<PAGE>

                                 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 SEPTEMBER 30, 2001
                       COMMISSION FILE NUMBER: 333-89179

                                 KNOLOGY, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                      58-2424258
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

              KNOLOGY, INC.                                 31833
        1241 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 September 30, 2001, we had 632,446 shares of common stock, 50,983,790
shares of Series A preferred stock, 21,180,131 shares of Series B preferred
stock, and 37,219,563 shares of Series C preferred stock outstanding.
<PAGE>

                         KNOLOGY, INC. AND SUBSIDIARIES
                        QUARTER ENDED SEPTEMBER 30, 2001

                                     INDEX

<TABLE>
<CAPTION>

                                                                                                             PAGE
                                                                                                             ----
<S>                                                                                                          <C>
PART I   FINANCIAL INFORMATION

 ITEM 1  FINANCIAL STATEMENTS..............................................................................     2
         Condensed Consolidated Balance Sheets.............................................................     2
         Condensed Consolidated Statements of Operations...................................................     3
         Condensed Consolidated Statement of Cash Flows....................................................     4
         Notes to Condensed Consolidated Financial Statements..............................................     5
 ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS...............................................................     7
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.........................................    18

PART II  OTHER INFORMATION

 ITEM 1  LEGAL PROCEEDINGS.................................................................................    19
 ITEM 2  CHANGES IN SECURITIES AND USE OF PROCEEDS.........................................................    19
 ITEM 3  DEFAULTS UPON SENIOR SECURITIES...................................................................    19
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................................    19
 ITEM 5  OTHER INFORMATION.................................................................................    19
 ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K..................................................................    19
</TABLE>

                                       1
<PAGE>

ITEM 1. FINANCIAL STATEMENTS

                        KNOLOGY, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                              SEPTEMBER 30, 2001
            (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                     September 30,    December 31,
                                                                         2001             2000
                                                                     -------------    ------------
<S>                                                                  <C>              <C>
                                             ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                            $  53,962        $  20,628
  Accounts receivable, net                                                13,488           10,697
  Affiliate receivable                                                     3,175            3,326
  Prepaid expenses and other                                               1,506            1,231
                                                                       ---------        ---------
       Total current assets                                               72,131           35,882

PROPERTY, PLANT AND EQUIPMENT, net                                       398,507          377,421

INVESTMENTS                                                               12,625           11,472

INTANGIBLE AND OTHER ASSETS, net                                          51,327           64,631
                                                                       ---------        ---------
       Total assets                                                    $ 534,590        $ 489,406
                                                                       =========        =========

                             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of notes payable                                     $       -        $      12
  Accounts payable                                                        16,771           30,442
  Accrued liabilities                                                     11,322           14,028
  Unearned revenue                                                         5,930            4,318
                                                                       ---------        ---------
       Total current liabilities                                          34,023           48,800

NONCURRENT LIABILITIES:
  Long-term notes payable                                                 45,465           15,562
  Senior discount notes, net of discount                                 334,495          352,054
  Unamortized investment tax credits                                         200              299
                                                                       ---------        ---------
       Total noncurrent liabilities                                      380,160          367,915

       Total liabilities                                                 414,183          416,715

WARRANTS                                                                   4,726            4,726
                                                                       ---------        ---------

STOCKHOLDERS' EQUITY
  Convertible preferred stock                                              1,094              721
  Common Stock                                                                 5                4
  Additional paid-in capital                                             357,427          247,730
  Accumulated deficit                                                   (242,845)        (180,490)
                                                                       ---------        ---------
       Total stockholders' equity                                        115,681           67,965
                                                                       ---------        ---------
       Total liabilities and stockholders' equity                      $ 534,590        $ 489,406
                                                                       =========        =========

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

                                       2
<PAGE>

                        KNOLOGY, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                      SEPTEMBER 30,
                                                            --------------------------        ------------------------
                                                               2001             2000             2001            2000
                                                             --------         --------         --------         -------
<S>                                                        <C>              <C>               <C>            <C>
OPERATING REVENUES:                                         $     27,396     $    20,885      $     76,354    $    59,879
                                                            ------------      ----------      ------------    -----------

OPERATING EPENSES:
  Costs and expenses, excluding depreciation and
   amortization                                                   26,668          23,606             78,070        65,189
  Depreciation and amortization                                   21,092          15,727             59,515        43,585
                                                            ------------      ----------       ------------    -----------
                Total operating expenses                          47,760          39,333            137,585       108,774
                                                            ------------      ----------       ------------    -----------

OPERATING LOSS                                                   (20,364)        (18,448)          (61,231)       (48,895)

OPERATING INCOME AND EXPENSES:
  Interest income                                                    523           1,160             2,452          4,283
  Interest expense                                               (10,944)        (10,011)          (32,197)       (29,423)
  Other (expense) income, net                                       (174)             (1)             (774)            72
                                                            ------------      ----------      ------------    -----------
                Total other income and expenses                  (10,595)         (8,852)          (30,519)       (25,068)
                                                            ------------      ----------      ------------    -----------

LOSS BEFORE INCOME TAX BENEFIT                                  (30,959)        (27,300)          (91,750)       (73,963)

INCOME TAX BENEFIT                                                     -               -                 -          1,557
                                                            ------------      ----------      ------------    -----------

LOSS BEFORE EXTRAORDINARY ITEM                              $    (30,959)     $  (27,300)     $    (91,750)   $   (72,406)
                                                            ------------      ----------      ------------    -----------

EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT (Note 5)                29,394               -            29,394              -
                                                            ------------      ----------      ------------    -----------

NET LOSS                                                    $     (1,565)     $  (27,300)     $    (62,356)   $   (72,406)
                                                            ============      ===========      ============    ===========

LOSS PER SHARE BEFORE EXTRAORDINARY ITEM (Note 3):
  Basic and diluted                                         $      (0.26)     $    (0.38)     $      (1.09)   $     (1.05)
                                                            ------------      ----------      ------------    -----------

NET LOSS PER SHARE (Note 3):
   Basic and diluted                                        $      (0.01)     $    (0.38)     $      (0.84)   $     (1.05)
                                                            ------------      ----------      ------------    -----------

WEIGHTED AVERAGE SHARES OUTSTANDING                          121,211,995      72,507,950       118,173,643     68,642,609
                                                            ============     ===========      ============    ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       3
<PAGE>


                        KNOLOGY, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              NINE MONTHS ENDED SEPTEMBER 30,
                                                                   2001             2000
                                                                 --------         --------
<S>                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                     $  (62,356)     $ (72,406)
                                                               ----------      ---------
  Adjustments to reconcile net loss to net cash
   (used in) provided by operating activities:
     Depreciation and amortization                                 59,515         43,585
     Gain on disposition of assets                                    237             (2)
     Amortization of bond discount                                 32,941         29,632
     Extraordinary gain on debt extinguishment                    (29,394)             -
     Amortization of deferred investment tax credit                   (54)           (54)
     Changes in operating assets and liabilities:
       Accounts receivable                                         (2,792)        (1,355)
       Accounts receivable - affiliate                                151          3,819
       Prepaid expenses and other                                    (341)          (458)
       Accounts payable                                           (13,643)         4,324
       Accrued liabilities                                         (2,706)           627
       Unearned revenue                                             1,612            376
                                                                 --------       --------
            Total adjustments                                      45,526         80,524
                                                                 --------       --------
            Net cash (used in) provided by
             operating activities                                 (16,830)         8,118
                                                                 --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures, net of retirements                        (66,943)       (97,954)
  Investments                                                      (1,152)        (7,727)
  Franchise cost expenditures, net                                   (950)          (732)
  Proceeds from sales of assets                                        92            221
  Proceeds from sales of marketable securities, net                     -          6,069
                                                                 --------       --------
          Net cash used in investing activities                   (68,953)      (100,123)
                                                                 --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of debt                                   30,000              -
  Expenditures related to issuance of debt                           (411)           (38)
  Advances to affiliates                                              (48)          (338)
  Proceeds from exercised stock options                               406              -
  Proceeds from private placement, net of offering expenses       109,502        130,850
  Principal payments on debt                                           (4)           (10)
  Purchase of affiliate bonds                                     (20,328)             -
                                                                 --------       --------
          Net cash provided by financing activities               119,117        130,464
                                                                 --------       --------

NET INCREASE IN CASH                                               33,334         38,459
                                                                 --------       --------

CASH AT BEGINNING OF PERIOD                                        20,628          7,818
                                                                 --------       --------
CASH AT END OF PERIOD                                            $ 53,962       $ 46,277
                                                                 ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid during the period for interest                       $  1,123       $  1,410
</TABLE>

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

                                       4
<PAGE>

                         KNOLOGY, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2001
                                  (UNAUDITED)

            (DOLLARS IN THOUSANDS, EXCEPT SHARE AND 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 service 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. 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
  and nine months ended September 30, 2001 are not necessarily indicative of the
  results that may be expected for the year ended December 31, 2001. 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 2000 financial statements have been
  reclassified to conform to the 2001 financial statements.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  NET LOSS PER SHARE

     In 1997, the Company adopted 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.

     In January 2001, a non-cash dividend was recognized in conjunction with the
  issuance of Series C preferred stock and the amendment of the conversion
  ratios of the Company's Series A preferred stock and Series B preferred stock
  into common stock (Note 4). The following table represents a reconciliation of
  the net loss reflected on the condensed consolidated statement of operations
  to the net loss attributable to equivalent common stockholders:

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 Nine Months Ended
                                                                                                    September 30,
                                                                                                 -----------------
<S>                                                                                              <C>
Loss before extraordinary item                                                                      $    (91,750)
Non-cash distribution to preferred stockholders                                                          (36,579)
                                                                                                    ------------
Loss before extraordinary item attributable to equivalent common stockholders                       $   (128,329)
Extraordinary item (Note 5)                                                                               29,394
                                                                                                    ------------
Net loss attributable to equivalent common stockholders                                             $    (98,935)
Weighted average shares outstanding                                                                  118,173,643
Loss per share, before extraordinary item                                                           $      (1.09)
Net loss per share                                                                                  $      (0.84)
</TABLE>


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.
  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's required adoption date is January 1, 2002, at which time the
  Company will no longer record amortization of goodwill and will begin an
  impairment analysis of goodwill in accordance with SFAS No. 142.

4.   EQUITY TRANSACTIONS

     In February 2000, ITC Holding Company, Inc., in connection with a
  reorganization of certain of its businesses, distributed to its option holders
  options to purchase 6,258,036 shares of our Series A preferred stock, and
  distributed to its shareholders all of its 43,211,531 shares of our Series A
  preferred stock. As a result of this distribution, we are no longer a
  subsidiary of ITC Holding. The shares of Series A 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 firm-commitment underwritten
  public offering in which (1) if the offering is completed in 2001, the price
  per share is at least $4.00; if the offering is completed in 2002, the price
  per share is at least $5.00; and if the offering is completed in 2003 or
  thereafter, the price per share is at least $6.00, (2) the gross proceeds to
  us are at least $50 million and (3) the common stock sold in the offering is
  listed on the Nasdaq National Market or on a national securities exchange (a
  "Qualified Public Offering"). The shares of Series A preferred stock are
  currently convertible into shares of common stock on a one-to-1.0371 basis,
  subject to customary anti-dilution adjustments.

     On February 7, 2000, we completed a private placement of 21,180,131 shares
  of our Series B preferred stock to a small group of institutional investors
  and certain of our executive officers for approximately $100.6 million. The
  shares of Series B 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. The shares of Series B preferred
  stock are currently convertible into shares of common stock on a one-to-1.4865
  basis, subject to customary anti-dilution adjustments.

     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.
  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 to the ratios set forth
  above. 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 (Note 3).

                                       6
<PAGE>

5.   SENIOR DISCOUNT NOTES

     On October 22, 1997, Knology Broadband, Inc. (formerly Knology Holdings,
  Inc.), a wholly owned subsidiary of the Company, received net proceeds of
  $242.4 million from the offering of senior discount notes due 2007 with a
  principal amount at maturity of $444.1 million.  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.

     In September 2001, the Company repurchased senior discount notes with a
  face amount of $58.5 million and a carrying amount of $50.5 million as of the
  respective repurchase dates 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
  $778,000 in issue costs associated with the original issuance of the notes in
  October 1997.

6.   SEGMENT INFORMATION

     Effective January 1998, the Company adopted SFAS 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:

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                        SEPTEMBER 30,                     SEPTEMBER 30,
                                                                    2001             2000             2001            2000
                                                                   -------          -------          -------         -------
<S>                                                                <C>              <C>              <C>              <C>
Video....................................................          $12,513          $10,360          $35,665         $30,975
Voice....................................................           11,523            8,973           32,142          24,958
Data and other...........................................            3,360            1,552            8,547           3,946
                                                                   -------          -------          -------         -------
Consolidated revenues....................................          $27,396          $20,885          $76,354         $59,879
                                                                   =======          =======          =======         =======
</TABLE>

7.  SUBSEQUENT EVENTS

     In October the Company repurchased $5.7 million of the senior discount
notes due 2007 issued by Knology Broadband for approximately $2.5 million in
cash.

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 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 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 IF AND AS NEEDED, (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 RISKS SET FORTH IN
OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000, 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.

                                       7
<PAGE>

     The following is a discussion of our consolidated financial condition and
results of operations for the three and nine months ended September 30, 2001 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 notes thereto and other financial data included
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. In November 1999, in
order to effectuate the reorganization:

-    ITC Holding contributed to Knology, Inc.:

     -   its 85% interest in Knology Broadband, Inc. (formerly Knology
         Holdings, Inc.);

     -   all of the outstanding capital stock of Interstate Telephone Company,
         Inc., Valley Telephone Company, Inc., Globe Telecommunications, Inc.
         and ITC Globe, Inc., 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 $5.6 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, Inc. and the holders of outstanding
     warrants to purchase Knology Broadband preferred stock exchanged those
     warrants for warrants to purchase Series A preferred stock of Knology,
     Inc.

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

     In January 2000, InterCall, Inc., a subsidiary of ITC Holding, loaned us
$29.7 million to fund our capital expenditures and working capital. The loan,
which had a maturity date of March 31, 2000, provided that InterCall could elect
to convert it into options to purchase our Series A preferred stock. In February
2000, InterCall converted the loan into options to purchase 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.


SIGNIFICANT ACCOUNTING POLICIES

     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. 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's required
adoption date is January 1, 2002, at which time the Company will no longer
record amortization of goodwill and will begin an impairment analysis of
goodwill in accordance with SFAS No. 142.


REVENUES AND EXPENSES

     We have incurred net losses in each quarter since our inception, and as of
September 30, 2001, the accumulated deficit had reached approximately $242.8
million. We anticipate incurring net losses during the next several years as we
continue to expand our networks and build our customer base. There can be no
assurance that growth in revenue or the subscriber base will continue or that we
will be able to achieve or sustain profitability or positive cash flow.

                                       8
<PAGE>

     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 45.7% and 46.7% of our consolidated
         revenues for the three and nine months ended September 30, 2001
         compared to 49.6% and 51.7% for the three and nine months ended
         September 30, 2000.

     -   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 42.1% and 42.1% of our consolidated
         revenues for the three and nine months ended September 30, 2001
         compared to 43.0% and 41.7% for the three and nine months ended
         September 30, 2000.

     -   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 resulted principally from broadband carrier
         services. These combined revenues accounted for approximately 12.2% and
         11.2% of our consolidated revenues for the three and nine months ended
         September 30, 2001 compared to 7.4% and 6.6% for the three and nine
         months ended September 30, 2000.

     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 expenses 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 are our largest single
         cost and we expect this to continue. Since programming cost is
         primarily based on the numbers of subscribers, it will increase as we
         add more subscribers. Additionally, programming costs will increase as
         cost per program channel increases over time.

     -   Voice, Data and Other cost of service. Voice, data and other cost of
         services consist primarily of transport cost and network access fees.

     Selling, operations and administrative expenses include:

     -   Sales and marketing costs. Sales and marketing costs 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 general 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.

                                       9
<PAGE>

     We have experienced operating losses as a result of the expansion of our
advanced interactive broadband communications networks and services into new and
existing markets. Management expects to continue to focus on increasing the
customer base and expanding our broadband operations. Accordingly, we expect
that we will continue to experience operating losses in accordance with our
business plan. While management expects our expansion plans to result in
profitability, there can be no assurance that growth in our revenue or customer
base will continue or that we will be able to achieve or sustain profitability
and/or positive cash flow.


RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2000

The following table sets forth financial data as a percentage of operating
revenues for the three months ended September 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                                                  THREE MONTHS ENDED
                                                                                                     SEPTEMBER 30,
                                                                                                 --------------------
                                                                                                 2001            2000
                                                                                                 ----            ----
<S>                                                                                              <C>             <C>
Operating revenues:.................................................................
    Video...........................................................................               46%             50%
    Voice...........................................................................               42              43
    Data and other..................................................................               12               7
                                                                                                 ----           -----
       Total........................................................................              100             100
Operating expenses:
    Cost and expenses, excluding
     depreciation and amortization..................................................               97             113
    Depreciation and amortization...................................................               77              75
                                                                                                 ----           -----
       Total........................................................................              174             188
                                                                                                 ----           -----

Operating loss......................................................................              (74)            (88)
Other income and expenses, net......................................................              (39)            (42)
                                                                                                 ----           -----
Loss before extraordinary item......................................................             (113)           (130)
Extraordinary gain on debt extinguishment...........................................              107               0
                                                                                                 ----           -----
Net loss............................................................................              (6)%          (130)%
                                                                                                 ====           =====
</TABLE>

The following tables set forth certain operating and financial data as of and
for the periods ended September 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                     As of September 30,
                                                                     2001          2000         CHANGE             %
                                                                    -------       -------       -------          ------
<S>                                                                 <C>           <C>           <C>              <C>
MARKETABLE HOMES PASSED (1)..................................       412,060       359,739        52,321           14.5%
CONNECTIONS (2)
    Video....................................................       113,738        99,565        14,173           14.2%
                                                                    -------       -------        ------         ------
    Voice
     On Net..................................................        74,633        51,591        23,042           44.7%
     Off Net.................................................         6,279         7,224          (945)        (13.1)%
                                                                    -------       -------        ------         ------
                                                                     80,912        58,815        22,097           37.6
    Data.....................................................        27,510        12,473        15,037          120.6%
                                                                    -------       -------        ------         ------
     Total...................................................       222,160       170,853        51,307           30.0%
                                                                    =======       =======        ======         ======
</TABLE>


(1)  Marketable homes passed are the number of small 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.

(2)  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
     23,210 and 23,108 lines as of September 30, 2000 and 2001, respectively,
     provided using traditional copper telephone lines. Off net refers to
     telephone connections provided over telephone lines leased from third
     parties.

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                           SEPTEMBER 30,
                                                                       ---------------------
                                                                         2001        2000     CHANGE      %
                                                                       --------    --------   -------   -----
<S>                                                                    <C>        <C>         <C>       <C>
OPERATING REVENUES:
  Video..............................................................  $ 12,513    $ 10,360   $ 2,153    20.8%
  Voice..............................................................    11,523       8,973     2,550    28.4%
  Data and other.....................................................     3,360       1,552     1,808   116.5%
                                                                       --------    --------   -------   -----
       Total.........................................................    27,396      20,885     6,511    31.2%
OPERATING EXPENSES:
  Cost and expenses, excluding depreciation
    and amortization.................................................    26,668      23,606     3,062    13.0%
  Depreciation and amortization......................................    21,092      15,727     5,365    34.1%
                                                                       --------    --------   -------   -----
       Total.........................................................    47,760      39,333     8,427    21.4%
                                                                       --------    --------   -------   -----

OPERATING LOSS.......................................................   (20,364)    (18,448)   (1,916)   10.4%
OTHER INCOME AND EXPENSES, NET.......................................   (10,595)     (8,852)   (1,743)   19.7%
                                                                       --------    --------   -------   -----
LOSS BEFORE EXTRAORDINARY ITEM.......................................   (30,959)    (27,300)   (3,659)   13.4%
EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT............................    29,394           0    29,394   100.0%
                                                                       --------    --------   -------   -----
NET LOSS.............................................................  $ (1,565)   $(27,300)  $25,735    94.3%
                                                                       ========    ========   =======   =====
</TABLE>


     Revenues. Operating revenues increased 31.2% from $20.9 million for the
three months ended September 30, 2000, to $27.4 million for the three months
ended September 30, 2001. Operating revenues from video services increased 20.8%
from $10.4 million for the three months ended September 30, 2000 to $12.5
million for the same period in 2001. Operating revenues from voice services
increased 28.4% from $9.0 million for the three months ended September 30, 2000
to $11.5 million for the same period in 2001. Operating revenue from data and
other services increased 116.5% from $1.6 million for the three months ended
September 30, 2000 to $3.4 million for the same period in 2001, $3.1 million of
which were revenues from data services in 2001.

     The increased revenues from video, voice and data and other services are
due primarily to an increase in the number of connections, from 170,853 as of
September 30, 2000 to 222,160 as of September 30, 2001. The additional
connections resulted primarily from:

     .   the extension of our broadband networks in the Augusta and Charleston
         markets;

     .   the upgrade of our existing one-way network to an advanced interactive
         broadband network in Huntsville;

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

     .   the construction of a new broadband network in Knoxville.

     Expenses. Operating expenses, excluding depreciation and amortization
increased 13.0% from $23.6 million for the three months ended September 30,
2000, to $26.7 million for the three months ended September 30, 2001. The
increase in our operating expenses is consistent with the growth in revenues and
is a result of the expansion of our operations, the increase in the number of
employees associated with such expansion and growth into new markets. We expect
our operating expenses to continue to increase as we add more connections.
Selling, operations and administrative expenses will increase operating expenses
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 an increase in costs per program 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.

     Depreciation and amortization increased 34.1% from $15.7 million for the
three months ended September 30, 2000, to $21.1 million for the three months
ended September 30, 2001. The increase in depreciation and amortization is due
to significant additions in property, plant and equipment resulting from the
expansion of our networks; the upgrading of older systems to broadband
capabilities; and the purchase of buildings, computers and office equipment. We
expect our depreciation and amortization expense to continue to increase as we
make capital expenditures to extend our existing networks and build additional
networks.

                                       11
<PAGE>

     Other Income and Expense. Interest income was $1.2 million for the three
months ended September 30, 2000, compared to $0.5 million for the same period in
2001. The interest income earned is due to the short term investment of the
proceeds from our private equity transactions.

     Interest expense increased from $10.0 million for the three months ended
September 30, 2000, to $10.9 million for the three months ended September 30,
2001. The increase in interest expense is primarily due to the accretion of the
book value of the 11 7/8% senior discount notes issued by Knology Broadband in
October 1997. We capitalized interest related to the construction of our
broadband networks of $0.6 million and $0.6 million for the three months ended
September 30, 2000 and 2001, respectively.

     Other expense was $0.2 million for the three months ended September 30,
2001. This amount primarily represents a loss recorded on the disposal of fixed
assets.

     Loss Before Extraordinary Item. We incurred a loss before extraordinary
item of $27.3 million for the three months ended September 30, 2000, compared to
a loss before extraordinary item of $31.0 million for the three months ended
September 30, 2001.

     Extraordinary Gain on Debt Extinguishment. In September 2001, the Company
repurchased senior discount notes with a face amount of $58.5 million and a
carrying amount of $50.5 million as of the respective repurchase dates 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.

     Net Loss. We incurred a net loss of $27.3 million for the three months
ended September 30, 2000, compared to a net loss of $1.6 million for the three
months ended September 30, 2001. The improvement in net loss is primarily due to
the extraordinary gain related to the repurchase of senior discount notes. We
expect to incur net losses as we continue to expand our business.



NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2000

The following table sets forth financial data as a percentage of operating
revenues for the nine months ended September 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                                    NINE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                                  ---------------------
                                                                                   2001            2000
                                                                                  -----           -----
<S>                                                                                <C>            <C>
Operating revenues:
    Video.......................................................................     47%             52%
    Voice.......................................................................     42              42
    Data and other..............................................................     11               6
                                                                                   ----           -----
       Total....................................................................    100             100
Operating expenses:
    Cost and expenses, excluding
      depreciation and amortization.............................................    102             109
    Depreciation and amortization...............................................     78              73
                                                                                   ----           -----
       Total....................................................................    180             182
                                                                                   ----           -----
Operating loss..................................................................    (80)            (82)
Other income and expenses, net..................................................    (40)            (42)
                                                                                   ----           -----
Loss before income tax benefit..................................................   (120)           (124)
Income tax benefit..............................................................      0               3
                                                                                   ----           -----
Loss before extraordinary item..................................................   (120)           (121)
Extraordinary gain on debt extinguishment......................................     38               0
       Net loss.................................................................   (82)%          (121)%
                                                                                   ====           =====
</TABLE>

                                       12
<PAGE>

The following table sets forth certain financial data for the periods ended
September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                       NINE MONTHS ENDED
                                                                         SEPTEMBER 30,
                                                                      --------------------
                                                                        2001       2000      CHANGE      %
                                                                      --------   --------   --------   -----
<S>                                                                   <C>        <C>        <C>        <C>
OPERATING REVENUES:
 Video..............................................................  $ 35,665   $ 30,975   $  4,690    15.1%
 Voice..............................................................    32,142     24,958      7,184    28.8%
 Data and other.....................................................     8,547      3,946      4,601   116.6%
                                                                      --------   --------   --------   -----
  Total.............................................................    76,354     59,879     16,475    27.5%
OPERATING EXPENSES:
 Costs and expenses, excluding
   depreciation and amortization....................................    78,070     65,189     12,881    19.8%
 Depreciation and amortization......................................    59,515     43,585     15,930    36.5%
                                                                      --------   --------   --------   -----
  Total.............................................................   137,585    108,774     28,811    26.5%
                                                                      --------   --------   --------   -----
OPERATING LOSS......................................................   (61,231)   (48,895)   (12,336)   25.2%
OTHER INCOME AND EXPENSES, NET......................................   (30,519)   (25,068)    (5,451)   21.7%
                                                                      --------   --------   --------   -----
LOSS BEFORE INCOME TAX BENEFIT......................................   (91,750)   (73,963)   (17,787)   24.0%
INCOME TAX BENEFIT..................................................         0      1,557     (1,557)  100.0%
                                                                      --------   --------   --------   -----
LOSS BEFORE EXTRAORDINARY ITEM......................................   (91,750)   (72,406)   (19,344)   26.7%
EXTRAORDINARY GAIN ON DEBT EXTINGUISHMENT...........................    29,394          0     29,394   100.0%
                                                                      --------   --------   --------   -----
NET LOSS............................................................  $(62,356)  $(72,406)  $ 10,050    13.9%
                                                                      ========   ========   ========   =====
</TABLE>


     Revenues. Operating revenues increased 27.5% from $59.9 million for the
nine months ended September 30, 2000, to $76.4 million for the nine months ended
September 30, 2001. Operating revenues from video services increased 15.1% from
$31.0 million for the nine months ended September 30, 2000 to $35.7 million for
the same period in 2001. Operating revenues from voice services increased 28.8%
from $25.0 million for the nine months ended September 30, 2000 to $32.1 million
for the same period in 2001. Operating revenue from data and other services
increased 116.6% from $3.9 million for the nine months ended September 30, 2000
to $8.5 million for the same period in 2001, $7.9 million of which were revenues
from data services.

     The increased revenues for video, voice and data and other services are
primarily due to an increase in the number of connections, from 170,853 at
September 30, 2000 to 222,160 at September 30, 2001. The additional connections
resulted primarily from:

     .   the extension of our broadband networks in the Augusta and Charleston
         markets;

     .   the upgrade of our existing one-way network to an advanced interactive
         broadband network in Huntsville;

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

     .   the construction of a new broadband network in Knoxville.

     Expenses. Operating expenses, excluding depreciation and amortization,
increased 19.8% from $65.2 million for the nine months ended September 30, 2000,
to $78.1 million for the nine months ended September 30, 2001. The increase in
our cost of services and operating expenses is consistent with the growth in
revenues and is a result of the expansion of the operations, 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. Selling, operations and administrative expenses will increase
operating expenses 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 an increase in costs per program 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.

     Depreciation and amortization increased 36.5% from $43.6 million for the
nine months ended September 30, 2000, to $59.5 million for the nine months ended
September 30, 2001. The increase in depreciation and amortization is due to
significant additions in property, plant, equipment and intangible assets
resulting from the expansion of our networks; the upgrading of older systems to
broadband capabilities; and the purchase of buildings, computers and office
equipment. We expect our depreciation and amortization expense to continue to
increase as we make capital expenditures to extend our existing networks and
build additional networks.

                                       13
<PAGE>

     Other Income and Expense. Interest income was $4.3 million for the nine
months ended September 30, 2000, compared to $2.5 million for the same period in
2001.

     Interest expense increased from $29.4 million for the nine months ended
September 30, 2000, to $32.2 million for the nine months ended September 30,
2001. The increase in interest expense reflects the accrual of the interest
attributable to the 11 7/8% senior discount notes issued by Knology Broadband in
October 1997. We capitalized interest related to the construction of our
broadband networks of $1.6 million and $2.0 million for the nine months ended
September 30, 2000 and 2001 respectively.

     Other expense was $0.8 million for the nine months ended September 30,
2001. Other expense consists primarily of $0.4 million for the write-off of
obsolete inventory and approximately $0.4 million for loss recorded on the
disposal of fixed assets.

     Income Tax Benefit. The income tax benefit was $1.6 million for the nine
months ended September 30, 2000, compared to no benefit for the same period in
2001. The income tax benefit in 2000 resulted from our utilizing net tax losses
under a tax sharing agreement with ITC Holding. The tax sharing agreement became
effective August 1998 upon the acquisition by ITC Holding of its majority
interest in Knology Broadband. Following the spin-off of Knology, Inc. by ITC
Holding, effective February 7, 2000, we no longer participate in the tax sharing
agreement. Therefore, we no longer receive 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.

     Loss Before Extraordinary Item. We incurred a loss before extraordinary
item of $72.4 million for the nine months ended September 30, 2000, compared to
a loss before extraordinary item of $91.8 million for the nine months ended
September 30, 2001.

     Extraordinary Gain on Debt Extinguishment. In September 2001, the Company
repurchased senior discount notes with a face amount of $58.5 million and a
carrying amount of $50.5 million as of the respective repurchase dates 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.

     Net Loss. We incurred a net loss of $72.4 million for the nine months ended
September 30, 2000, compared to a net loss of $62.4 million for the nine months
ended September 30, 2001. The improvement in net loss is primarily due to the
extraordinary gain related to the repurchase of senior discount notes. We expect
to incur net losses as we continue to expand our business.


LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2000, we had a net working capital deficit of $12.9
million, compared to net working capital of $38.1 million at September 30, 2001.
The increase in working capital is principally due to the private placements of
our Series C preferred stock.

     Operating activities provided cash of $8.1 million and used cash of $16.8
million for the nine months ended September 30, 2000 and 2001, respectively.
Cash flow activities in the 2001 period consisted primarily of adjustments to
net loss for a non-cash extraordinary gain of $29.4 million and non-cash
depreciation and amortization of $92.4 million and a reduction of $16.3 million
in accounts payable and accrued liabilities.

     Investing activities used cash of $100.1 million and $69.0 million for the
nine months ended September 30, 2000 and 2001, respectively. Investing
activities in the 2001 period primarily consisted of $66.9 million of capital
expenditures.

     Financing activities provided cash of $130.5 million and $119.1 million for
the nine months ended September 30, 2000 and 2001, respectively. Financing
activities in the nine months ended September 30, 2001 consisted of $109.5
million in proceeds, net of expenses, from the private placement of Series C
preferred stock and $29.6 million in net proceeds from the issuance of secured
bank debt from CoBank ACB.


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. In October 1997, Knology Broadband received net proceeds of
approximately

                                       14
<PAGE>

$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 $444.1 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 a number of covenants that
restrict the ability of Knology Broadband and its subsidiaries to take certain
actions, including the ability to:

        -     incur indebtedness;

        -     pay dividends;

        -     prepay subordinated indebtedness;

        -     redeem capital stock;

        -     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 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, the Company 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 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 and (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;

                                       15
<PAGE>

        -    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 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
September 30, 2001 was approximately $15.5 million. As of September 30, 2001,
$15.5 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 of these advances were provided 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 qualified investors in an equity 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 approximately $100.6 million.

     On January 12, 2001, the Company issued to certain existing investors and a
select group of new accredited investors, in a private placement, 31,166,667
shares of Series C preferred stock at a purchase price of $3.00 per share, for
aggregate proceeds of $93.5 million. In connection with the completion of this
private placement, 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 the completion of
the private placement 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 March 30, 2001 the Company issued to a small group of accredited
investors, in a private placement, 1,885,996 shares of Series C preferred stock,
at a purchase price of $3.00 per share, for aggregate proceeds of approximately
$5.7 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 (See Note 4). The shares of
Series C preferred stock are convertible into shares of common stock on a one-
to-one basis.

     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 and exiting investors, in a private placement,

                                       16
<PAGE>

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.

     Our use of the net proceeds from the offerings of our Series C preferred
stock to date and from future offerings of debt and equity securities and future
borrowings is limited by the provisions of the stock purchase agreement that we
entered into in connection with the January 12, 2001 offering. Specifically, the
first $90 million in net proceeds are restricted to construction and operation
of our networks in the Augusta, Charleston, Columbus, Huntsville, Montgomery and
Panama City markets.

     The next $10 million in net proceeds can be used to construct and operate
Knology's networks in the first six markets as well as in the Knoxville and
Nashville markets. The next $35 million in net proceeds that we raise in future
offerings of debt or equity securities and future borrowings must be used to
construct and expand our networks in the first six markets. The next $15 million
of net proceeds must be used to construct and expand Knology's networks in the
first six markets as well as in the Knoxville market. Any additional net
proceeds can be used for any corporate purpose.

The table below summarizes these uses:

<TABLE>
<CAPTION>

Use of Net Proceeds from
Series C Preferred Stock
Offerings and Future Offerings                                     Use of Proceeds
------------------------------                                     ---------------
<S>                                                                <C>
$0-$90 million                                                     Augusta, Charleston, Columbus, Huntsville, Montgomery
                                                                   and Panama City markets
$90-$100 million                                                   Augusta, Charleston, Columbus, Huntsville,
                                                                   Montgomery, Panama City, Knoxville and Nashville markets
$100-$135 million                                                  Augusta, Charleston, Columbus, Huntsville,
                                                                   Montgomery and Panama City markets
$135-$150 million                                                  Augusta, Charleston, Columbus, Huntsville,
                                                                   Montgomery, Panama City and Knoxville markets
Over $150 million                                                  Any corporate purpose
</TABLE>

     These restrictions on our use of proceeds from the Series C preferred stock
offerings and future offerings may be waived if approved by a majority of our
board of directors, including at least one director appointed by the holders of
our Series B preferred stock (if there are any then serving on our board).

     On June 29, 2001, Knology, Inc., through its wholly owned subsidiaries,
Globe Telecommunications, Inc., Interstate Telephone Company and Valley
Telephone Co., Inc. (the "Borrowers"), 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;

        -    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

                                       17
<PAGE>

in compliance with these covenants, but there can be no assurances that the
Borrowers will remain in compliance. Should the Borrowers not be in compliance
with the covenants, the Borrowers 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 September 30, 2001, a $30.0 million loan has been made 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 presently expect that our current
cash reserves, cash flow from operations, and funding obtained through our
existing credit facilities will be sufficient to fund our planned 2001 capital
expenditures. In 2001, we expect to use approximately $2.0 million to fund
operating losses and approximately $85.0 million for capital expenditures, of
which approximately $32.2 million relates to the construction of networks in the
markets where we currently provide service and the remainder primarily relates
to the purchase of equipment for customer premises, such as cable boxes, and
information systems.

     We have completed the construction of our networks in Montgomery, Alabama;
Columbus, Georgia and Panama City, Florida. We expect that, with sufficient
funds, the construction of our networks in our other existing markets will be
substantially completed during 2005. We will not have sufficient funds to
complete this construction without significant additional financing. We expect
to raise this capital through bank borrowings, private and public debt offerings
and private and public equity offerings, although there is no assurance that
this financing will be available on terms favorable to us.

     If we are not successful in raising additional capital, we may not be able
to complete the construction of our networks throughout these markets. This may
cause us to violate our franchise agreements, which could adversely affect us,
or may limit our growth within these markets.

     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 $6.9
million to obtain franchise agreements and perform preliminary construction
activity in Nashville and Louisville. Due to the uncertainties in the current
financial markets, there is a possibility that planned expansion into Nashville
and Louisville may be delayed. 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 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 facility. 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.

                                       18
<PAGE>

                           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

ITEM 6. Exhibits and Reports on Form 8-K

(A)  EXHIBITS

<TABLE>
<CAPTION>

Exhibit
No.                                                      Exhibit Description
<S>         <C>
3.1         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 for the quarter ended June 30,
            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         Specimen of Stock Certificate for Shares of Common Stock, par value $0.01 (Incorporated herein by
            Reference to Exhibit 4.1 to Knology Inc.'s Registration Statement on Form S-1 (File No. 333-89179)).

4.2         Specimen of Stock Certificate for Shares of Series A Preferred Stock, par value $0.01 (Incorporated
            Herein by reference to Exhibit 4.2 to Knology Inc.'s Registration Statement on Form S-1 (File No. 333-89179)).

4.3         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 78% 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)).

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

4.5         Form of Exchange Note (contained in Exhibit 4.3).

10.1        Master Loan Agreement, dated as of June 29, 2001, by and between CoBank, ACB and Globe Telecommunications,
            Inc., Interstate Telephone Company and Valley Telephone Co., Inc.

</TABLE>

                                       19
<PAGE>

<TABLE>
<S>         <C>
10.1.1      First Supplement to the Master Loan Agreement, dated as of June 29, 2001, by and between CoBank, ACB and
            Globe Telecommunications, Inc., Interstate Telephone Company and Valley Telephone Co., Inc.

10.1.2      Promissory Note, dated June 29, 2001, made by Globe Telecommunications, Inc., Interstate Telephone
            Company and Valley Telephone Co., Inc. in favor of CoBank, ACB

10.1.3      Stock Pledge Agreement, dated as of June 29, 2001, by and between Globe Telecommunications, Inc. and CoBank,
            ACB

10.1.4      Security Agreement, dated as of June 29, 2001, made by Globe Telecommunications, Inc., Interstate Telephone
            Company and Valley Telephone Co., Inc. in favor of CoBank, ACB

10.1.5      Security Agreement, dated as of June 29, 2001, made by ITC Globe, Inc. in favor of CoBank, ACB

10.1.6      Continuing Guaranty, dated as of June 29, 2001 by ITC Globe, Inc. for the benefit of CoBank, ACB

10.1.7      Stock Pledge Agreement, dated as of June 29, 2001, by and between Knology, Inc. and CoBank, ACB

10.2        Carrier Services Agreement, dated July 16, 2001, between Business Telecom, Inc. and Knology, Inc.

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).

10.3.1      Sixth Amendment to Credit Facility Agreement, dated as of November 7, 2001.
</TABLE>

(B)  REPORTS ON FORM 8-K

     The Company did not file any reports on Form 8-K during the quarterly
period ended September 30, 2001.

                                       20
<PAGE>

                                   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.

November 14, 2001                            By: /s/ RODGER L JOHNSON
                                                 ------------------------------
                                                 President and Chief Executive
                                                 Officer


                                                 KNOLOGY, Inc.

November 14, 2001                            By: /s/ ROBERT K. MILLS
                                                 ------------------------------
                                                 Chief Financial Officer
                                                 (Principal Financial Officer)

                                       21