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UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





---




FORM 10-Q





QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934





FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 2002





COMMISSION FILE NUMBER: 000-32647





---




KNOLOGY, INC.


(Exact name of registrant as specified
in its charter)





DELAWARE

58-2424258(State or other jurisdiction of incorporation or
organization)

(I.R.S. Employer Identification No.)





KNOLOGY, INC.

318331241 O.G. SKINNER DRIVE

(Zip Code)WEST POINT, GEORGIA(Address of principal executive offices)





Registrants telephone number, including area code: (706) 645-8553





Indicate by check mark whether the registrant (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.  Yes  x  No  ̈





As of April 30, 2002, we had 502,594 shares of common stock, 51,010,578 shares of Series A preferred stock, 21,180,131 shares of Series B preferred
stock, and 37,219,562 shares of Series C preferred stock outstanding.





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KNOLOGY, INC. AND SUBSIDIARIES


QUARTER ENDED MARCH 31, 2002





INDEX





PAGEPART I

FINANCIAL INFORMATIONITEM 1

FINANCIAL STATEMENTS

2Condensed Consolidated Balance Sheets

2Condensed Consolidated Statements of Operations

3Condensed Consolidated Statement of Cash Flows

4Notes to Condensed Consolidated Financial Statements

5ITEM 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

6ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

16PART II

OTHER INFORMATIONITEM 1

LEGAL PROCEEDINGS

17ITEM 2

CHANGES IN SECURITIES AND USE OF PROCEEDS

17ITEM 3

DEFAULTS UPON SENIOR SECURITIES

17ITEM 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

17ITEM 5

OTHER INFORMATION

17ITEM 6

EXHIBITS AND REPORTS ON FORM 8-K

18




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ITEM 1.    FINANCIAL STATEMENTS





KNOLOGY, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED BALANCE SHEETS


(UNAUDITED)


MARCH 31, 2002


(DOLLARS IN THOUSANDS)





March 31, 2002


December 31, 2001ASSETSCURRENT ASSETS:Cash and cash equivalents

$
25,611


$
38,074Accounts receivable, net


14,267



13,420Affiliate receivable


66



594Prepaid expenses and other


1,243



946Total current assets


41,187



53,034PROPERTY, PLANT AND EQUIPMENT, net


391,890



400,851INVESTMENTS


12,625



12,625INTANGIBLE AND OTHER ASSETS, net


48,267



50,030Total assets

$
493,969


$
516,540LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Current portion of notes payable

$
17,096


$
17,096Accounts payable


15,580



18,103Accrued liabilities


7,392



10,583Unearned revenue


7,560



6,636Total current liabilities


47,628



52,418NONCURRENT LIABILITIES:Notes payable


31,331



31,331Unamortized investment tax credits


164



182Senior discount notes, net of discount


349,603



339,486Total non-current liabilities


381,098



370,999Total liabilities


428,726



423,417WARRANTS


4,726



4,726STOCKHOLDERS (EQUITY):Convertible preferred stock


1,094



1,094Common stock


5



5Additional paid-in capital


394,743



394,741Accumulated equity


(335,325
)


(307,443
)Total stockholder equity


60,517



88,397Total liabilities and stockholders equity

$
493,969


$
516,540


The accompanying notes are an integral part of these condensed consolidated balance sheets.




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KNOLOGY, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)


(DOLLARS
IN THOUSANDS, EXCEPT PER SHARE DATA)





Three Months Ended March 31,2002


2001OPERATING REVENUES

$
32,034


$
23,506OPERATING EXPENSES:Costs and expenses, excluding depreciation and amortization


28,498



25,249Depreciation and amortization


18,601



18,613TOTAL OPERATING EXPENSES


47,099



43,862OPERATING LOSS


(15,065
)


(20,356
)OTHER INCOME (EXPENSE):Interest income


129



1,119Interest expense


(10,815
)


(10,348
)Other expense, net


(828
)


(390
)TOTAL OTHER INCOME AND EXPENSES


(11,514
)


(9,619
)LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE


(26,579
)


(29,975
)INCOME TAX PROVISION


(9
)


LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE


(26,588
)


(29,975
)CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE


(1,294
)


NET LOSS (Note 3)

$
(27,882
)

$
(29,975
)NON-CASH DISTRIBUTION TO PREFERRED STOCKHOLDERS





$
36,579NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$
(27,882
)

$
(66,554
)BASIC AND DILUTED NET LOSS PER SHARE BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

$
(0.22
)

$
(0.59
)CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

$
(0.01
)

$
BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

$
(0.23
)

$
(0.59
)BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING


122,091,986



112,143,251





The accompanying notes are an integral part of these condensed consolidated financial
sttements.




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KNOLOGY, INC. AND SUBSIDIARIES





(UNAUDITED)


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(DOLLARS IN THOUSANDS)


Three Months Ended March 31,2002


2001CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(27,882
)

$
(29,975
)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization


18,601



18,631Write down of inventory to market


852



Amortization of bond discount


10,117



10,700Loss on disposition of assets


(12
)


Cumulative effect of change in accounting principleGoodwill impairment


1,294



Changes in operating assets and liabilities:Accounts receivable


(847
)


(844
)Accounts receivableaffiliate


528



48Prepaid expenses and other


(297
)


(40
)Accounts payable


(2,523
)


(13,836
)Accrued liabilities


(3,191
)


(4,852
)Unearned revenue


924



645Total adjustments


25,446



10,452Net cash used in operating activities


(2,436
)


(19,523
)CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures, net of retirements


(10,060
)


(25,996
)Investments






(541
)Franchise cost expenditures, net


(56
)


(643
)Proceeds from sale of assets


87



Net cash used in investing activities


(10,029
)


(27,180
)CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on debt






(4
)Proceeds from private placement






97,907Proceeds from exercised stock options


2



Net cash provided by financing activities


2



97,903NET (DECREASE) INCREASE IN CASH


(12,463
)


51,200CASH AT BEGINNING OF PERIOD


38,074



20,628CASH AT END OF PERIOD

$
25,611


$
71,828SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for interest

$
331


$
405Cash received during the period for income taxes

$
456


$
Stock issued for purchase of land

$



$
211





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




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KNOLOGY, INC. AND SUBSIDIARIES





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





MARCH 31, 2002


(UNAUDITED)





(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)





1.    ORGANIZATION AND NATURE OF BUSINESS





Knology Inc. (including its
predecessors, the Company) offers residential and business customers broadband communications services, including analog and digital cable television, local and long distance telephone, high-speed Internet access service, and broadband
carrier services, using advanced interactive broadband networks. We own, operate and manage interactive broadband networks in seven metropolitan areas: Montgomery and Huntsville, Alabama; Columbus and Augusta, Georgia; Panama City, Florida;
Charleston, South Carolina; and Knoxville, Tennessee. We also provide local telephone services in West Point, Georgia, and Lanett and Valley, Alabama. Our local telephone service in this area is provided over a traditional copper wire network while
our cable and Internet services are provided over our broadband network. Subject to the availability of additional funding, we plan to expand to additional mid-to-large-sized cities in the southeastern United States.





2.    BASIS OF PRESENTATION





The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial
information and with the instructions to Form 10-Q 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 considered necessary for the fair presentation of the financial statements have been included, and the financial statements present fairly the financial position and results of operations for the interim
periods presented. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with managements discussion and analysis of financial condition and results of operations contained in the Companys Annual Report on Form 10-K for the year ended December 31,
2001.





Certain amounts included in the 2001 financial statements have been reclassified to conform to the 2002
financial statements.





3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





NET LOSS PER SHARE





The Company follows SFAS No. 128,
Earnings Per Share. This statement requires the disclosure of basic net income (loss) per share and diluted net income (loss) per share. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average
number of common shares outstanding during the period. Diluted net loss per share gives effect to all potentially dilutive securities. As the Company has no significant common stock outstanding, the convertible preferred stock is assumed to be
converted for purposes of this calculation. The Companys other potentially dilutive securities, including stock options and stock warrants, are not included in the computation of diluted net loss per share as their effect is antidilutive.





NEW ACCOUNTING PRONOUNCEMENTS





The Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, in June 2001. SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the purchase method. The Company had no business combinations initiated after June 30, 2001. SFAS No. 142 provides that goodwill is no longer subject to amortization over its
estimated useful life. It requires that goodwill be assessed for impairment on at least an annual basis by applying a fair value-based test.





The Company adopted SFAS No. 142 on January 1, 2002. The Company has performed a goodwill impairment test in accordance with SFAS No. 142. Based on the results of the goodwill impairment test, the Company recorded an
impairment loss




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of $1,294 in the first quarter of 2002 as a cumulative effect of change in accounting principle. A goodwill impairment test will be performed at least annually
on January 1.





Effective January 1, 2002, the Company no longer records amortization of goodwill. During the first quarter of
2001 the Company recorded approximately $1,198 in amortization of goodwill.





4.    EQUITY TRANSACTIONS





On January 12, 2001, we completed a private placement of 31,166,667 shares of our Series C preferred stock to a small group of institutional
investors for approximately $93.5 million. On March 30, 2001, we completed another private placement of 1,885,996 shares of Series C preferred stock to a small group of accredited investors for approximately $5.7 million. On April 13, 2001 the
Company issued to a small group of accredited investors, in a private placement, 2,621,930 shares of its Series C preferred stock, at a purchase price of $3.00 per share, for aggregate proceeds of approximately $7.9 million. On June 29, 2001 the
Company issued to a small group of accredited investors, in a private placement, 1,544,970 shares of its Series C preferred stock, at a purchase price of $3.00 per share, for aggregate proceeds of approximately $4.6 million. The shares of Series C
preferred stock are convertible into shares of our common stock at any time at the option of the holder and automatically upon the completion of a Qualified Public Offering (as defined in our amended and restated certificate of incorporation). The
shares are currently convertible into shares of common stock on a one-to-one basis, subject to customary anti-dilution adjustments.





In connection with the January 12, 2001 private placement of Series C preferred stock, the Company amended its amended and restated certificate of incorporation to adjust the ratios at which the Series A preferred stock and Series B
preferred stock convert into common stock. With respect to the amendment of the conversion ratios of the Series A preferred stock and Series B preferred stock, the Company recognized a non-cash dividend in January 2001.





5.    SEGMENT INFORMATION





The Company follows SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which established revised standards for the reporting of financial and descriptive information about operating segments in
financial statements.





The Company owns and operates advanced interactive broadband networks and provides residential and
business customers broadband communications services, including analog and digital cable television, local and long distance telephone, and high-speed Internet access, which the Company refers to as video, voice, and data services. We also provide
other services including broadband carrier services, which includes local transport services such as local Internet transport, special access, local private line, and local loop services.





While management of the Company monitors the revenue generated from each of the various broadband services, operations are managed and financial performance is evaluated based upon the
delivery of multiple services to customers over a single network. As a result of multiple services being provided over a single network, many expenses and assets are shared related to providing the various broadband services to customers. Management
believes that any allocation of the shared expenses or assets to the broadband services would be subjective and impractical.





Revenues by broadband communications service are as follows:





THREE MONTHS ENDED MARCH 31,2002

2001Video

$
14,150

$
11,237Voice


13,330


9,989Data and other


4,554


2,280Consolidated revenues

$
32,034

$
23,506





ITEM 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations





THE
MANAGEMENTS DISCUSSION AND ANALYSIS AND OTHER PORTIONS OF THIS ANNUAL REPORT INCLUDE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS, INCLUDING THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THAT
ARE SUBJECT TO FUTURE EVENTS, RISKS




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AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED. IMPORTANT FACTORS THAT EITHER INDIVIDUALLY OR IN THE
AGGREGATE COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED INCLUDE, WITHOUT LIMITATION, (1) THAT WE WILL NOT RETAIN OR GROW OUR CUSTOMER BASE, (2) THAT WE WILL FAIL TO BE COMPETITIVE WITH EXISTING AND NEW COMPETITORS, (3) THAT WE
WILL NOT ADEQUATELY RESPOND TO TECHNOLOGICAL DEVELOPMENTS IMPACTING OUR INDUSTRY AND MARKETS, (4) THAT NEEDED FINANCING WILL NOT BE AVAILABLE, (5) THAT A SIGNIFICANT CHANGE IN THE GROWTH RATE OF THE OVERALL U.S. ECONOMY WILL OCCUR SUCH THAT CONSUMER
AND CORPORATE SPENDING ARE MATERIALLY IMPACTED, AND (6) THAT SOME OTHER UNFORESEEN DIFFICULTIES OCCUR, AS WELL AS THOSE RISK SET FORTH IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001, WHICH ARE INCORPORATED HEREIN BY
REFERENCE. THIS LIST IS INTENDED TO IDENTIFY ONLY CERTAIN OF THE PRINCIPAL FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN.





The following is a discussion of our consolidated financial condition and results of operations for the three months ended March 31, 2002 and
certain factors that are expected to affect our prospective financial condition. The following discussion and analysis should be read in conjunction with the financial statements and related notes and other financial data elsewhere in this Form
10-Q.





GENERAL





Knology,
Inc. was formed in September 1998 to enable ITC Holding to complete a reorganization of some of its subsidiaries. One of those ITC Holding subsidiaries was Knology Broadband, Inc., which operated most of the broadband network subsidiaries we
currently operate. In November 1999, in order to effectuate the reorganization:





| | · |  | ITC Holding contributed to Knology:
| | - |  | -----------------------------------




| | - |  | its 85% interest in Knology Broadband;
| | - |  | --------------------------------------




| | - |  | all of the outstanding capital stock of Interstate Telephone, Valley Telephone, Globe Telecommunications and ITC Globe, referred to as our telephone operations
group;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | a note in the principal amount of $9.6 million; and
| | - |  | ---------------------------------------------------




| | - |  | its 6% interest in ClearSource, Inc., subscription rights to purchase ClearSource shares and $5.7 million in cash to purchase the additional ClearSource shares; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | · |  | The holders of the remaining 15% interest in Knology Broadband exchanged that interest for shares of Knology, and the holders of outstanding warrants to purchase Knology
Broadband preferred stock exchanged those warrants for warrants to purchase the Series A preferred stock of Knology.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




As a result of the reorganization, ITC Holding held a 90% interest in us, which it distributed to its stockholders in February 2000.





Significant Accounting Policies





Our significant accounting policies are more fully described in Note 2 to the
consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2001. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.





The Companys revenues are recognized when services are provided, regardless of the period in which
they are billed. Fees billed in advance are recorded in the consolidated balance sheets as unearned revenue and are deferred until the month the service is provided.





The Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets in
June 2001. SFAS No. 141 requires all business combinations initiated after June




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30, 2001 to be accounted for using the purchase method. The Company had no business combinations initiated after June 30, 2001. SFAS No. 142 provides that
goodwill is no longer subject to amortization over its estimated useful life. It requires that goodwill be assessed for impairment on at least an annual basis by applying a fair-value-based test.





The Company adopted SFAS No. 142 on January 1, 2002. The Company has performed a goodwill impairment test in accordance with SFAS No. 142. Based on the results of the goodwill
impairment test the Company recorded an impairment loss of $1.3 million in the first quarter of 2002 as a cumulative effect of change in accounting principle.





In June 2001, the FASB issued SFAS No. 143 Accounting for Asset Retirement Obligations. SFAS No. 143, addresses accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. This statement is effective for fiscal years beginning after June 15, 2002. The Company is currently assessing the impact of this new standard.





In July 2001, the FASB issued SFAS No. 144, Impairment or Disposal of Long-Lived Assets, which is effective for fiscal years beginning after
December 15, 2001. The provisions of this statement provide a single accounting model for impairment of long-lived assets. There was no impact to the Company upon adoption of this new standard.





Revenues and Expenses





We can group our revenues into the following
categories:





| | - |  | Video revenues. Our video revenues consist of fixed monthly fees for expanded basic, premium and digital cable television services, as well as fees from pay-per-view movies and
events such as boxing matches and concerts, that involve a charge for each viewing. Video revenues accounted for approximately 47.8% and 44.2% of our consolidated revenues for the three months ended March 31, 2001 and 2002, respectively.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | Voice revenues. Our voice revenues consist primarily of fixed monthly fees for local service, enhanced services, such as call waiting and voice mail, and usage fees for
long-distance service. Voice revenues accounted for approximately 42.5% and 41.6% of our consolidated revenues for the three months ended March 31, 2001 and 2002, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | Data revenues and other revenues. Our data revenues consist primarily of fixed monthly fees for Internet access service and rental of cable modems. Other revenues result
principally from broadband carrier services and video production services. These combined revenues accounted for approximately 9.7% and 14.2% of our consolidated revenues for the year ended March 31, 2001 and 2002, respectively.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




As we continue to sell bundled services, we expect that our voice and data and other revenues will continue to increase at
a higher rate compared to video revenues. Accordingly, we expect that our voice and data and other revenues will represent a higher percentage of consolidated revenues in the future.





Our operating expenses include cost of services, selling, operations and administrative and depreciation and amortization.





Cost of services include:





| | - |  | Video cost of services. Video cost of services consist primarily of monthly fees to the National Cable Television Cooperative and other programming providers and are generally
based on the average number of subscribers to each program. Programming costs as a percentage of video revenue were approximately 47.3% and 47.7% for the three months ended March 31, 2001 and 2002, respectively. Programming costs are our largest
single cost and we expect this to continue. Since programming cost is partially based on numbers of subscribers, it will increase as we add more subscribers. Additionally, programming cost will increase as costs per channel increase over time.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | Voice cost of services. Voice cost of services consist primarily of transport cost and network access fees. The voice cost of services as a percentage of voice revenues were
approximately 18.9% and 18.4% for the three months ended March 31, 2001 and 2002, respectively.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | Data and other cost of services. Data and other cost of services consist primarily of transport cost and network access fees. The data and other cost of services as a
percentage of data and other revenue were 9.6% and 7.2% for the three months ended March 31, 2001 and 2002, respectively.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Based on the anticipated changes in our revenue mix, we expect that our consolidated cost of services as a percentage of




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our consolidated revenues will decrease.





Selling, operations and administrative expenses include:





| | - |  | Sales and marketing expenses. Sales and marketing expenses include the cost of sales and marketing personnel and advertising and promotional expenses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | Network operations and maintenance expenses. Network operations and maintenance expenses include payroll and departmental costs incurred for network design and maintenance
monitoring.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | Customer service expenses. Customer service expenses include payroll and departmental costs incurred for customer service representatives and management.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------




| | - |  | General and administrative expenses. General and administrative expenses consist of corporate and subsidiary management and administrative costs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------




Depreciation and amortization expenses include depreciation of our interactive broadband networks and equipment and
amortization of cost in excess of net assets and other intangible assets related to acquisitions.





As our sales and marketing
efforts continue and our networks expand, we expect to add customer connections resulting in increased revenue. We also expect our operating expenses, including depreciation and amortization, to increase as we expand our networks and business.





We have experienced operating losses as a result of the expansion of our advanced broadband communications networks and
services into new and existing markets. We expect to continue to focus on increasing our customer base and expanding our broadband operations. Accordingly, we expect that our operating expenses and capital expenditures will continue to increase as
we extend our interactive broadband networks in existing and new markets in accordance with our business plan.




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Results of Operations





The following table sets forth financial data as a percentage of operating revenues for the three months ended March 31, 2001 and 2002.





Three Months Ended March 31,2001


2002Operating revenues:Video

48
%

44
%Voice

42


42Data

10


14Total

100


100Operating expenses:Cost of services

32


30Selling, operating and administrative

76


59Depreciation and amortization

79


58Total

187


147Operating loss

(87
)

(47
)Other expense, net

(41
)

(36
)Net loss before cumulative effect of change in accounting principle

(128
)

(83
)Cumulative effect of change in accounting principle

0


(4
)Non-cash distribution to preferred stockholders

(155
)

0Net loss

(283
)%

(87
)%








Connections





The following table sets forth certain operating data as of March 31, 2001 and 2002. The information provided in the table reflects revenue-generating connections. Because we deliver
multiple services to our customers, we report the total number of our various revenue generating service connections for video, voice and data rather than the total number of customers. For example, a single customer who purchases cable television,
local telephone and Internet access services would count as three connections.





AS OF MARCH 31,2001

2002Connections: (1)Video

105,859

122,823Voice:On-net

61,034

89,747Off-net

6,936

6,254Data

18,885

37,829Total Connections

192,714

256,653Marketable Homes Passed (2)

388,710

425,197


---

(1) All of our video and data connections are provided over our
networks. Our voice connections consist of both On-net and Off-net connections. On-net refers to lines provided over our broadband networks. It includes 23,271, and 23,733 lines as of March 31, 2001 and 2002, respectively,
provided using traditional copper telephone lines. Off-net refers to telephone connections




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provided over telephone lines leased from third parties.





(2) Marketable homes passed are the number of business and residential units, such as single residence homes, apartments and condominium units, passed by our broadband networks other
than those we believe are covered by exclusive arrangements with other providers of competing services.





Three Months Ended March 31, 2002 Compared to
Three Months Ended March 31, 2001





Revenues. Operating revenues increased 36.3% from $23.5 million for the three months
ended March 31, 2001, to $32.0 million for the three months ended March 31, 2002. Operating revenues from video services increased 25.9% from $11.2 million for the three months ended March 31, 2001 to $14.2 million for the same period in 2002.
Operating revenues from voice services increased 33.4% from $10.0 million for the three months ended March 31, 2001 to $13.3 million for the same period in 2002. Operating revenue from data and other services increased 99.7% from $2.3 million for
the three months ended March 31, 2001 to $4.6 million for the same period in 2002, $4.3 million of which were revenues from data services in 2002. The increased revenues from video, voice and data and other services are due primarily to an increase
in the number of connections, from 192,714 as of March 31, 2001 to 256,653 as of March 31, 2002. The additional connections resulted primarily from:





| | - |  | the extension of our broadband networks in the Augusta, Charleston and Knoxville markets;
| | - |  | -----------------------------------------------------------------------------------------




| | - |  | the upgrade of existing networks to broadband capacity in Huntsville and Panama City; and
| | - |  | -----------------------------------------------------------------------------------------




| | - |  | internal growth in connections generated by our sales and marketing efforts.
| | - |  | ----------------------------------------------------------------------------




Expenses. Our operating expenses, excluding depreciation and amortization, increased 12.9% from $25.2 million for the three months ended March 31, 2001 to $28.5 for the three months
ended March 31, 2002. The cost of services component of operating expenses increased 28.3% from $7.4 million for the three months ended March 31, 2001 to $9.5 million for the three months ended March 31, 2002. Our selling, operating and
administrative expenses increased 6.4% from $17.8 million for the three months ended March 31, 2001 to $19.0 million for the three months ended March 31, 2002. The increase in our cost of services and other operating expenses is consistent with
the growth in revenues and is a result of the expansion of our operations and the increase in the number of employees associated with such expansion and growth into new markets. We expect our cost of services to continue to increase as we add more
connections. Our selling, operations and administration expenses will increase as we expand into additional markets. Programming costs, which are our largest single expense item, have been increasing over the last several years on an aggregate basis
due to an increase in subscribers and on a per subscriber basis due to increase in costs per channel. We expect this trend to continue. We may not be able to pass these higher costs on to customers because of competitive forces, which would
adversely affect our cash flow and operating margins.





Our depreciation and amortization was $18.6 million for the three months
ended March 31, 2001 and $18.6 million for the three months ended March 31, 2002. We expect our depreciation and amortization expense to increase as we make capital expenditures to extend our existing networks and build additional networks. The
Company has ceased amortization of goodwill in accordance with the adoption of SFAS No. 142.





Other Income and Expense,
including interest income and interest expense. Our total other expense increased from $9.6 million for the three months ended March 31, 2001 to $11.5 million for the three months ended March 31, 2002. Interest income was $1.1 million for the three
months ended March 31, 2001, compared to $129,000 for the same period in 2002. The decrease in interest income primarily reflects the lower average cash balances for the three months ended March 31, 2002 compared to the three months ended March 31,
2001. We capitalized interest related to the construction of our broadband networks of $777,000 for the three months ended March 31, 2001. Interest expense increased from $10.3 million for the three months ended March 31, 2001, to $10.8 million for
the three months ended March 31, 2002. The increase in interest expense is due to the accretion of the book value of the 11 7/8% senior discount notes issued in October 1997 by Knology Broadband. Other expenses, net increased from $390,000 for the
three months ended March 31, 2001 to $828,000 for the three months ended March 31, 2002 primarily due to an $852,000 write down of inventory to market value.





Income Tax Provision. We recorded no tax provision for the three months ended March 31, 2001, compared to an income tax provision of $9,000 for the same period in 2002, representing a state tax provision related to
our telephone operations group subsidiaries. Following the spin-off of Knology by ITC Holding, we no longer participate in a tax sharing agreement. Therefore, we no longer receive any payments from ITC Holding related to income tax benefits. As a
stand-alone entity after the spin-off, we now record a full valuation allowance against any income tax benefit until management determines that it will be more likely than not that a tax benefit will be realized, at which time a tax benefit will be
recorded.




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Loss Before Cumulative Effect of Change in Accounting Principle. We incurred a loss before
cumulative effect of change in accounting principle of $30.0 million for the three months ended March 31, 2001, compared to a loss before cumulative effect of change in accounting principle of $26.6 million for the three months ended March 31, 2002.





Cumulative Effect of Change in Accounting Principle. We adopted SFAS No. 142 on January 1, 2002. We have performed a goodwill
impairment test in accordance with SFAS 142. Based on the results of the goodwill impairment test we recorded an impairment loss of $1.3 million for the quarter ended March 31, 2002.





Net Loss Attributable to Common Stockholders. We incurred a net loss of $30.0 million for the three months ended March 31, 2001, compared to a net loss of $27.9 million for the three
months ended March 31, 2002. We expect to have net losses as our business matures.





Liquidity and Capital Resources





As of March 31, 2002, we had net working capital deficit of $6.4 million, compared to a net working capital deficit of $617,000 as of December 31, 2001.
The increase in the deficit from December 31, 2001 to March 31, 2002 is due to a decrease in cash partially offset by an increase in accounts receivable and a decrease in accounts payable and accrued liabilities.





Net cash used by operations totaled $19.5 million and $2.4 million for the three months ended March 31, 2001 and 2002, respectively. The net cash flow
activity related to operations consists primarily of changes in operating assets and liabilities and adjustments to net income for non-cash transactions including:





| | - |  | depreciation and amortization;
| | - |  | ------------------------------




| | - |  | cumulative effect of change in accounting principle;
| | - |  | ----------------------------------------------------




| | - |  | loss on disposition of assets; and
| | - |  | ----------------------------------




| | - |  | write down of inventory.
| | - |  | ------------------------




Net cash
used for investing activities was $27.2 million and $10.0 million for the three months ended March 2001 and 2002, respectively. Our investing activities for the three months ended March 31, 2001 consisted of $26.0 million of capital expenditures and
$1.2 million of investment and franchise expenditures. Investing activities in 2002 consisted of $10.1 million of capital expenditures and $55,000 of franchise expenditures partially offset by $87,000 in proceeds from the sale of assets.





Net cash provided by financing activities was $97.9 million and $2,000 for the three months ended March 31, 2001 and 2002,
respectively. Financing activities in 2001 consisted of $97.9 million from an equity private placement of our Series C preferred stock.





Funding to
Date





We have raised equity capital and borrowed money to finance a significant portion of our operating, investing and
financing activities in the development of our business. On October 22, 1997, Knology Broadband received net proceeds of $242.4 million from the offering of units consisting of senior discount notes due 2007 and warrants to purchase preferred stock.
The notes were sold at a substantial discount from their principal amount at maturity, and there will not be any payment of cash interest on the notes prior to April 15, 2003. The notes will fully accrete to face value of $379.9 million on October
15, 2002. From and after October 15, 2002, the notes will bear interest, which will be payable in cash, at a rate of 11 7/8% per annum on April 15 and October 15 of each year, commencing April 15, 2003. The indenture contains covenants that affect,
and in certain cases restrict, the ability of Knology Broadband to:





| | - |  | incur indebtedness;
| | - |  | -------------------




| | - |  | pay dividends;
| | - |  | --------------




| | - |  | prepay subordinated indebtedness;
| | - |  | ---------------------------------




| | - |  | redeem capital stock;
| | - |  | ---------------------



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| | - |  | make investments;
| | - |  | -----------------




| | - |  | engage in transactions with stockholders and affiliates;
| | - |  | --------------------------------------------------------




| | - |  | create liens;
| | - |  | -------------




| | - |  | sell assets; and
| | - |  | ----------------




| | - |  | engage in mergers and consolidations.
| | - |  | -------------------------------------




If Knology Broadband fails to comply with these covenants, Knology Broadbands obligation to repay the notes may be accelerated. However, these limitations are subject to a number of important qualifications and exceptions. In
particular, while the indenture restricts Knology Broadbands ability to incur additional indebtedness by requiring compliance with specified leverage ratios, it permits Knology Broadband and its subsidiaries to incur an unlimited amount of
indebtedness to finance the acquisition of equipment, inventory and network assets and to secure such indebtedness, and to incur up to $50.0 million of additional secured indebtedness. Upon a change of control of Knology Broadband, as defined in the
indenture, Knology Broadband would be required to make an offer to purchase the notes at a purchase price equal to 101% of their accreted value, plus accrued interest.





In November 1999, we completed an exchange in which we received the Knology Broadband warrants, issued in connection with the senior discount notes in 1997, in exchange for warrants to
purchase shares of our Series A preferred stock.





In September 2001, we repurchased senior discount notes with a face amount of
$58.5 million and a carrying amount of $50.5 million as of the repurchase date for approximately $20.3 million in cash. The transaction resulted in an extraordinary gain of $29.4 million, consisting of a gain of $30.2 million due to the discount,
offset by the write-off of $0.8 million in issue costs associated with the original issuance of the notes in October 1997. In October 2001, the Company repurchased senior discount notes with a face amount of $5.7 million for approximately $2.5
million in cash.





The Company used funds borrowed by our telephone operations group under the CoBank, ACB master loan agreement
discussed below to purchase the senior discount notes. The Company currently intends to hold the repurchased notes rather than contributing them to Knology Broadband for retirement. The Company will continue to monitor the pricing of outstanding
notes on the open market and may repurchase additional notes when terms are deemed favorable by management.





On December 22,
1998, Knology Broadband entered into a $50 million four-year senior secured credit facility with First Union National Bank (now Wachovia Bank, National Association) and First Union Securities, Inc. On November 7, 2001, Knology Broadband, First Union
National Bank and First Union Securities, Inc. agreed to amend the credit facility. The credit facility, as amended, allows Knology Broadband to borrow up to the greater of (i) $15.5 million or (ii) three times the annualized consolidated cash flow
of Knology Broadband. The credit facility may be used for working capital and other purposes, including capital expenditures and permitted acquisitions. At Knology Broadbands option, interest will accrue based on either the prime or federal
funds rate plus applicable margin or the LIBOR rate plus applicable margin. The applicable margin may vary from 4.0% for Base Rate Loans to 5.0% for LIBOR Rate Loans. The credit facility contains a number of covenants that restrict the ability of
Knology Broadband and its subsidiaries to take certain actions, including the ability to:





| | - |  | incur indebtedness;
| | - |  | -------------------




| | - |  | create liens;
| | - |  | -------------




| | - |  | pay dividends;
| | - |  | --------------




| | - |  | make distributions or stock repurchases;
| | - |  | ----------------------------------------




| | - |  | make investments;
| | - |  | -----------------




| | - |  | engage in transactions with affiliates;
| | - |  | ---------------------------------------




| | - |  | sell assets; and
| | - |  | ----------------




| | - |  | engage in mergers and acquisitions
| | - |  | ----------------------------------







The credit facility also includes covenants requiring compliance with certain operating and financial ratios on a




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consolidated basis, including the number of customer connections and average revenue per subscriber. Knology Broadband
is currently in compliance with these covenants, as amended, but there can be no assurances that Knology Broadband will remain in compliance. Should Knology Broadband not be in compliance with the covenants, Knology Broadband would be in default and
would require a waiver from the lender. In the event the lender would not provide a waiver, amounts outstanding under the facility could be payable to the lender on demand. A change of control of Knology Broadband, as defined in the credit facility
agreement, would constitute a default under the covenants. In connection with the amendment of the credit facility, Knology Broadband paid First Union National Bank $250,000.





The maximum amount available under the amended credit facility as of March 31, 2002 was approximately $15.5 million. As of March 31, 2002, $15.5 million had been drawn against the credit
facility.





In January 2002, Knology Broadband also entered into a secured intercompany credit facility with Knology, Inc. The
secured intercompany credit facility is intended to provide a mechanism for any funding Knology chooses to advance to Knology Broadband; however, the facility does not represent a present commitment from Knology to fund any future cash needs of
Knology Broadband. The intercompany credit facility is secured by substantially all of the assets of Knology Broadband and is subordinate to the First Union credit facility. As of March 31, 2002, $4.0 million had been drawn against the credit
facility.





We obtained an aggregate of approximately $39.4 million in loans from ITC Holding and its subsidiary InterCall during
November 1999 and January 2000. Approximately $9.6 million was advanced to us in November 1999. This loan was converted into 2,029,724 shares of Series A preferred stock in November 1999. Another $29.7 million loan was made in January 2000. The loan
bore interest at an annual rate of 11 7/8% and had a maturity date of March 31, 2000. In February 2000, the loan was converted into options to purchase up to 6,258,036 shares of our Series A preferred stock, and we issued to ITC Holding a note under
which we will pay ITC Holding any proceeds from option exercises received by us, including an amount equal to the exercise price for cashless exercises. The options were distributed to ITC Holdings option holders on February 4, 2000.





In connection with our spin-off from ITC Holding in February 2000, we entered into an agreement with ITC Holding in which we
made certain covenants that restricted our ability to issue additional shares of capital stock under certain circumstances. In connection with our private placement of 31,166,667 shares of our Series C preferred stock on January 12, 2001, ITC
Holding agreed to release us from these covenants pursuant to the agreement. Accordingly, we are no longer restrained by the ITC Holding agreement with respect to the issuance of additional shares of capital stock.





In February 2000, we issued to accredited investors in a private placement 21,180,131 shares of our Series B preferred stock at a purchase price of
$4.75 per share, for aggregate proceeds of $100.6 million.





In 2001, we issued to certain of our existing investors and a select
group of new accredited investors in a series of private placements 37,219,563 shares of our Series C preferred stock at a purchase price of $3.00 per share, for aggregate proceeds of $111.7 million. In connection with these private placements, we
amended our amended and restated certificate of incorporation to adjust the ratios at which our Series A preferred stock and Series B preferred stock convert into common stock. Prior to these private placements of Series C preferred stock, both the
shares of Series A preferred stock and shares of Series B preferred stock converted into shares of common stock on a one-to-one basis. As amended, the conversion ratio for each share of Series A preferred stock was adjusted to one-to-1.0371 and the
conversion ratio for each share of Series B preferred stock was adjusted to one-to-1.4865, subject to customary anti-dilution adjustments. With respect to the amendment of the conversion prices of the Series A preferred stock and Series B preferred
stock, we recognized a non-cash dividend in the approximate amount of $36.6 million in the first quarter of 2001.





On June 29,
2001, Knology through its wholly owned subsidiaries, Globe Telecommunications, Interstate Telephone and Valley Telephone entered into a $40 million secured master loan agreement with CoBank, ACB. This master loan agreement allows the borrowers to
make one or more advances in an amount not to exceed $40 million. The loan proceeds may be used to purchase the senior discount notes issued by Knology Broadband and to finance capital expenditures, working capital and for general corporate
purposes of the borrowers. Interest is payable quarterly and will accrue, at the Companys option, based on either a variable rate established by CoBank, a fixed quoted rate established by CoBank or a LIBOR rate plus applicable margin. The
applicable margin may vary from 1.50% to 3.00% based on the leverage ratio of the Borrowers. The master loan agreement contains a number of covenants that restrict the ability of the borrowers to take certain actions, including the ability to:





| | - |  | incur indebtedness;
| | - |  | -------------------




| | - |  | create liens;
| | - |  | -------------




| | - |  | merge or consolidate with any other entity;
| | - |  | -------------------------------------------



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- make distributions or stock repurchases;





- make investments;





- engage
in transactions with affiliates; and





- sell or transfer assets.





The master loan agreement also includes covenants requiring compliance with certain operating and financial ratios of the borrowers on a consolidated basis, including a total leverage
ratio and a debt service coverage ratio. The borrowers are currently in compliance with these covenants, but there can be no assurances that they will remain in compliance. Should the borrowers not be in compliance with the covenants, they would be
in default and would require a waiver from CoBank. In the event CoBank would not provide a waiver, amounts outstanding under the master loan agreement could be payable on demand.





As of March 31, 2002, we have $32.5 million outstanding under the master loan agreement.





Future Funding





Our business requires substantial investment to finance capital expenditures and related
expenses, incurred in connection with the expansion and upgrade of our interactive broadband networks, funding subscriber equipment, maintaining the quality of our networks, and to finance the repayment, extinguishment or repurchase of our debt.





We have completed the construction of our networks in Montgomery, Alabama; Columbus, Georgia and Panama City, Florida. In 2002,
we expect to spend approximately $50.5 million for capital expenditures, of which $13.0 million relates to network construction and the remainder relates to the purchase of customer premise equipment, such as cable set-top boxes and cable modems;
network equipment, including switching and transport equipment; and billing and information systems. We will need to obtain additional financing to complete our 2002 planned capital expenditures.





Funding to complete the construction of our networks throughout our markets and for our working capital needs, current and future operating losses, and debt service requirements
will require continuing capital investment. The Company has historically relied on debt and equity financing to meet its funding requirements and plans to continue to rely on debt and equity financing to fund its capital needs, however, there can be
no assurance that sufficient debt or equity funding will continue to be available in the future or that it will be available on terms acceptable to the Company. If we are not successful in raising additional capital, we may not be able to complete
the construction of our networks throughout our markets. This may cause us to violate our franchise agreements, which could adversely affect us, or may limit our growth within these markets. Failure to obtain additional funding would also limit our
ability continue in business or to expand our business. As a result of the aforementioned factors and related uncertainties, there is substantial doubt about the Companys ability to continue as a going concern.





We are considering alternatives to improve our capital structure and strengthen our liquidity position. We have been engaged in discussions regarding a
potential restructuring with an ad hoc committee of the holders of a significant amount of Knology Broadband senior discount notes and with the financial advisor for the committee. Although we are actively pursuing discussions with the committee, no
restructuring agreement has been reached and there can be no assurance that a restructuring agreement will be reached in the future. Management is currently in discussions with ITC Telecom Ventures, Inc., a current investor and subsidiary of ITC
Holding, to negotiate a commitment whereby ITC Telecom Ventures will commit to purchase, at a price, and on terms and conditions, to be negotiated and agreed to by the parties, up to $19.5 million of debt or equity securities of the Company during
the year ended December 31, 2002. The ITC Telecom Ventures commitment will be contingent upon the successful restructuring of our capital structure, including Knology Broadbands senior discount notes. Although there can be no assurance we will
be able to do so, if we are successful in our efforts to restructure our capital structure and are able to enter into the $19.5 million commitment with ITC Telecom Ventures, the financing obtained through the commitment should allow us to meet our
obligations and operate as a going concern through 2002.





We have received franchises to build networks in Nashville, Tennessee
and Louisville, Kentucky, although our franchise in Louisville is currently being contested by the incumbent cable provider. We have spent approximately $6.6 million to obtain franchise agreements and perform preliminary construction activity in
Nashville and Louisville. Due to the uncertainties in the current financial markets, planned expansion into Nashville and Louisville has been delayed. Subject to the availability of additional funding, we also plan to expand to additional cities in
the southeastern United States. We estimate the cost of constructing networks and funding initial subscriber equipment in these new cities as well as others at approximately $750 to $1,000 per home. The actual costs of each new market may vary
significantly from this range and will depend on the number of miles of network to be constructed, the geographic and




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demographic characteristics of the city, costs associated with the cable franchise in each city, the number of subscribers in each city, the mix of services
purchased, the cost of subscriber equipment we pay for or finance and other factors. We will need additional financing to complete this expansion, for new business activities or in the event we decide to make acquisitions. The schedule for our
planned expansion will depend upon the availability of sufficient capital. Definitive decisions on which cities will be chosen for expansion are not expected to be made until this capital has been raised. If we are not successful in raising
additional capital, we will not be able to expand as planned.





ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk





We are
exposed to market risk from changes in interest rates. We manage our exposure to this market risk through our regular operating and financing activities. Derivative instruments are not currently used and, if used, are employed as risk management
tools and not for trading purposes.





We have no derivative financial instruments outstanding to hedge interest rate risk. Our
only borrowings subject to market conditions are our borrowings under our credit facilities which are based on either a prime or federal funds rate plus applicable margin or LIBOR plus applicable margin. Any changes in these rates would affect the
rate at which we could borrow funds under our bank credit facilities. A hypothetical 10% increase in interest rates on our variable rate bank debt for duration of one year would increase interest expense by an immaterial amount.




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PART II.    OTHER INFORMATION





ITEM 1.    Legal Proceedings





We are subject to litigation in the normal course of
our business. However, in our opinion, there is no legal proceeding pending against us which would have a material adverse effect on our financial position, results of operations or liquidity. We are also a party to regulatory proceedings affecting
the relevant segments of the communications industry generally.





ITEM 2.    Changes in Securities and Use of Proceeds





None





ITEM 3.    Default upon Senior Securities





None





ITEM 4.    Submission of Matters to a Vote of Security Holders





None.





ITEM 5.    Other Information





None




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ITEM 6.    Exhibits and Reports on Form 8-K





(A)    EXHIBITS





Exhibit No.

Exhibit Description3.1

Amended and Restated Certificate of Incorporation of Knology, Inc. (Incorporated herein by reference to Exhibit 3.1 to Knology Inc.s Current Report on Form 8-K filed
on January 26, 2001).3.1.1

Amendment to Amended and Restated Certificate of Incorporation of Knology, Inc. (Incorporated herein by reference to Exhibit 3.1.1 to Knology, Inc.s Quarterly Report
on Form 10-Q or the quarter ended June 30, 2001).3.1.2

Amendment to Amended and Restated Certificate of Incorporation of Knology, Inc. (Incorporated herein by reference to Exhibit 3.1.2 to Knology, Inc.s Annual Report on
Form 10-K or the quarter ended December 31, 2001).3.2

Bylaws of Knology, Inc. (Incorporated herein by reference to Exhibit 3.2 to Knology Inc. Registration Statement on Form S-1 (File No. 333-89179)).4.1

Indenture dated as of October 22, 1997 between Knology Holdings, Inc. and United States Trust Company of New York, as Trustee, relating to the 11 7/8% Senior Discount Notes
Due 2007 of Knology Holdings, Inc. (Incorporated herein by reference to Exhibit 4.1 to the Registration Statement of Knology Broadband, Inc. (formerly Knology Holdings, Inc.) on Form S-4 (File No. 333-43339)).4.2

Form of Senior Discount Note (contained in Exhibit 4.1).4.3

Form of Exchange Note (contained in Exhibit 4.1).10.1

Master Agreement for Internet Access Services dated January 2, 2002, by and between ITCDeltaCom, Inc. and Knology, Inc. (Incorporated herein by reference to Exhibit 10.21 to
Knology Inc.s Annual Report on Form 10-K/A for the year ended December 31, 2001).10.2

Subordinated Intercompany Credit Agreement Promissory Note, dated January 1, 2002 made by Knology Broadband, Inc. in favor of Knology, Inc. (Incorporated herein by reference
to Exhibit 10.56 to Knology Inc.s Annual Report on Form 10-K for the year ended December 31, 2001).10.2.1

Intercompany Loan Guarantee, dated as of January 1, 2002, executed by Knology of Columbus, Inc., Knology of Montgomery, Inc., Knology of Panama City, Inc., Knology of
Augusta, Inc., Knology of Charleston, Inc., Knology of South Carolina, Inc., Knology of Alabama, Inc., and Knology of Florida, Inc., Knology of Huntsville, Inc., and Knology Broadband, Inc., as Guarantors in favor of Knology, Inc. (Incorporated
herein by reference to Exhibit 10.56.1 to Knology Inc.s Annual Report on Form 10-K for the year ended December 31, 2001).10.2.2

Security Agreement, dated as of January 1, 2002, made by Knology Broadband, Inc., and certain undersigned Subsidiaries of Knology Broadband, Inc. in favor of Knology, Inc.
(Incorporated herein by reference to Exhibit 10.56.2 to Knology Inc.s Annual Report on Form 10-K for the year ended December 31, 2001).10.2.3

Pledge Agreement, dated as of January 1, 2002, made by Knology Broadband, Inc., in favor of Knology, Inc. (Incorporated herein by reference to Exhibit 10.56.3 to Knology
Inc.s Annual Report on Form 10-K for the year ended December 31, 2001).10.3

Credit Facility Agreement between First Union National Bank, First Union Capital Markets Corp. and Knology Holdings, Inc. dated December 22, 1998 (Incorporated herein by
reference to Exhibit 10.53 to Knology Broadband, Inc.s Annual Report on Form 10-K for the year ended December 31, 1998).







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10.3.1

Seventh Amendment to Credit Facility Agreement, dated as of January 7, 2002. (Incorporated herein by reference to Exhibit 10.32.7 to Knology Inc.s Annual Report on
Form 10-K for the year ended December 31, 2001)10.3.2

Eighth Amendment to Credit Facility Agreement, dated as of March 31, 2002.





(B)    REPORTS ON FORM 8-K





On March 11, 2002, the Company filed on Form 8-K, a press release announcing its 2001 fourth quarter and year-end results.




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SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





KNOLOGY, Inc.By:

/s/  Rodger L. Johnson Rodger L. Johnson President and Chief Executive Officer


May 15, 2002





KNOLOGY, Inc.By:

/s/  Robert K. Mills Robert K. Mills Chief Financial Officer (Principal Financial
Officer)


May 15, 2002




20