SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

         For the quarterly period ended September 30, 2006

                                       OR

       ____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

         For the transition period from ______________to ______________

                         Commission file number 0-32513


                                   ICOA, INC.
             (Exact name of Registrant as Specified in Its Charter)

                       Nevada                             87-0403239
           -------------------------------     --------------------------------
           (State or Other Jurisdiction of     (IRS Employer Identification No.)
           Incorporation or Organization)

                  111 Airport Road, Warwick, Rhode Island 02889
             ------------------------------------------------------
             (Address of Principal Executive Offices with Zip Code)

        Registrant's Telephone Number, Including Area Code: 401-352-2300


--------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

       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  ___

       Indicate by check mark whether the registrant is a large accelerated
       filer, an accelerated filer, or a non-accelerated filer. See definition
       of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
       Exchange Act. (Check one):

  Large accelerated filer __    Accelerated filer __   Non-accelerated filer _X_



       Indicate by check mark whether the registrant is a shell company (as
       defined in Rule 12b-2 of the Exchange Act).

                                                      Yes   __     No _X_



       The number of shares of common stock outstanding as of November 20, 2006
       was 564,695,192 The number of shares of preferred stock outstanding as of
       November 20, 2006 was 5,411,255



       Transitional Small Business Disclosure Format: Yes   __     No _X_
<PAGE>


       PART I - FINANCIAL INFORMATION


Item 1.       Unaudited Consolidated Balance Sheet at
              September 30, 2006..............................................3

              Unaudited Consolidated Statements of Operations
              for the three months ended September 30, 2006 and
              2005 and the nine months ended September 30, 2006
              and 2005........................................................4

              Unaudited Consolidated Statements of Cash Flows
              for the nine months ended September 30, 2006 and
              nine months ended September 30, 2005............................5

              Notes to the Unaudited Consolidated Financial
              Statements......................................................6

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations............................15

Item 3.       Controls and Procedures........................................22


PART II - OTHER INFORMATION

Item 2.       Changes in Securities..........................................23

Item 3.       Default on Senior Securities...................................23

Item 6.       Exhibits.......................................................24


SIGNATURES

<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               September 30, 2006
                                    Unaudited


                                     ASSETS

CURRENT ASSETS:
     Cash                                                    $         30,820
     Accounts receivable (net of
      allowance of $79,655)                                           395,721
     Inventories                                                       97,199
     Prepaid expenses                                                  37,055
                                                             -----------------

        TOTAL CURRENT ASSETS                                          560,795

EQUIPMENT, net                                                      1,224,815

OTHER ASSETS:
     Long term receivables                                             49,039
     Intangibles, net                                               2,506,249
     Deferred finance costs                                           415,268
     Deposits                                                          71,962
                                                             -----------------
        TOTAL OTHER ASSETS                                          3,042,518
                                                             -----------------

                                                             $      4,828,128
                                                             =================

                     LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Cash overdraft                                          $         87,645
     Accounts payable and accrued expenses                          3,034,218
     Payroll tax liability                                          1,300,440
     Capital lease obligation                                         258,988
     Convertible debentures due in one year,
        net unamortized discount of $1,012,803                        876,076
     Notes payable                                                  1,012,667
     Common stock to be issued                                         39,600
     Preferred stock to be issued                                     300,000
     Derivative instrument liability                                  346,927
                                                             -----------------

        TOTAL CURRENT LIABILITIES                                   7,256,561
                                                             -----------------

LONG TERM LIABILITIES:
     Capital lease obligation                                         531,370
     Convertible debentures, net unamortized
         discount of $1,012,803                                     1,087,196
                                                             -----------------
        TOTAL LONG TERM LIABILITIES                                 1,618,566
                                                             -----------------

STOCKHOLDERS' DEFICIT:
     Preferred stock, $.0001 par value; authorized
        shares - 50,000,000 shares; 5,411,255 issued
         and outstanding                                                  541
     Common stock, $.0001 par value; authorized shares -
        750,000,000 shares; 509,358,575 shares issued
        and outstanding                                                50,950
     Additional paid-in capital                                    21,560,447
     Accumulated deficit                                          (25,658,937)
                                                             -----------------
        TOTAL STOCKHOLDERS' DEFICIT                                (4,046,999)
                                                             -----------------

                                                             $      4,828,128
                                                             =================





            See notes to unaudited consolidated financial statements


                                       3
<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    Unaudited

<TABLE>
<CAPTION>

                                                      Three Months Ended September 30,    Nine Months Ended September 30,
                                                    ----------------------------------   --------------------------------
                                                         2006              2005               2006             2005
                                                    ----------------  ----------------   ---------------   --------------
REVENUES:
<S>                                               <C>                <C>              <C>                <C>
    Transaction service fees                        $       453,792   $       539,210    $    1,462,554    $     980,033
    Equipment sales and installation                         60,501           109,745           312,720          442,490
    Managed services                                        186,881           127,257           507,480          282,353
                                                    ----------------  ----------------   ---------------   --------------
       TOTAL REVENUE                                        701,174           776,212         2,282,754        1,704,876
                                                    ----------------  ----------------   ---------------   --------------

COST OF SERVICES:
    Telecommunication costs                                 223,952           214,058           618,446          381,436
    Equipment and installation                               37,357            52,911           253,385          318,794
    Managed services                                        196,823           211,340           590,310          468,528
    Depreciation and amortization                           348,406           191,141         1,038,376          404,187
                                                    ----------------  ----------------   ---------------   --------------
       TOTAL COST OF SERVICES                               806,538           669,450         2,500,517        1,572,945
                                                    ----------------  ----------------   ---------------   --------------

GROSS MARGIN (LOSS)                                        (105,363)          106,762          (217,763)         131,931

OPERATING EXPENSES:
    Selling, general and administrative                     625,898           997,113         2,272,287        3,329,107
    Depreciation                                              1,181             3,476             4,481            7,977
                                                    ----------------  ----------------   ---------------   --------------
       TOTAL OPERATING EXPENSES                             627,079         1,000,589         2,276,768        3,337,084
                                                    ----------------  ----------------   ---------------   --------------

OPERATING LOSS                                             (732,441)         (893,827)       (2,494,531)      (3,205,153)

INTEREST EXPENSE                                           (279,156)       (2,322,020)         (827,461)      (3,623,902)
MARK TO MARKET - DERIVATIVE INSTRUMENT LIABILITY            421,496                 -         1,641,007                -
AMORTIZATION OF NOTE DISCOUNT                              (208,425)                -          (602,260)               -
                                                    ----------------  ----------------   ---------------   --------------
NET LOSS                                            $      (798,526)  $    (3,215,847)   $   (2,283,244)   $  (6,829,055)
                                                    ================  ================   ===============   ==============

BASIC AND DILUTED - LOSS PER SHARE                  $         (0.00)  $         (0.01)   $        (0.01)   $       (0.03)
                                                    ================  ================   ===============   ==============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
       Basic and Diluted                                489,527,929       311,906,878       432,122,542      245,121,859
                                                    ================  ================   ===============   ==============
</TABLE>

            See notes to unaudited consolidated financial statements


                                       4
<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    Unaudited
<TABLE>
<CAPTION>

                                                           For the Nine Months Ended September 30,
                                                                ---------------  -------------
                                                                     2006            2005
                                                                ---------------  -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>              <C>
    Net loss                                                    $   (2,283,244)  $ (6,829,055)
                                                                ---------------  -------------
    Adjustments to reconcile net loss to net cash
         used in operating activities:
         Depreciation                                                    4,481          7,977
         Depreciation of equipment                                     507,351        404,187
         Amortization of intangibles                                   531,024         94,811
         Amortization of deferred financing cost                       661,970        276,404
         Stock issued for compensation                                   5,000        424,096
         Stock to be issued for services                                21,000         39,600
         Beneficial conversion and warrants issued
         for services                                                  300,000      2,969,412
         Change in derivative instrument liability                  (1,733,053)             -

    Changes in assets and liabilities:
       Accounts receivable                                             (39,990)       (69,676)
       Inventory                                                        (6,793)       (24,670)
       Deposits                                                         (9,957)       (73,319)
       Prepaid expenses                                                (29,113)       (36,997)
       Other assets                                                     14,190              -
       Payroll taxes                                                   530,058              -
       Accounts payable and accrued expenses                           584,622      1,587,210
                                                                ---------------  -------------
    Net cash used in operating activities                             (942,455)    (1,230,020)
                                                                ---------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition / disposition of equipment                             (43,313)    (1,604,426)
    Other                                                                    -        (31,110)
                                                                ---------------  -------------
NET CASH USED IN INVESTING ACTIVITIES                                  (43,313)    (1,635,536)
                                                                ---------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of warrants                                  10,000              -
    Payments of capital leases                                        (141,095)             -
    Payments of notes payable                                         (102,055)             -
    Proceeds of private placement                                      585,430              -
    Payments of convertible debentures                                 (55,034)             -
    Proceeds from convertible debentures                               425,000        673,009
    Proceeds from capital leases                                             -        809,712
    Increase in deferred finance costs                                 (27,500)             -
    Proceeds from notes payable                                        285,241      1,401,132
                                                                ---------------  -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                              979,987      2,883,853
                                                                ---------------  -------------

INCREASE (DECREASE) IN CASH                                             (5,781)        18,297

CASH - BEGINNING OF PERIOD                                              36,601         23,676
                                                                ---------------  -------------

CASH - END OF PERIOD                                            $       30,820   $     41,973
                                                                ===============  =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION:
       Cash paid for interest                                   $      164,198   $     84,233
                                                                ===============  =============

NON-CASH INVESTING AND FINANCING ACTIVITIES:
       Conversion of debentures and interest into stock         $      662,327   $    693,179
                                                                ===============  =============
       Conversion of notes and interest into stock              $       30,000   $  2,180,990
                                                                ===============  =============
       Common stock issued in connection with settlements       $      900,000   $  1,036,658
                                                                ===============  =============
       Capital leases                                           $            -   $    734,377
                                                                ---------------  -------------

ACQUISITION DETAILS:
       Fair value of assets acquired                            $            -   $  3,919,196
                                                                ===============  =============
       Liabilities assumed                                      $            -   $    559,401
                                                                ===============  =============
       Common stock issued for acquisition                      $            -   $  3,103,191
                                                                ===============  =============
</TABLE>

            See notes to unaudited consolidated financial statements


                                       5
<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  Nine Months Ended September 30, 2006 and 2005
                                   (Unaudited)

Note 1--Basis of Interim Financial Statement Presentation

         The accompanying unaudited consolidated financial statements have been
         prepared in accordance with generally accepted accounting principles
         for interim information. Accordingly, they do not include all of the
         information and footnotes required by generally accepted accounting
         principles for complete financial statements. The results of operations
         for the interim periods shown in this report are not necessarily
         indicative of expected results for any future interim period or for the
         entire fiscal year. ICOA, Inc. and Subsidiaries (the "Company"),
         believes that the quarterly information presented includes all
         adjustments (consisting only of normal, recurring adjustments)
         necessary for a fair presentation in accordance with generally accepted
         accounting principles. The accompanying consolidated financial
         statements should be read in conjunction with the Company's Form 10-KSB
         as filed with the Securities and Exchange Commission for the year ended
         December 31, 2005.

Note 2--Going Concern

         The accompanying consolidated financial statements have been prepared
         assuming the Company will continue as a going concern, which presumes
         that the Company will be able to continue to meet its obligations and
         realize its assets in the normal course of business.

         As shown in the accompanying financial statements, the Company has a
         history of losses with an accumulated deficit of $25,658,937 and
         $23,375,805 at September 30, 2006 and December 31, 2005, respectively.
         The Company also had a working capital deficiency of $6,695,766 and
         $8,192,239 at September 30, 2006 and December 31, 2005, respectively.
         These conditions raise substantial doubt about the Company's ability to
         continue as a going concern. The Company's continuation as a going
         concern is dependent upon its ability to ultimately attain profitable
         operations, generate sufficient cash flow to meet its obligations, and
         obtain additional financing as may be required.

Note 3 - Summary of Significant Accounting Policies

         A summary of significant accounting policies is included in Note 3 to
         the audited consolidated financial statements included in the Company's
         Annual Report on Form10-KSB for the year ended December 31, 2005.
         Management believes that the application of these policies on a
         consistent basis enables the Company to provide useful and reliable
         financial information about the company's operating results and
         financial condition. Below is provided a synopsis of the most
         significant policies.

         Principles of Consolidation - The consolidated financial statements
         include the accounts of the Company and its wholly owned subsidiaries.
         All material intercompany transactions and balances have been
         eliminated in consolidation.

         Cash and Cash Equivalents - The Company considers all highly liquid
         short-term investments, with a remaining maturity of three months or
         less when purchased, to be cash equivalents.

         Use of Estimates - The preparation of financial statements in
         accordance with accounting principles generally accepted in the United
         States requires management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities and disclosure of
         contingent assets and liabilities at the date of the financial
         statements and the reported amounts of revenues and expenses during the
         reporting periods. Significant estimates made by management include,
         but are not limited to, the realization of receivables. Actual results
         will differ from these estimates

                                       6
<PAGE>

         Accounts receivable and concentration of credit risk - Concentration of
         credit risk with respect to trade receivables is limited to customers
         dispersed across the United States of America. While trade receivables
         are concentrated in the quick service restaurant segment of the
         economy, the Company has begun to diversify its sales and has developed
         additional markets such as marinas, RV Parks, and Hotels for its
         services; accordingly the Company has reduced its exposure to business
         and economic risk. Although the Company does not currently foresee a
         concentrated credit risk associated with these trade receivables,
         repayment is dependent upon the financial stability of the various
         customers.

         Fair Value of Financial Instruments - The Company considers its
         financial instruments, which are carried at cost, to approximate fair
         value due to their near-term maturities.

         Deferred Financing Costs - The Company amortizes deferred financing
         costs over the life of the notes which range from one to three years.

         Inventories - Inventories consists of equipment held for resale or
         staged for future installation. Inventories are valued at the lower of
         cost or market based on specific identification. Obsolete inventory is
         written off and disposed of on a periodic basis.

         Equipment - Equipment are recorded at cost. Depreciation is provided by
         the straight - line method over the estimated useful lives of the
         related assets, which is estimated to be from three to seven years.

         Intangibles - Intangibles represent the net value of the customer lists
         and contracts acquired in the acquisitions of Airport Network
         Solutions, Inc., AuthDirect, Inc., Wise Technologies, Inc., and
         Linkspot, Inc. The Company has adopted the provisions of SFAS No 142,
         "Goodwill and Other Intangible Assets" ("SFAS 142") for the
         determination of fair value of the intangibles carrying value.

         Loss per Common Share - Net loss per common share is based on the
         weighted average number of shares outstanding. Potential common shares
         includable in the computation of fully diluted per share results are
         not presented in the financial statements as their effect would be
         anti-dilutive.

         Revenue Recognition -
         Revenue generated for Internet access via Wi-Fi or Internet terminals
         (transaction service fees) is recognized at the time the service is
         used. Costs associated with providing the services are expensed as
         incurred.

         Revenue generated from the sale and configuration of Wi-Fi equipment is
         recognized at time of shipment FOB to the customer. Costs associated
         with the equipment sold are expensed at the time of shipment.
         Configuration and setup labor is expensed as incurred.

         Revenue generated from managed services (both help desk and network
         management) is recognized at the time of billing. Services are billed
         at the beginning of each month's activity.

         Impact of New Accounting Standards Recent Accounting Pronouncements
         In February 2006, the FASB issued FASB Statement No. 155, which is an
         amendment of FASB Statements No. 133 and 140. This Statement; a)
         permits fair value re-measurement for any hybrid financial instrument
         that contains an embedded derivative that otherwise would require
         bifurcation, b) clarifies which interest-only strip and principal-only
         strip are not subject to the requirements of Statement 133, c)
         establishes a requirement to evaluate interests in securitized
         financial assets to identify interests that are freestanding
         derivatives or that are hybrid financial instruments that contain an
         embedded derivative requiring bifurcation, d) clarifies that
         concentrations of credit risk in the form of subordination are not
         embedded derivatives, e) amends Statement 140 to eliminate the
         prohibition on a qualifying special-purpose entity from holding a
         derivative financial instrument that pertains to a beneficial interest
         other than another derivative financial instrument. This Statement is
         effective for financial statements for fiscal years beginning after
         September 15, 2006. Earlier adoption of this Statement is permitted as
         of the beginning of an entity's fiscal year, provided the entity has
         not yet issued any financial statements for that fiscal year.
         Management believes this Statement will have no impact on the financial
         statements of the Company once adopted.

                                       7
<PAGE>

         In March 2006, the FASB issued FASB Statement No. 156, which amends
         FASB Statement No. 140. This Statement establishes, among other things,
         the accounting for all separately recognized servicing assets and
         servicing liabilities. This Statement amends Statement 140 to require
         that all separately recognized servicing assets and servicing
         liabilities be initially measured at fair value, if practicable. This
         Statement permits, but does not require, the subsequent measurement of
         separately recognized servicing assets and servicing liabilities at
         fair value. An entity that uses derivative instruments to mitigate the
         risks inherent in servicing assets and servicing liabilities is
         required to account for those derivative instruments at fair value.
         Under this Statement, an entity can elect subsequent fair value
         measurement to account for its separately recognized servicing assets
         and servicing liabilities. By electing that option, an entity may
         simplify its accounting because this Statement permits income statement
         recognition of the potential offsetting changes in fair value of those
         servicing assets and servicing liabilities and derivative instruments
         in the same accounting period. This Statement is effective for
         financial statements for fiscal years beginning after September 15,
         2006. Earlier adoption of this Statement is permitted as of the
         beginning of an entity's fiscal year, provided the entity has not yet
         issued any financial statements for that fiscal year. Management
         believes this Statement will have no impact on the financial statements
         of the Company once adopted.

         In June 2006, the Financial Accounting Standards Board (FASB) issued
         Financial Interpretation (FIN) No. 48, "Accounting for Uncertainty in
         Income Taxes -- an Interpretation of FASB Statement No. 109." FIN 48
         addresses the accounting for uncertainty in income taxes recognized in
         an enterprise's financial statements in accordance with Statement of
         Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
         Taxes." FIN 48 prescribes specific criteria for the financial statement
         recognition and measurement of the tax effects of a position taken or
         expected to be taken in a tax return. This interpretation also provides
         guidance on de-recognition of previously recognized tax benefits,
         classification of tax liabilities on the balance sheet, recording
         interest and penalties on tax underpayments, accounting in interim
         periods, and disclosure requirements. FIN 48 is effective for fiscal
         periods beginning after December 15, 2006. The Company is currently
         evaluating the impact, if any that the adoption of FIN 48 will have on
         its financial statements.

         In September 2006, the FASB issued FASB Statement No. 157. This
         Statement defines fair value, establishes a framework for measuring
         fair value in generally accepted accounting principles (GAAP), and
         expands disclosures about fair value measurements. This Statement
         applies under other accounting pronouncements that require or permit
         fair value measurements, the Board having previously concluded in those
         accounting pronouncements that fair value is a relevant measurement
         attribute. Accordingly, this Statement does not require any new fair
         value measurements. However, for some entities, the application of this
         Statement will change current practices. This Statement is effective
         for financial statements for fiscal years beginning after November 15,
         2007. Earlier application is permitted provided that the reporting
         entity has not yet issued financial statements for that fiscal year.
         Management is currently evaluating the impact this statement will have
         on the financial statements of the Company once adopted.

Note 4 -- Convertible Debentures

                           Lender                                   Amount
                           ------                                   ------
                 Cornell Capital Partners,                $          1,850,000
                 5% interest, due November 2007
                 Accredited individual investors
                 10% to 12% interest
                 due various dates in 2006                           1,126,075
                                                          ---------------------
                                                                     2,976,075

                 Notes payable discounts                            (1,012,803)
                                                          ---------------------

                                                   Total  $          1,963,272
                                                          =====================

         In February 2006, the Company issued a two year, secured convertible
         debenture to Cornell, in the principal amount of $125,000. The
         debenture carries similar conversion provisions as the November 2, 2005
         and December 16, 2005 debentures. In addition, the Company issued
         25,000,000 warrants to purchase common shares at a price of $0.01 per
         share, and 25,000,000 warrants to purchase common shares at a price of
         $0.03 per share. The warrants have a term of 3 years.

                                       8
<PAGE>

         In January 2006, the Company issued 3,572,851 shares of common stock
         upon conversion of $104,327.24 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0292 per share.

         In February 2006, the Company issued 1,760,563 shares of common stock
         upon conversion of $50,000 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0284 per share.

         In March 2006, the Company issued 2,183,000 shares of common stock upon
         conversion of $55,448.20 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0254 per share.

         In June 2006, the Company issued 7,180,222 shares of common stock upon
         conversion of $77,552 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0108 per share.

         In June 2006, the Company issued 14,925,374 shares of common stock upon
         conversion of $100,000 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0067 per share.
         In July 2006, the Company issued 7,692,308 shares of common stock upon
         conversion of $50,000 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0065 per share.

         In August 2006, the Company issued 16,101,695 shares of common stock
         upon conversion of $95,000 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0059 per share.

         In August 2006, the Company issued 16,000,000 shares of common stock
         upon conversion of $80,000 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0050 per share.

         In September 2006, the Company issued 12,195,122 shares of common stock
         upon conversion of $50,000 of the November 2006 secured convertible
         debenture to Cornell Capital. The shares were converted at a price of
         $0.0041 per share.

         In August 2006, the Company issued a two year convertible debenture to
         Michael Vickers, an accredited investor, in the principal amount of
         $50,000. The debenture is convertible at a fixed price of $0.0058 per
         share. The debenture carries interest at a rate of 9% per annum. In
         addition, the Company issued 8,620,689 two year warrants to purchase
         common shares; one third at a price of $0.02 per share, one third at a
         price $0.05 per share, and one third at a price of $0.08 per share. The
         warrants are subject to a call provision by the Company if the market
         price per share is above $0.05 per share, $0.08 per share, and $0.11
         per share respectively for a period of 5 or more days.

         In August 2006, the Company issued a two year convertible debenture to
         Betsill Builders, an accredited investor, in the principal amount of
         $250,000. The debenture is convertible at a fixed price of $0.0066 per
         share. The debenture carries interest at a rate of 9% per annum. In
         addition, the Company issued 40,000,000 two year warrants to purchase
         common shares; one third at a price of $0.02 per share, one third at a
         price $0.05 per share, and one third at a price of $0.08 per share. The
         warrants are subject to a call provision by the Company if the market
         price per share is above $0.05 per share, $0.08 per share, and $0.11
         per share respectively for a period of 5 or more days.

Note 5 --Notes Payable

         From January 2006 through March 2006, the Company issued short term
         bridge notes totaling $60,712 to Seaport Capital. The notes carried
         interest at a rate of between 10% and 15% per annum. During the same
         period, the Company repaid $77,712 to Seaport Capital consisting of the
         bridge notes secured between January and March 2006, and a previous
         bridge note issued in December 2005.

         From April 2006 through June 2006, the Company issued short term bridge
         notes totaling $27,911 to Seaport Capital. The notes carry interest at
         a rate of between 10% and 15% per annum.

         From July through September 2006, the Company issued short term bridge
         notes totaling $43,000 to Seaport Capital. The notes carry interest at
         a rate of between 10% and 15% per annum.

                                       9
<PAGE>

         In April 2006, the Company received $50,000 from the sale of a term
         note to an accredited investor. The note is due on June 1, 2006 and
         carries interest at a rate of 12% per annum. In addition, the investor
         received a two year warrant to purchase 555,555 shares of common stock
         at an exercise price of $0.045 per share. Pursuant to the penalty
         provision, the Investor will receive an additional 2,222,220 common
         stock warrants since the Company failed to pay the principal and
         accrued interest on the stated maturity date.

                          Lender                                  Amount
                          ------                                  ------
Acquisitions (WISE Technologies, Inc)                        $          50,000
10% interest, due on demand
Bill Thomas,                                                           295,000
15% to 25% interest, due on demand
Seaport Capital,                                                       362,280
12 to 15% interest, due on demand
Accredited individual investors,                                       305,387
9% to 36% interest, due on demand
                                                             ------------------

                                                      Total  $        1,012,667
                                                             ==================

Note 6 - Stockholder's Deficit

         On February 22, 2006, the Company sold 2,659,574 shares of restricted
         common stock for a total of $50,000. The shares were issued at an
         average price of $0.0188 per share.

         On March 24, 2006, the Company sold 13,333,333 shares of restricted
         common stock for a total of $80,000. The shares were issued at an
         average price of $0.006 per share.

         On March 9, 2006 the Company executed a letter of understanding with
         SSJ Enterprises, LLC ("SSJ") and Street Search, LLC ("Street Search"
         pertaining to the obligations imposed on the Company as a result of the
         recent litigation against the Company by SSJ and Street Search. The
         parties agreed to settle the obligation with 30,000,000 shares of the
         Company's common stock. The agreement was executed on April 12, 2006.
         Subsequently, in April 2006, the Company issued 30,000,000 shares of
         restricted common stock in full settlement of the judgment and
         subsequent settlement of the litigation between the Company, SSJ, and
         Street Search. The shares were issued at an average price of $0.03 per
         share. The previously recorded accrual of $900,000 has been
         reclassified from `stock to be issued' to equity.

         On April 18, 2006, the Company issued 1,000,000 shares of restricted
         common stock on conversion of warrants. The shares were issued at an
         average price of $0.01 per share.

         On April 19, 2006, the Company sold 15,252,976 shares of restricted
         common stock for a total of $150,000. The shares were issued at an
         average price of $0.0098 per share.

         On June 15, 2006, the Company sold 3,731,343 shares of restricted
         common stock for a total of $25,000. The shares were issued at an
         average price of $.0067 per share.

         On June 26, 2006, the Company sold 5,411,255 shares of Series B
         Preferred Stock for a total of $250,000. The series B preferred shares
         are convertible under certain conditions into 10 shares of common
         stock. If the preferred shares are converted into common shares, it
         would be at an average price of $0.0046 per share.

Note 7 - Capital Lease

         On May 4, 2005, the Company entered into a Master Lease Agreement with
         Agility Lease Fund I, LLC. Under the terms of the agreement, the
         Company can lease up to $1.0 million of equipment and project costs
         related to Wi-Fi network growth and deployments. In connection with the
         Master Lease Agreement, the Company is required to issue $200,000 of
         warrants at the market price on the day prior to closing, and an
         additional 10% warrant based on the market price on the day prior to
         each lease schedules execution.

                                       10
<PAGE>

         In May and June 2005, the Company utilized $529,234 of the lease line,
         and recorded $96,408 of prepaid interest. The three lease schedules are
         due in May and June 2008.

         In July and August 2005, the Company utilized $205,143 of the lease
         line, and recorded $52,621 of prepaid interest. The two lease schedules
         are due in July and August 2008.

         In connection with the lease agreement and the individual lease draws,
         the Company issued 4,245,133 three year warrants at prices between
         $0.056 and $0.06 per share. In connection with the July and August
         lease draws, the Company issued 204,955 three year warrants at a price
         of $0.051 per share, and 170,535 three year warrants at a price of
         $0.059 per share.

         In April 2006, the Company defaulted on its payments under the Master
         Lease Agreement. Agility has invoked their right to directly collect
         the proceeds of the revenue generated by the leased locations. The
         Company cooperated in this effort and in September 2006 came to
         agreement with Agility to re-age the delinquent lease payments. Agility
         continues to maintain control of the proceeds to maintain timely
         payment of the leases.


Note 8 - Litigation

         On October 8, 2004, SSJ and Street Search filed suit in the United
         States District Court, District of Rhode Island against the Company,
         George Strouthopoulos and Erwin Vahlsing alleging breach of contract,
         breach of oral contract and fraud regarding a Services Agreement, dated
         October 20, 2003 for consulting services under the agreement. In
         November 2004, the Company filed its response to the allegations.

         In March 2006, the case reached trial, and the fraud charges against
         the Company, George Strouthopoulos, and Erwin Vahlsing, Jr. were
         dismissed. The count alleging breach of contract was upheld, and the
         jury entered judgment against the Company in the amount of $900,000. On
         April 12, 2006, the Company and the plaintiff's entered into a
         settlement agreement pursuant to which the Company issued 30,000,000
         shares of common stock. The value of these shares at the time of
         judgment was $900,000 which amount the Company had previously accrued
         on its books. Accordingly, the Company has reclassified this amount
         from accounts payable to stock to be issued. In April 2006, the Company
         issued 30 million shares in full satisfaction of the settlement.

         On January 25, 2002, a legal proceeding was commenced by the Company,
         against World Capital, Inc., a leasing company with which the Company
         had a contract to finance certain equipment purchases. On June 15,
         2001, the Company signed a lease agreement with World Capital, Inc. and
         made payment of $178,641.49 representing the first and last two months
         lease payments. On July 25, 2001 World Capital, Inc. gave notice to the
         Company of its intention not to fund the equipment lease. The Company
         has filed suit in US District Court for the Eastern District of
         Pennsylvania seeking recovery of the payment, accrued interest, and
         damages caused by the failure to fund. In December 2002, the Company
         amended its complaint against World Capital, Inc. to include criminal
         fraud charges against the principals of World Capital, Inc. Trial took
         place in late February, 2005

         In April 2005, the Company was advised that its case against World
         Capital, Inc. had been decided in its favor and judgment was entered
         against World Capital and its principals in the amount of $218,000. The
         defendants have appealed the ruling, and uncertainties exist regarding
         collectibility. In light of these uncertainties, the Company has not
         recognized any value associate with this litigation.

                                       11
<PAGE>

Note 9 - Acquisitions

         On May 26, 2005, the Company acquired the outstanding shares, in
         exchange for $2,000,000 of common stock and the assumption of a $50,000
         note, of Wise Technologies, Inc., a privately held corporation that
         provides Wi-Fi services in various airports, hotels, and universities.
         It is operated as a wholly-owned subsidiary.

         On July 8, 2005, the Company acquired the outstanding shares, in
         exchange for $962,999 of commons stock, of LinkSpot Networks, Inc., a
         privately held corporation that provides Wi-Fi services in various RV
         Parks and recreation facilities. It is operated as a wholly-owned
         subsidiary.

         On July 28, 2005, the Company acquired the operating assets of
         Cafe.com, in exchange for $30,000 of cash and $140,085 of common stock.
         The assets consist of equipment and contracts to provide Wi-Fi services
         in various west coast based coffee shops.

         The above acquisitions have been accounted for as purchases and their
         results of operations are included in the financial statements of the
         Company from the date of acquisition.

         The following Unaudited pro forma consolidated results of operations
         have been prepared as if the acquisition of Wise, LinkSpot, and
         Cafe.com had occurred as of the following period:
<TABLE>
<CAPTION>

     -------------------------- -------------------------- -------------------------- ---------------------------
                                                                                             Pro Forma,
                                    As reported, Nine                                     Nine Months Ended
                                      Months Ended              Pre-Acquisition          September 30, 2005
             2005                  September 30, 2005              Operations                     (1)
     -------------------------- -------------------------- -------------------------- ---------------------------
<S>                             <C>                        <C>                        <C>
     Revenues                   $       1,704,876          $         431,186          $       2,136,062
     -------------------------- -------------------------- -------------------------- ---------------------------
     Loss before
     extraordinary items               (6,829,055)                   (980,558)                (7,809,613)
     -------------------------- -------------------------- -------------------------- ---------------------------
     Net Loss                          (6,829,055)                   (980,558)                (7,809,613)
     -------------------------- -------------------------- -------------------------- ---------------------------
     Loss per common share      $           (0.02)                                    $       (0.02)
     -------------------------- -------------------------- -------------------------- ---------------------------
     Shares outstanding                353,879,220                                            353,879,220
     -------------------------- -------------------------- -------------------------- ---------------------------
         (1) Acquisitions included through date of acquisition.
</TABLE>

Note 10 - Warrants

         In connection with the convertible debentures issued in February 2006
         to Cornell, the Company issued three year warrants in the following
         amounts:

          o    Warrants to purchase up to 25,000,000 shares of common stock at a
               price of $0.01 per share
          o    Warrants to purchase up to 25,000,000 shares of common stock at a
               price of $0.03 per share

         In April 2006, the holder of $1,000,000 warrants exercised the warrant
         at its exercise price of $0.01 per share.

         In connection with the issuance of convertible debentures in July 2006
         to Michael Vickers, the Company issued two year warrants in the
         following amounts:

          o    Warrants to purchase up to 2,873,563 shares of common stock at a
               price of $0.02 per share
          o    Warrants to purchase up to 2,873,563 shares of common stock at a
               price of $0.05 per share
          o    Warrants to purchase up to 2,873,563 shares of common stock at a
               price of $0.08 per share


         In connection with the issuance of convertible debentures in August
         2006 to Betsill Builders, the Company issued two year warrants in the
         following amounts:

          o    Warrants to purchase up to 13,333,333 shares of common stock at a
               price of $0.02 per share
          o    Warrants to purchase up to 13,333,333 shares of common stock at a
               price of $0.05 per share
          o    Warrants to purchase up to 13,333,334 shares of common stock at a
               price of $0.08 per share

                                       12
<PAGE>

Note 11 - Derivative Liabilities

         In 2005, the Company determined that the conversion feature of the
         convertible debentures entered into with Cornell represented an
         embedded derivative since the debentures are convertible into a
         variable number of shares upon conversion. Accordingly, the convertible
         debentures are not considered to be conventional debt under EITF 00-19
         and the embedded conversion feature must be bifurcated from the debt
         host and accounted for as a derivative liability.

         The Company believes that the aforementioned embedded derivatives and
         freestanding warrants meet the criteria of SFAS 133 and EITF 00-19, and
         should be accounted for as separate derivatives with a corresponding
         value recorded as liability.

         As a result of the Company's meeting the requirements of SFAS 133, all
         of the Company's previously issued and outstanding instruments,
         including fixed price convertible debentures, warrants and options as
         well as those issued in the future, would be classified as derivative
         liabilities as well.

         In February 2006, the Company issued an additional convertible
         debenture to Cornell in the principal amount of $125,000 and issued
         warrants to purchase 25,000,000 shares of common stock at a price of
         $0.01 per share, and an additional 25,000,000 shares of common stock at
         a price of $0.03 per share. In connection with this transaction the
         Company recorded $94,154 as a discount on convertible debentures;
         interest expense of $1,496,932; and a derivative liability of
         $1,591,086.

         The increase in fair value between the date of inception of the various
         debt and equity instruments and September 30, 2006 amounted to
         $1,906,625 and has been recorded as a reversal of interest expense.

         The aggregate fair value of the derivative liabilities at the date of
         issuance of the convertible debenture and at September 30, 2006, is as
         follows:
<TABLE>
<CAPTION>

                                                 At Inception       At Dec. 31, 2005       At Sept. 30, 2006
                                           ---------------------- ---------------------- -----------------------
<S>                                        <C>                    <C>                    <C>
       Discount on convertible debentures  $      1,421,102       $        1,407,110     $         1,012,803
       Liability associated with prior
       convertible debentures and
       warrants                                     832,450                  672,870                 665,876
                                           ---------------------- ---------------------- -----------------------

        Total derivative liability         $      2,253,552       $        2,079,980     $           346,927
                                           ====================== ====================== =======================
</TABLE>

Note 12 - Stock Options and Warrants

         Effective January 1, 2006, the Company began recording compensation
         expense associated with stock-based awards and other forms of equity
         compensation in accordance with FASB Statement No. 123-R, Share-Based
         Payment ("SFAS 123R") as interpreted by SEC Staff Accounting Bulletin
         No. 107. The Company adopted the modified prospective transition method
         provided under SFAS 123R, and consequently has not retroactively
         adjusted results from prior periods. The Company did not recognize any
         costs associated with stock-based awards in the first quarter of 2006
         as none were granted or unvested prior to January 1, 2006. Prior to
         January 1, 2006, the Company accounted for stock-based awards using the
         "disclosure only" alternative described in SFAS 123 and FASB Statement
         No. 148, Accounting for Stock-Based Compensation.

         The Company utilizes the Black-Scholes option-pricing model to
         calculate the fair value of each individual issuance of options. This
         method and the underlying assumptions are further described in footnote
         13 of our report on Form 10KSB dated December 31, 2005.

                                       13
<PAGE>

Note 13 - Subsequent Events

         In October 2006, the Company received $100,000 from the sale of
         convertible debentures to accredited investors. The convertible
         debentures mature in two years, carry interest at a rate of 9% per
         annum, and are convertible at an average price of $0.0040 per share.

         In October 2006, the Company received $10,000 from the sale of a short
         term demand note to an accredited investor.

         In November 2006, the Company received $25,000 from the sale of a short
         term demand note to an accredited investor.






















                                       14
<PAGE>

Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations

         THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL
CONDITION OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO OF THE COMPANY, CONTAINED
ELSEWHERE IN THE FORM 10-QSB.

Forward-looking statements in this report may prove to be materially inaccurate.
In addition to historical information, this report contains forward-looking
information that involves risks and uncertainties. The words "may", "will",
"expect", "anticipate", "continue", "estimate", "project", "intend" and similar
expressions are intended to identify forward-looking statements. Actual results
may differ materially from those included within the forward-looking statements
as a result of factors, including the risks described above and factors
described elsewhere in this report.

Strategy
Our goal is to be a leading and innovative national provider of broadband
solutions. During the third quarter of 2006, ICOA sharpened the focus of its
operations into three Strategic Business Units (SBU's).

1.       ICOA BroadBand Properties
ICOA BroadBand Properties provides pay-per-use Wi-Fi service on ICOA owned and
operated networks at 23 airports, 55 marinas and 75 RV parks across the country
as well as at such hospitality locations as the Trump Casino Properties in
Atlantic City. Under long-term contracts, ICOA BroadBand Properties designs,
builds, maintains, operates and provides call center support for these hotspot
networks. Users of these networks pay usage fees to ICOA and ICOA on average
pays 20% of hotspot revenues back to the venues. ICOA BroadBand Properties has
focused its attention on regional airports and on niche markets where it can
enjoy superior margins.

2.       ICOA Wi-Fi BroadBand Solutions
ICOA Wi-Fi BroadBand Solutions sells "turnkey" Wi-Fi broadband solutions under
multi-year contracts (typically 3 to 5 years) to enterprises which primarily
offer Wi-Fi as an amenity in order to increase customer traffic. Enterprises
currently served include over 1,500 restaurants, super markets, retail chains,
and independently owned outlets. Wi-Fi BroadBand Solutions provides equipment,
turn-key maintenance, and backend operational and support services for the
hot-spot. Backend services include 24 x 7 network monitoring, call center
support, billing, credit card processing and inter-network settlements, user
provisioning & authentication and regular reports for the venue owner. ICOA
earns profits on the sale of the solutions to the venue and is paid monthly over
the life of the contracts.

3.        ICOA Managed Services
ICOA Managed Services sells backend support to 66 independent Wi-Fi Internet
Service Providers (WF-ISP). WF-ISPs include Wi-Fi service providers such as 5G
Wireless, large retail chains such as Staples that have established their own
Wi-Fi amenity networks and RF engineering companies that design and build Wi-Fi
hotspots for retailers, hospitality, restaurants, Metrozones, and other venues.
ICOA Managed Services utilizes ICOA's proprietary, award winning TollBooth(TM)
operations and support software and ICOA's nationwide network support
capabilities to provide such services as:

     o    24x7 network monitoring & call center support for the WF-ISP and its
          customers.
     o    Billing, credit card services & inter-network settlements where
          appropriate
     o    Network maintenance & provisioning
     o    User provisioning & authentication
     o    Regular operational reporting to the WF-ISP
     o    Customer network administration via self help portal

ICOA Managed Services receives a one-time payment for integration and
development engineering and under multi-year contracts is paid a monthly
retainer fee and per transaction fees.

As part of our overall strategy to compete in each relevant segment, we use our
core competencies in the design, deployment and management of broadband and
broadband wireless networks in and to high-traffic public locations in market
segments including but not limited to airports, hospitality, RV resorts and
campgrounds, marinas, multiple dwelling units ("MDU's"), restaurants and cafes,
travel plazas and higher education.

As of September 30, 2006, ICOA owned or operated over 2,000 broadband access
installations in high-traffic locations servicing millions of annual patrons
across 45 states. Until earlier this year, the Company's revenue had a strong
reliance on one time equipment sales and installation projects. The revenue mix
has changed with recurring revenue increasing to 86.3% of total revenue for the
nine months ended September 30, 2006 as compared to 74.0% for the same period in
2005. This is an important aspect of our long term growth as the margin on
recurring revenue is significantly higher than on equipment and installation
sales.

                                       15
<PAGE>

Today, ICOA is a provider of Wi-Fi networks and services. Our footprint for
retail services is targeted at high-traffic and high-value locations, with
wireless capability supplemented by a growing wired infrastructure and our kiosk
expertise. We also provide cost effective networks for the growing "amenity"
services segment. We provide high-quality and reliable support systems and
services for both our own operations and as a "back-office" for other service
providers. We are sensitive to the specific needs of the growing and changing
base of users who demand access to broadband on demand anywhere, anytime, with
any device.

Our strategy over time is to focus on expanding end-to-end solutions which meet
the present and future needs of customers and the rapid proliferation of new
broadband wireless access devices such as hand-held consumer devices,
communications devices, PDAs and mobile gaming platforms. We believe our
industry will be transformed over time from one driven solely by computing
platforms to one increasingly driven by a wide array of communications, gaming
and hand-held consumer device platforms. This device platform expansion is
increasing usage across our networks as it is also generating new end-user
demographic segment demand. In addition, as emerging technologies allow, and
subject to available capital, ICOA is looking to move beyond the delivery of
Wi-Fi access to the delivery of digital value-added services to deliver value to
our customers and users.

We anticipate increased revenue and demand to be generated in our near-term
horizon from services including VoIP, increased roaming, location-specific
applications, targeted advertising platforms, high-bandwidth content delivery
and management, and access to proprietary content. With respect to VoIP, a small
but steadily growing customer base has been utilizing VoIP technologies and
services over our Wi-Fi networks, and we expect this trend to improve as
additional services and VoIP-enabled devices are propagated into the
marketplace. This trend is in keeping with broader industry trends, such as the
recent Skype/Boingo VoIP over Wi-Fi trials, which will include ICOA's assets in
the near future. With respect to ancillary revenue from roaming, ICOA's recently
achieved national scale provides the Company with attractive locations of
strategic roaming value to other wireless service providers. Our networks were
designed as neutral-host specifically to prepare for roaming, a strategy which
maximizes revenue-potential from the existing asset base.

With respect to location-specific applications, including targeted advertising,
recent advancements in both hardware and software technologies provide
opportunities for layered services which were previously not possible, including
the value-add localization of advertising revenue. Our strategy includes
participating in this important transformation of the broadband wireless
industry through active partnerships with key industry solution providers on a
go-forward basis. The delivery and management of high bandwidth content is
another recent promising development. An example is IPTV and other entertainment
industry transitions to full digital platforms. Our strategy during the
early-stages includes engaging in select trials with proven partners, ensuring
network capacity and architectures meet the requirements of emerging content
applications, and preparing for demand as customer tastes and habits mature.

While today ICOA is focused on Wi-Fi, our models and approach is
technology-agnostic. We work with numerous technologies, as economies of scale,
market penetration and device propagation permit or demand. For example, we are
looking to early market tests of Wi-Max, which we believe is a promising
technology still in its early stages of development. Wi-Max may serve our
medium-term requirements as a fixed wireless backhaul replacement in certain
locations, which could bring operational cost savings and expanded reach to
locations otherwise unreachable through terrestrial solutions. In the long-term,
management believes that as the number of Wi-Max capable devices increases to
warrant select upgrades, the strategic value of ICOA's footprint offers a
platform from which to transition to mobile Wi-Max solutions. With respect to
newly emerging cellular 3G networks, our strategy includes working with device
manufacturers and cellular providers for seamless interoperability between the
networks.

We have grown through acquisition and look to continue to do so. Our near to
medium term strategy is to continue to acquire promising Wi-Fi and broadband
services companies as capital resources allow 1) in market segments targeted for
growth and anticipated profitability or 2) with unique infrastructure
capabilities. We look for leading companies with management strength, and who
are strategically placed in market segments which may offer intrinsic value per
share. In the future, we may also consider equity investments in related and
complementary companies and assets, which further our strategic objectives,
support our key business initiatives and enhance shareholder value.

All of our businesses operate in highly innovative environments characterized by
continuing and rapid introduction of new technologies, bundled services and
products which offer improved performance at lower prices. Nationally, our
competitors range in size from large established national companies with
multiple technology and service offerings, to smaller companies and new entrants
to the marketplace that compete in specialized market segments. The continued
and rapid convergence of computing, communications and consumer devices offers
us enhanced opportunities, but also increased competition. Competition tends to
increase pricing pressure or require us to modify our business models to remain
competitive, which may result in lower profits. Wherever we believe it is
advantageous, we may take various steps, including introducing new services and
other incentives in order to remain competitive and position the Company to
potentially increase market share.

                                       16
<PAGE>

SIGNIFICANT ACCOUNTING POLICIES

         A summary of significant accounting policies is included in Note 3 to
the audited consolidated financial statements included in the Company's Annual
Report on Form10-KSB for the year ended December 31, 2005. Management believes
that the application of these policies on a consistent basis enables the Company
to provide useful and reliable financial information about the company's
operating results and financial condition. See footnote 3 for additional
information.


Results of operations

Three months ended September 30, 2006 as compared to the three months ended
September 30, 2005, and nine months ended September20, 2006 as compared to the
nine months ended September 20, 2005.


Revenue
Our revenue is derived from the ownership and operation of neutral-host
broadband wireless Wi-Fi Hot Spots and High Speed Internet terminals in high
traffic public locations, and Wi-Fi equipment sales, installation fees, and
network management and maintenance services.

For the period ended September 30, 2006, quarterly revenue decreased $75,038 or
9.7% to $701,174 as compared to $776,212 for the quarter ended September 30,
2005.

The Company realized a 33.9% increase in revenue generating $2,282,754 in
revenue for the nine months ended September 30, 2006 as compared to $1,704,876
for the nine months ended September 30, 2005.

The revenue growth for the nine months ended September 30, 2006 is primarily due
to increasing Transaction Service Fees and an increase in Managed Services Fees
year over year while new Equipment Sales decreased as the Company did not pursue
several large projects of the type it completed in the first half of 2005. The
decrease in revenue of $75,038 for the three months ended September 20, 2006
versus the three months ended September 30, 2005 is mainly attributable to
several locations converting to a managed amenity service model from a customer
pay per use model. The increased Managed Services revenue is a result of this
shift which long term should yield a stronger gross margin as the Company
eliminates costs associated with location operation, and concentrates on
providing the more profitable Managed Services. A portion of the overall year to
date increase is a result of the acquisitions completed in 2005.


Revenue was generated from the following services:
<TABLE>
<CAPTION>

                                           For the three months ended            For the nine months ended
                                        September 30,      September 30,      September 30,      September 30,
                                            2006               2005               2006               2005
                                      ------------------ ------------------ ------------------ ------------------
<S>                                   <C>                <C>                <C>                <C>
Transaction Service Fees              $         453,792  $         539,210  $       1,462,554  $         980,033
Wi-Fi Equipment Sales and Service                60,501            109,745            312,720            442,490
Managed Services                                186,881            127,257            507,480            282,353

                                      ------------------ ------------------ ------------------ ------------------
                               Total  $         701,174  $         776,212  $       2,282,754  $       1,704,876
                                      ================== ================== ================== ==================
</TABLE>

                                       17
<PAGE>

Cost of Services consists primarily of:
<TABLE>
<CAPTION>

                                           For the three months ended            For the nine months ended
                                      ------------------------------------- -------------------------------------
                                        September 30,      September 30,      September 30,      September 30,
                                            2006               2005               2006               2005
                                      ------------------ ------------------ ------------------ ------------------
<S>                                   <C>                <C>                <C>                <C>
Telecom/Co-Location/Hosting Costs     $         223,952  $         214,058  $         618,446  $         381,436
Wi-Fi Equipment and Installation                 37,357             52,911            253,385            318,794
Managed Services                                196,823            211,340            590,310            468,528
Depreciation Expense                            348,406            191,141          1,038,376            404,187
                                      ------------------ ------------------ ------------------ ------------------
                               Total  $         806,538  $         669,450  $       2,500,517  $       1,572,945
                                      ================== ================== ================== ==================
</TABLE>

For the quarter ended September 30, 2006, the Company recorded a negative gross
margin of ($105,363), as compared to a gross margin of $106,762 for the quarter
ended September 30, 2005, an increase of $212,125 or 200%. This was primarily
due to the increase in depreciation and amortization of $157,265 coupled with
added telecommunication costs.

For the nine months ended September 30, 2006, the negative gross margin was
($217,763), as compared to a gross margin of $131,931 for September 30, 2005, an
increase of 265%. This was primarily due to the increase in depreciation and
amortization of $634,189.

Cost of Services increased 20% or $137,088 to $806,538 for the three months
ended September 30, 2006 versus $669,450 for the three months ended September
30, 2005.

Similarly, the Cost of Services increased 59% or $927,572 to $2,500,517 for the
nine months ended September 30, 2006 versus $1,572,945 for the nine months ended
September 30, 2005.

The increases both quarterly and year to date, were primarily due to increased
costs of providing help desk services as business has increased, additional cost
of telecommunications, and an increase in depreciation expense. Depreciation and
Amortization Expense increased 82% or $157,265 for the three months ended
September 30, 2006 compared to the three months ended September 30, 2005, and
157% or $634,189 for the nine months ended September 30, 2006 compared to the
nine months ended September 30, 2005. The increase was primarily due to the
amortization of intangible assets associated with the acquisitions of Wise
Technologies, LinkSpot Networks, Cafe.com, and depreciation associated with the
capital leases.

Selling, general and administrative expenses

General and administrative expenses consist primarily of:
Employee compensation and related expenses including payroll taxes and benefits
for executive, administrative and operations personnel, Professional fees
associated with deployment of Wi-Fi networks, legal and accounting fees
connected with registrations filed with the SEC, professional fees associated
with the development and creation of marketing materials in pursuit of
advertising contracts, travel and entertainment, and facility and office-related
costs such as rent, insurance, maintenance and telephone.

For the quarter ended September 30, 2006 these costs decreased $371,215 or 37%
from $997,113 for the quarter ended September 30, 2005 to $625,898.

For the nine months ended September 30, 2006, these expenses decreased
$1,056,820 or 32% to $2,272,287 from $3,329,107 for the nine months ended
September 30, 2005.

The quarterly decreases outlined below are mainly a reflection of the Company's
efforts to control costs. The Company added several new personnel by converting
consultants who previously provided development services related to the business
model and the Company's entry into new market verticals to staff. This was
offset by an overall reduction in the use of consultants. Additionally, there
was a reduction in (i) relocation and hiring expenses, (ii) reduced legal
expense connected with financing, registration filings, acquisitions and the
wind up of litigation in the World Capital lawsuit and the SSJ litigation, (iii)
accounting expense related to acquisitions and reviews of SEC filings, (iv)
finance fees associated with the convertible debentures and the now cancelled
Standby Equity Distribution Agreement, (v) employee stock bonuses, and (vi)
additional travel and entertainment expense connected with sales efforts to
secure new installation opportunities. Employment related expense for the nine
month period ended September 30, 2005, was higher than the same period in 2006
because in 2005, the Company relocated several key members of its management
team and was required to provide temporary living expenses related to these
moves. Management expects general and administrative expenses in future periods
to run at similarly decreased levels as the Company works to effectively manage
the costs of the business even as it pursues continued growth.

                                       18
<PAGE>

<TABLE>
<CAPTION>

                          Quarterly increases (decreases) in selling, general and administrative

                                                 For the three months ended          For the nine months ended
                                               September 30, 2006 as compared      September 30, 2006 as compared
                                                   to September 30, 2005               to September 30, 2005
                                             ----------------------------------- -----------------------------------
<S>                                          <C>                                 <C>
            Payroll                          $             (73,936)              $               44,041
            Consulting                                    (143,587)                            (351,484)
            Legal                                          (81,763)                            (184,446)
            Accounting                                       28,736                               71,259
            Finance Fees                                      2,520                             (50,468)
            Insurance                                        27,800                               74,946
            Employment related expense                              0                          (303,818)
            Travel & Entertainment                         (138,511)                           (397,631)
            Other                                              7,526                              40,781
                                             ----------------------------------- -----------------------------------
                   Increase Quarter and YTD  $            ( 371,215)             $           ( 1,056,820)
                                             =================================== ===================================
</TABLE>

Interest Expense

Interest expense consists of interest accrued on loans and convertible notes
payable, and the beneficial conversion feature on the convertible notes and
warrants.

Interest expense decreased by $2,042,864 to $279,156 for the three months ended
September 30, 2006 as compared to $2,322,020 for the three months ended
September 30, 2005.

Interest expense decreased by $2,796,441 to $827,461 for the nine months ended
September 30, 2006 as compared to $3,623,902 for the nine months ended September
30, 2005.

The decrease for the three month and nine month periods is attributable to a
reduction in beneficial conversion feature recorded on convertible debentures
issued in the prior year. The calculation of beneficial conversion feature has
been superseded by the Derivative Liability computation identified in the `Other
Expense' section below and in Footnote 11.

Other Expense

The Company recorded income of $421,496 for the three months ended September 30,
2006 and $1,641,007 for the nine months ended September 30, 2006 as the "mark to
market" adjustment of the derivative liability. There was no similar expense
during the same periods in 2005.

Net Loss

For the three months ended September 30, 2006, the Company had a loss of
$798,526 as compared to a loss of $3,215,847 for the three months ended
September 30, 2005 a decrease of $2,417,321 or 75%.

For the nine months ended September 30, 2006, the Company had a loss of
$2,283,244 as compared to a loss of $6,829,055 for the nine months ended
September 30, 2005 a decrease of $4,545,811 or 67%.

The significant difference for the quarter and year to date as compared to the
same period last year is mainly due to the reduction in selling, general and
administrative costs and the adjustment of the derivative instrument liability
in the first six months offset by an increase in depreciation and amortization
expense.


                                       19
<PAGE>

Income Taxes

No provision for federal and state income taxes has been recorded as the Company
incurred net operating losses since January 1, 1998 (Inception). The net
operating losses will be available to offset any future taxable income. Given
the Company's limited operating history, losses incurred to date and the
difficulty in accurately forecasting future results, management does not believe
that the realization of the potential future benefits of these carry forwards
meets the criteria for recognition of a deferred tax asset required by generally
accepted accounting principles. Accordingly, a full 100% valuation allowance has
been provided.

Liquidity and Capital Resources

Cash and cash equivalents were $30,820 at September 30, 2006. Net cash used in
operating activities of $942,455 was derived from the net loss from operations
offset by depreciation of equipment, amortization of intangibles and deferred
financing costs, an increase in accounts receivable, an increase in inventory,
an increase in prepaid expenses and deposits, and an increase in accounts
payable, payroll taxes, and accrued expenses.

At September 30, 2006, the Company had a working capital deficit of $6,695,766.
The Company made capital expenditures of $43,313 during the nine months ended
September 30, 2006.

From July 2006 through September 2006, the Company issued short term bridge
notes totaling $48,000 to Seaport Capital. The notes carried interest at a rate
of between 10% and 15% per annum. During the same period, the Company repaid
$5,000 to Seaport Capital consisting of the bridge notes secured between April
and September, 2006.

In August 2006, the Company issued a two year convertible debenture to Michael
Vickers, an accredited investor, in the principal amount of $50,000. The
debenture is convertible at a fixed price of $0.0058 per share. The debenture
carries interest at a rate of 9% per annum. In addition, the Company issued
8,620,689 two year warrants to purchase common shares; one third at a price of
$0.02 per share, one third at a price $0.05 per share, and one third at a price
of $0.08 per share. The warrants are subject to a call provision by the Company
if the market price per share is above $0.05 per share, $0.08 per share, and
$0.11 per share respectively for a period of 5 or more days.

In August 2006, the Company issued a two year convertible debenture to Betsill
Builders, an accredited investor, in the principal amount of $250,000. The
debenture is convertible at a fixed price of $0.0066 per share. The debenture
carries interest at a rate of 9% per annum. In addition, the Company issued
40,000,000 two year warrants to purchase common shares; one third at a price of
$0.02 per share, one third at a price $0.05 per share, and one third at a price
of $0.08 per share. The warrants are subject to a call provision by the Company
if the market price per share is above $0.05 per share, $0.08 per share, and
$0.11 per share respectively for a period of 5 or more days.

From April 2006 through June 2006, the Company issued short term bridge notes
totaling $27,911 to Seaport Capital. The notes carried interest at a rate of
between 10% and 15% per annum.

In April 2006, the Company received $50,000 from the sale of a term note to an
accredited investor. The note is due on June 1, 2006 and carries interest at a
rate of 12% per annum. In addition, the investor received a two year warrant to
purchase 555,555 shares of common stock at an exercise price of $0.045 per
share. Pursuant to the penalty provision, the Investor will receive an
additional 2,222,220 common stock warrants since the Company failed to pay the
principal and accrued interest on the stated maturity date.

On April 18, 2006, the Company issued 1,000,000 shares of restricted common
stock on conversion of warrants. The shares were issued at an average price of
$0.01 per share.

On April 19, 2006, the Company sold 15,252,976 shares of restricted common stock
for a total of $150,000. The shares were issued at an average price of $0.098
per share.

On June 15, 2006, the Company sold 3,731,343 shares of restricted common stock
for a total of $25,000. The shares were issued at an average price of $.0067 per
share.

On June 26, 2006, the Company sold 5,411,255 shares of Series B Preferred Stock
for a total of $250,000. The series B preferred shares are convertible under
certain conditions into 10 shares of common stock. If the preferred shares are
converted into common shares, it would be at an average price of $0.0046 per
share.

                                       20
<PAGE>

In February 2006, the Company issued a two year, secured convertible debenture
to Cornell in the aggregate amount of $125,000. The debenture carries similar
conversion provisions as the November 2, 2005 and December 16, 2005 debentures.
In addition, the Company issued 25,000,000 warrants to purchase common shares at
a price of $0.01 per share, and 25,000,000 warrants to purchase common shares at
a price of $0.03 per share. The warrants carry three year expirations.

From January 2006 through March 2006, the Company issued short term bridge notes
totaling $60,712 to Seaport Capital. The notes carried interest at a rate of
between 10% and 15% per annum. During the same period, the Company repaid
$77,712 to Seaport Capital consisting of the bridge notes secured between
January and March, 2006 and a previous bridge note issued in December 2005.

On February 22, 2006, the Company sold 2,659,574 shares of restricted common
stock to an accredited investor for a total of $50,000. The shares were issued
at an average price of $0.0188 per share.

On March 24, 2006, the Company sold 13,333,333 shares of restricted common stock
to accredited investors for a total of $80,000. The shares were issued at an
average price of $0.006 per share.

In January 2006, the Company issued 3,572,851 shares of restricted common stock
upon conversion of $104,327.24 of the November 2006 secured convertible
debenture to Cornell. The shares were converted at a price of $0.0292 per share.

In February 2006, the Company issued 1,760,563 shares of common stock upon
conversion of $50,000 of the November 2006 secured convertible debenture to
Cornell. The shares were converted at a price of $0.0284 per share.

In March 2006, the Company issued 2,183,000 shares of common stock upon
conversion of $55,448.20 of the November 2006 secured convertible debenture to
Cornell. The shares were converted at a price of $0.0254 per share.

In June 2006, the Company issued 7,180,222 shares of common stock upon
conversion of $77,552 of the November 2006 secured convertible debenture to
Cornell. The shares were converted at a price of $0.0108 per share.

In June 2006, the Company issued 14,925,374 shares of common stock upon
conversion of $100,000 of the November 2006 secured convertible debenture to
Cornell. The shares were converted at a price of $0.0067 per share.

In July 2006, the Company issued 7,692,308 shares of common stock upon
conversion of $50,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0065 per share.

In August 2006, the Company issued 16,101,695 shares of common stock upon
conversion of $95,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0059 per share.

In August 2006, the Company issued 16,000,000 shares of common stock upon
conversion of $80,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0050 per share.

In September 2006, the Company issued 12,195,122 shares of common stock upon
conversion of $50,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0041 per share.

The Company has satisfied its cash requirements to date primarily through
private placements of common stock, warrants, debentures convertible into shares
of common stock, promissory notes, and the issuance of common stock in lieu of
payment for services. Also, officers have at times loaned the Company funds to
provide working capital.

The Company needs to raise a minimum of $3,500,000 through public or private
debt, sale of equity, to continue expanding our broadband on demand managed
services and service operation center, and to develop and implement additional
contracts at airports, hotels and retail locations in order to continue
expanding our Wi-Fi networks in strategic high traffic locations. Such financing
may not be available when needed. Even if such financing is available, it may be
on terms that are materially adverse to your interests with respect to dilution
of book value, dividend preferences, liquidation preferences, or other terms. If
we are unable to obtain financing on reasonable terms, we could be forced to
delay, scale back or eliminate certain product and service development programs.
In addition, such inability to obtain financing on reasonable terms could have a
material adverse effect on our business, operating results, or financial
condition.

                                       21
<PAGE>

The report of our independent auditors on our financial statements for the years
ended December 31, 2005 and 2004 contains an explanatory paragraph, which
indicates that we have incurred losses and have a working capital deficiency.
This report raises substantial doubt about our ability to continue as a going
concern. This report is not viewed favorably by analysts or investors and may
make it more difficult for us to raise additional debt or equity financing
needed to run our business.


Subsequent Events

In October 2006, the Company received $100,000 from the sale of convertible
debentures to accredited investors. The convertible debentures mature in two
years, carry interest at a rate of 9% per annum, and are convertible at an
average price of $0.0040 per share.

In October 2006, the Company received $10,000 from the sale of a short term
demand note to an accredited investor.

In November 2006, the Company received $25,000 from the sale of a short term
demand note to an accredited investor.



Item 3. - Controls and Procedures

(A)  Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
Principal Executive Officer and Principal Financial Officer of the effectiveness
of the design and operation of the Company's disclosure controls and procedures.
The Company's disclosure controls and procedures are designed to provide a
reasonable level of assurance of achieving the Company's disclosure control
objectives. The Company's Principal Executive Officer and Principal Financial
Officer have concluded that the Company's disclosure controls and procedures
are, in fact, effective at this reasonable assurance level. In addition, the
Company reviewed its internal controls, and there have been no significant
changes in its internal controls or in other factors that could significantly
affect those controls subsequent to the date of their last valuation or from the
end of the reporting period to the date of this Form 10-QSB.

(B)  Changes in Internal Controls over Financial Reporting
In connection with the evaluation of the Company's internal controls during the
quarter ended September 30, 2005, the Company's Principal Executive Officer and
Principal Financial Officer have determined that there are no changes to the
Company's internal controls over financial reporting that have materially
affected, or is reasonably likely to materially effect, the Company's internal
controls over financial reporting.

                                       22
<PAGE>

                           PART II - OTHER INFORMATION

Item 2.  Changes in Securities

During the three months ended September 30, 2006, the Company issued the
following unregistered securities:

In July 2006, the Company issued 7,692,308 shares of common stock upon
conversion of $50,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0065 per share.

In August 2006, the Company issued 16,101,695 shares of common stock upon
conversion of $95,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0059 per share.

In August 2006, the Company issued 16,000,000 shares of common stock upon
conversion of $80,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0050 per share.

In September 2006, the Company issued 12,195,122 shares of common stock upon
conversion of $50,000 of the November 2006 secured convertible debenture to
Cornell Capital. The shares were converted at a price of $0.0041 per share.

In August 2006, the Company issued a two year convertible debenture to Michael
Vickers, an accredited investor, in the principal amount of $50,000. The
debenture is convertible at a fixed price of $0.0058 per share. The debenture
carries interest at a rate of 9% per annum. In addition, the Company issued
8,620,689 two year warrants to purchase common shares; one third at a price of
$0.02 per share, one third at a price $0.05 per share, and one third at a price
of $0.08 per share. The warrants are subject to a call provision by the Company
if the market price per share is above $0.05 per share, $0.08 per share, and
$0.11 per share respectively for a period of 5 or more days.

In August 2006, the Company issued a two year convertible debenture to Betsill
Builders, an accredited investor, in the principal amount of $250,000. The
debenture is convertible at a fixed price of $0.0066 per share. The debenture
carries interest at a rate of 9% per annum. In addition, the Company issued
40,000,000 two year warrants to purchase common shares; one third at a price of
$0.02 per share, one third at a price $0.05 per share, and one third at a price
of $0.08 per share. The warrants are subject to a call provision by the Company
if the market price per share is above $0.05 per share, $0.08 per share, and
$0.11 per share respectively for a period of 5 or more days.


Item 3.  Default on Senior Securities


On May 4, 2005, the Company entered into a Master Lease Agreement with Agility
Lease Fund I, LLC. Under the terms of the agreement, the Company can lease up to
$1.0 million of equipment and project costs related to Wi-Fi network growth and
deployments. In connection with the Master Lease Agreement, the Company is
required to issue $200,000 of warrants at the market price on the day prior to
closing, and an additional 10% warrant based on the market price on the day
prior to each lease schedules execution.

In May and June 2005, the Company utilized $529,234 of the lease line, and
recorded $96,408 of prepaid interest. The three lease schedules are due in May
and June 2008.

In July and August 2005, the Company utilized $205,143 of the lease line, and
recorded $52,621 of prepaid interest. The two lease schedules are due in July
and August 2008.

In connection with the lease agreement and the individual lease draws, the
Company issued 4,245,133 three year warrants at prices between $0.056 and $0.06
per share. In connection with the July and August lease draws, the Company
issued 204,955 three year warrants at a price of $0.051 per share, and 170,535
three year warrants at a price of $0.059 per share.

In April 2006, the Company defaulted on its payments under the Master Lease
Agreement. Agility has invoked their right to directly collect the proceeds of
the revenue generated by the leased locations. The Company cooperated in this
effort and in September 2006 came to agreement with Agility to re-age the
delinquent lease payments. Agility continues to maintain control of the proceeds
to maintain timely payment of the leases.


                                       23
<PAGE>

Item 6.  Exhibits

         a) Exhibits
<TABLE>
<CAPTION>

Exhibit No.           Description                                              Location
-----------           -------------------------------------------------------  ------------------------------------------------
<S>                                                                                                                 <C>
3.1                   Articles of Incorporation                                Incorporated by reference to Exhibit 3.1 in
                                                                               the Registration Statement on Form 10-K filed
                                                                               with the Securities and Exchange Commission on
                                                                               November 30, 2000

3.2                   Articles of Amendment dated March 14, 1985               Incorporated by reference to Exhibit 3.2 in
                                                                               the Registration Statement on Form SB-2 filed
                                                                               with the Securities and Exchange Commission on
                                                                               November 30, 2000

3.3                   Articles of Amendment dated August 25, 2000              Incorporated by reference to Exhibit 3.3 in
                                                                               the Registration Statement on Form SB-2 filed
                                                                               with the Securities and Exchange Commission on
                                                                               November 30, 2000

3.4                   Articles of Amendment dated February 10, 2005            Incorporated by reference to Exhibit 2.1 on
                                                                               Form 10-K filed with the Securities and
                                                                               Exchange Commission on March 25, 2005

3.5                   Bylaws                                                   Incorporated by reference to Exhibit 3.4 in
                                                                               the Registration Statement on Form SB-2 filed
                                                                               with the Securities and Exchange Commission on
                                                                               November 30, 2000

10.2                  Master Lease Agreement #5509 with Agility Lease fund     Incorporated by reference to Exhibit 99.1 to
                      I, LLC.                                                  ICOA's Current Report on Form 8-K filed with
                                                                               the Securities and Exchange Commission on
                                                                               April 22, 2005

10.3                  Form of Warrant to be issued to Agility Solutions        Incorporated by reference to Exhibit 99.2 to
                                                                               ICOA's Current Report on Form 8-K filed with
                                                                               the Securities and Exchange Commission on
                                                                               April 22, 2005

10.4                  Amended and Restated Settlement Agreement with Richard   Incorporated by reference to Exhibit 99.4 to
                      Schiffmann                                               ICOA's Current Report on Form 8-K filed with
                                                                               the Securities and Exchange Commission on June
                                                                               26, 2006

10.5                  Amended and Restated Settlement Agreement with Stephen   Incorporated by reference to Exhibit 99.5 to
                      N. Cummings                                              ICOA's Current Report on Form 8-K filed with
                                                                               the Securities and Exchange Commission on June
                                                                               26, 2006

21.1                  Subsidiaries of ICOA                                     Incorporated by reference to Exhibit 21.1 in
                                                                               the Registration Statement on Form SB-2 filed
                                                                               with the Securities and Exchange Commission on
                                                                               November 30, 2000

31.1                  Certification pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002                               Provided herewith

31.2                  Certification pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002                               Provided herewith

32.1                  Certification pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002                               Provided herewith

32.2                  Certification pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002                               Provided herewith
</TABLE>

                                       24
<PAGE>

                                   SIGNATURES

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

       Date:  November 22, 2006
                                                     ICOA, INC.


                                                     /s/ George Strouthopoulos
                                                         -----------------------
                                                         George Strouthopoulos
                                                         Chief Executive Officer


                                                     /s/ Erwin Vahlsing, Jr.
                                                         -----------------------
                                                         Erwin Vahlsing, Jr.
                                                         Chief Financial Officer