansion. As we move away from the traditional colocentric model, we
anticipate a reduction in our network costs.

Selling, general and administrative expense.

Selling, general and administrative expenses decreased by $1,681,263 or (28%) to
$4,429,044 for the three months ended, June 30, 2001 as compared to $6,110,307
for the comparable period in 2000. Selling, general and administrative expenses
decreased by $1,135,723 or (12%) to $8,471,272 for the six months ended, June
30, 2001 as compared to $9,606,995 for the comparable period in 2000. The
decrease is a direct result of cost-cutting measures and realignment of our
operating plan, which started in the fourth quarter of 2000 and is still on
going.

Depreciation and amortization.

Depreciation and amortization increased by $315,156 to $1,370,669 for the three
months ended, June 30, 2001 as compared to $1,055,513 for the comparable period
in 2000. Depreciation and amortization increased by $1,122,711 to $3,043,530 for
the six months ended, June 30, 2001 as compared to $1,920,819 for the comparable
period in 2000. This increase is due primarily to the amortization expense
related to our intangible assets associated with our acquisitions and the
depreciation on the equipment costs associated with the build out of our network
backbone, switch and collocation build outs and the internal infrastructure to
accommodate the increased usage of our external and internal network. With the
impairment of our equipment and the one-time write-off of certain intangible
assets, (see below) we anticipate a reduction in our depreciation and
amortization expense.

Impairment of equipment and related costs.

On May 11, 2001 we reached a final settlement with Nortel in complete
satisfaction of all obligations owed to Nortel. The settlement provided for
payment by us of $1,200,000 in cash and the return of all Nortel equipment to
Nortel. This generated a one-time loss of approximately $9.6 million related to
the write-down of certain equipment no longer held for use to its net realizable
value and a one-time extraordinary gain of approximately $1.9 million related to
the early extinguishment of $4.8 million in debt outstanding under our Credit
Agreement.

In May of 2001, we generated a one-time loss of approximately $1 million for the
write off of certain intangible assets related to approximately 5,000 customers
which we no longer service.

During the second quarter of 2001, we determined that the expected undiscounted
cash flows related to our long-lived assets held for use was less than the carry
value. As a result, we estimate the fair value of there long lived assets and
determined that the fair value was less than the carrying value resulting in a
one-time write-down of approximately $7.1 million. The amount of the impairment
was based upon the related estimated future discounted cash flows over the
expected useful life of the long-lived assets.

Other Income.

Other income decreased by $228,302 to $52,740 for the three months ended, June
30, 2001 as compared to


                                       13
<PAGE>

$281,042 for the comparable period in 2000. Other income decreased by $429,178
to $121,732 for the six months ended, June 30, 2001 as compared to $550,910 for
the comparable period in 2000. This decrease is related to the investment income
generated from the cash balances on hand for each Quarter and is reflective of
lower cash and investment balances as we continue to act on and execute our
business plan.

Early extinguishment of debt.

On May 11, 2001 we reached a final settlement with Nortel in complete
satisfaction of all obligations owed. The result of this transaction generated a
one-time extraordinary gain of approximately $1.9 million related to the early
extinguishment of $4.8 million in debt.

Liquidity and Capital Resources.

During the six months ended, June 30, 2001, we had a net loss of $25,994,933.
Net cash used in operating activities was $6,335,559 and $6,570,770 for the six
months ended, June 30, 2001 and 2000, respectively. The net cash used in
operations was primarily to fund our operating loss. Also, in line with the
realignment of our operating plan, we made an effort to pay down our current
debt including the write-off of the switch and collocation equipment related to
our network. The net cash provided by investing activities was $1,656,388 for
the six months ended, June 30, 2001, related to the sales of our securities to
generate cash. The net cash used in investing activities was $4,404,062 for the
six months ended June 30, 2000. This cash funded our capital expansion and
acquisitions during the first quarter of 2000. The net cash used in financing
activities was $2,448,562 for the six months ended June 30, 2001. This cash was
used to settle our debt with Nortel, to pay off our line of credit and to make
principal payments on our existing capital leases. The net cash provided by
financing activities was $14,490,951 for the six months ended, June 30, 2000.
This cash was related to the net proceeds from the issuance of our preferred
stock and common stock warrants.

We are in the process of optimizing the assets that we have deployed and will
limit future capital expenditures to a success based smart build strategy. This
has lowered our overall capital expenditure requirements and has allowed us to
direct resources to high EBITDA opportunities. This year, we have limited our
capital expenditures to only $108,636. In addition, we have reduced our overall
EBITDA loss (adjusted for one time charges) by implementing various cost
reduction programs, which included a reduction of staff headcount, a
consolidation of certain redundant offices, and a consolidation of certain
network infrastructure. Certain of these programs have either been implemented
or we are in the process of implementing.

In May of 2001, we reached an agreement with Nortel to extinguish our debt
obligation in exchange for the return of equipment and a cash payment to Nortel
of approximately $1.2 million. We also reached a settlement agreement with
Belenos, which calls for a payment of approximately $1 million.

With these recent capital outlays, we believe that the existing capital
resources may not be sufficient to fund our operating deficits through 2001. If
we are unsuccessful in implementing our cost reductions or additional
unanticipated costs are incurred, we may not have sufficient funds to continue
as a going concern through December 31, 2001. As a result, we may decide to seek
additional capital earlier than the end of 2001, the timing of which will depend
upon, among other things, market conditions and terms, which are acceptable to
us.

We may obtain additional financing through commercial bank borrowings, equipment
financing or the private or public sale of equity or debt securities. We may be
unsuccessful in raising sufficient additional


                                       14
<PAGE>

capital. In particular, we may be unable to raise additional capital on terms
that we consider acceptable, that are within the limitations contained in our
financing agreements and that will not impair our ability to develop its
business. If we fail to raise sufficient funds, we 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 cash dividends to our shareholders and do not intend to pay
cash dividends in the foreseeable future.

In May 2001, we received notification from Nasdaq that our common stock has
failed to maintain certain continued listing requirements. On August 8, 2001, we
prepared a response to the Nasdaq notification and received a hearing on our
continued listing qualifications. Pending the outcome of the hearing our common
stock shall continue to be listed on NASDAQ National Market. We intend to
maintain our common stock on the Nasdaq National Market; however, if Nasdaq
delists our common stock we will attempt to have our common stock listed on the
Nasdaq Small Cap Market, or on another exchange. If those attempts fail, we will
attempt to have our common stock trade in the over-the-counter market on the
so-called "pink sheets" or the NASD's OTC Bulletin Board. Consequently, the
liquidity of our common stock could be impaired.

Special Note Regarding Forward-Looking Statements and Risk Factors

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, 2000. 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;
o     the existence or absence of adverse publicity;
o     changes in, or failure to comply with, government regulations;
o     changes in marketing and technology;
o     change in political, social and economic conditions;
o     increased competition in the Internet;
o     Internet capacity; general risks of the Internet;
o     success of acquisitions and operating initiatives;
o     changes in business strategy or development plans;
o     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;
o     business abilities and judgment of personnel;
o     availability of qualified personnel;
o     labor and employee benefit costs;
o     development risks and ability to raise additional capital and other
      factors referenced below in this


                                       15
<PAGE>

      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.


                                       16
<PAGE>

PART II

                                OTHER INFORMATION

Item 1: Legal Proceedings

On August 18, 2000, we commenced an action against Promethean Asset Management
LLC, HFTP Investment LLC, Fisher Capital LTD, Wingate Capital, LTD, Citadel
Limited Partnership and Marshall Capital Management, Inc. ("Defendants"), in the
United States District Court for the Southern District of New York (CA NO. 00CIV
6218 (RMB) (MHD), alleging: (i) violations of federal securities laws,
including, but not limited to, insider trading and stock manipulation through
cross sales and short sales of our common stock, (ii) breach of contract, (iii)
fraud, and (iv) breach of the covenant of good faith and fair dealing. The
complaint seeks declaratory relief, injunctive relief, compensatory and punitive
damages in an amount to be determined at trial.

After the complaint was filed, Defendants sent conversion and redemption notices
relating to the Preferred Shares to us. We have not honored these notices based
on the allegations contained in our complaint. As a result, we have not
converted or redeemed any Preferred Shares held by any of the Defendants. The
Defendants have filed a motion to dismiss our complaint.

On January 12, 2001, we commenced an action against CSFB seeking recovery for
CSFB's gross negligence and material conflicts of interest as our exclusive
financial advisor. We allege that CSFB was grossly negligent and was deceptive
in connection with the structuring and negotiation of our sale of Preferred
Shares to certain institutional investors including Marshall, a subsidiary of
CSFB; and the structuring and negotiation of an equipment purchase agreement and
secured credit facility with Nortel.

In a related action, one of the Defendants, HFTP Investment LLC, file an action
in the Chancery Court of Delaware, HFTP Investments LLC v. Log On America, Inc.
on June 14, 2001. We have filed a motion to dismiss asserting that all issues
set forth in the complaint are being heard in the Southern District of New York
as set forth above. We are waiting for HFTP Investment LLC to file responsive
documents.

In August 2001, we settled our lawsuit against CSFB and Marshall, the holder of
one half of the Preferred Shares. CSFB will pay Log On America $3,250,000 and
Marshall will exchange its Preferred Shares and warrants for 297,102 shares of
common stock for a new Series B Convertible Preferred stock with a face value of
$7,500,000. The Series B Preferred Stock will be convertible into common stock
of the Company at a fixed conversion rate of $4.50 per share for a total of
1,666,667 common shares. We will continue our pending lawsuit against the two
remaining holders of its Series A Preferred stock.

We intend to vigorously pursue our action in the Southern District of New York
and defend ourselves in the Delaware Chancery Court because we believe that we
acted appropriately in connection with the matters at issue in these cases and
that we were damaged by the Defendant's wrongful conduct. We can make no
assurances that we will not determine that the advantages of entering into a
settlement outweigh the risk and expense of protracted litigation or that
ultimately we will be successful in pursuing our claims against the remaining
Defendants. If we are unsuccessful in prevailing, the holders of Preferred
Shares could convert the Preferred Shares into common stock or compel us to
redeem the Preferred Shares. If the holders of the Preferred Shares were to
convert the Preferred Shares into common stock and sell such shares of common
stock into the market, such sales could have a negative effect on the market
price of our common stock and will dilute our common stock. Dilution or the
potential for dilution could also materially impair our ability to raise capital
through the future sale of equity securities and have a material adverse effect
on our financial condition. Moreover, we may not be in a position to redeem the


                                       17
<PAGE>

Preferred Shares and could be subject to substantial and additional penalties
for failing to do so, which would have a material adverse effect on our
financial condition or results of operations.

Item 2: Changes in Securities and Use of Proceeds

In connection with our settlement of our lawsuit against Marshall, Marshall will
exchange its 7,500 Preferred Shares and Warrant to purchase 297,102 shares of
our common stock for 7,500 shares of new Series B Convertible Preferred Stock
with a face value of $7.5 million. Pursuant to the terms of the Certificate of
Designations, Preferences and Rights of the Series B Convertible Preferred
Stock, the holders of the Series B Convertible Preferred Stock are entitled to
receive payments equal to the face value of such stock in preference of any
payments to the holders of our common stock upon liquidation.

Item 3: Defaults in Senior Securities

Following the commencement of the action against the holders of the Preferred
Shares and the announcement that we will not honor requests for conversions, the
holders of the Preferred Shares requested redemption of the Preferred Shares.
The holders have asserted that they are entitled to redemption of their
Preferred Shares under our Certificate of Designations, Preferences and Rights
of Series A Preferred Stock by reason of the our announcement that we will not
honor conversion requests and of the failure by us to have our shares of common
stock underlying the Preferred Shares and their related warrants registered
under Securities Act of 1933. We have refused to honor the redemption requests
upon the basis set forth in our action against the preferred holders. Holders of
7,500 of the Preferred Shares have requested an aggregate redemption amount of
$10.8 million.

The operating results as of March 31, 2001 caused us to violate certain of our
loan covenants with Nortel. Nortel provided us with the Credit Agreement and
agreed to finance our commitment to purchase, by December 31, 2001, of up to
$47,000,000 of equipment and services from Nortel. We had borrowed $4,868,247 as
of March 31, 2001. The March 31, 2001 operating loss caused us to violate the
EBITDA, Annualized EBITDA, and Minimum Gross Revenues covenants.

On May 11, 2001 we reached a final settlement with Nortel in complete
satisfaction of all obligations owed to Nortel. The settlement provides for
payment by us of $1,200,000 in cash and the return of all Nortel equipment to
Nortel. This generated an operating loss of approximately $9.6 million and an
extraordinary gain of approximately $1.9 million.

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

      Form 8K filed on June 1, 2001 in connection with Item 5 - other events.

      (1)   Exhibits:


                                       18
<PAGE>

      4.    Settlement Agreement and related exhibits.


                                       19
<PAGE>

                                   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: August 20, 2001          Kenneth M. Cornell,
                               Chief Financial Officer, Principal
                               Financial and Accounting Officer
                               (duly authorized to sign on behalf of registrant)

                                       19