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 June 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 August 14, 2006 was
454,369,450

The number of shares of preferred stock outstanding as of August 14, 2006 was
5,411,255

<PAGE>

PART I - FINANCIAL INFORMATION

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

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

          Unaudited Consolidated Statements of Cash Flows for
          the six months ended June 30, 2006 and six months
          ended June 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................................13

Item 3.   Controls and Procedures............................................20


PART II - OTHER INFORMATION

Item 1.   Legal Proceedings..................................................21

Item 2.   Changes in Securities..............................................21

Item 3.   Default on Senior Securities.......................................21

Item 4.   Submission of Matters to a Vote of Security Holders................21

Item 5.   Other Information..................................................21

Item 6.   Exhibits...........................................................22


SIGNATURES



                                       2
<PAGE>

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


                                     ASSETS

CURRENT ASSETS:
     Cash                                                    $          123,636
     Accounts receivable (net of allowance of $79,655)                  353,077
     Inventories                                                         96,634
     Prepaid expenses                                                    35,818
                                                             -------------------
        TOTAL CURRENT ASSETS                                            609,165

EQUIPMENT, net                                                        1,354,685

OTHER ASSETS:
     Long term receivables                                               54,923
     Intangibles, net                                                 2,683,257
     Deferred finance costs                                             530,077
     Deposits                                                            78,962
                                                             -------------------
        TOTAL OTHER ASSETS                                            3,347,219
                                                             -------------------
                                                             $        5,311,069
                                                             ===================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Accounts payable and accrued expenses                   $        3,023,576
     Payroll tax liability                                            1,132,563
     Capital lease obligation                                           865,047
     Convertible debentures due in one year, net
     unamortized discount of $1,107,429                                 845,510
     Notes payable                                                      979,063
     Common stock to be issued                                           39,600
     Preferred stock to be issued                                       300,000
     Derivative instrument liability                                    654,623
                                                             -------------------
        TOTAL CURRENT LIABILITIES                                     7,839,982
                                                             -------------------

LONG TERM LIABILITIES:
     Convertible debentures, net unamortized discount
     of $1,107,429                                                    1,017,571
                                                             -------------------
        TOTAL LONG TERM LIABILITIES                                   1,017,571
                                                             -------------------

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; 454,369,450 shares issued and
        outstanding                                                      45,441
     Additional paid-in capital                                      21,268,056
     Accumulated deficit                                            (24,860,522)
                                                             -------------------
        TOTAL STOCKHOLDERS' DEFICIT                                  (3,546,484)
                                                             -------------------

                                                             $        5,311,069
                                                             ===================





            See notes to unaudited consolidated financial statements

                                        3
<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    Unaudited

<TABLE>
<CAPTION>

                                                        Three Months Ended June 30,           Six Months Ended June 30,
                                                    ----------------------------------    --------------------------------
                                                          2006              2005                2006             2005
                                                    ----------------  ----------------    ---------------   --------------
REVENUES:
<S>                                                 <C>               <C>                 <C>               <C>
    Transaction service fees                        $       475,522   $       292,847     $    1,008,762    $     440,822
    Equipment sales and installation                        117,558            61,153            252,219          332,745
    Managed services                                        174,510            84,749            320,599          155,096
                                                    ----------------  ----------------    ---------------   --------------
       TOTAL REVENUE                                        767,590           438,749          1,581,580          928,663
                                                    ----------------  ----------------    ---------------   --------------

COST OF SERVICES:
    Telecommunication costs                                 199,919            94,080            394,494          167,378
    Equipment and installation                              143,755           123,714            216,028          265,883
    Managed services                                        217,186           146,346            393,487          257,188
    Depreciation and amortization                           345,186           150,504            689,970          213,046
                                                    ----------------  ----------------    ---------------   --------------
       TOTAL COST OF SERVICES                               906,046           514,644          1,693,979          903,495
                                                    ----------------  ----------------    ---------------   --------------

GROSS MARGIN (LOSS)                                        (138,456)          (75,895)          (112,399)          25,168

OPERATING EXPENSES:
    Selling, general and administrative                     904,805         1,088,589          1,646,389        2,331,994
    Depreciation                                              1,177             2,299              3,300            4,501
                                                    ----------------  ----------------    ---------------   --------------
       TOTAL OPERATING EXPENSES                             905,982         1,090,888          1,649,689        2,336,495
                                                    ----------------  ----------------    ---------------   --------------
OPERATING LOSS                                           (1,044,438)       (1,166,785)        (1,762,088)      (2,311,327)

INTEREST EXPENSE                                           (310,861)         (550,343)          (548,305)      (1,301,882)
MARK TO MARKET - DERIVATIVE INSTRUMENT LIABILITY          1,462,422                 -          1,219,511                -
AMORTIZATION OF NOTE DISCOUNT                              (198,225)                -           (393,835)               -
                                                    ----------------  ----------------    ---------------   --------------
NET LOSS                                            $       (91,102)  $    (1,717,128)    $   (1,484,717)   $  (3,613,209)
                                                    ================  ================    ===============   ==============

BASIC AND DILUTED - LOSS PER SHARE                  $         (0.00)  $         (0.01)    $        (0.00)   $       (0.02)
                                                    ================  ================    ===============   ==============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
       Basic and Diluted                                447,738,939       249,831,646        408,733,573      211,729,349
                                                    ================  ================    ===============   ==============
</TABLE>

            See notes to unaudited consolidated financial statements

                                        4
<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    Unaudited

<TABLE>
<CAPTION>

                                                               For the Six Months Ended June 30,
                                                             ------------------------------------
                                                                    2006                2005
                                                             ------------------   ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                          <C>                  <C>
    Net loss                                                 $      (1,484,717)   $   (3,613,210)
                                                             ------------------   ---------------
    Adjustments to reconcile net loss to net cash used in
    operating activities:
           Depreciation                                                  3,300             4,501
           Depreciation of equipment                                   335,729           213,046
           Amortization of intangibles                                 354,016            91,902
           Amortization of deferred financing cost                     520,574           219,598
           Stock issued for compensation                                 5,000           460,641
           Beneficial conversion and warrants issued
           for services                                                300,000           617,461
           Derivative instrument liability expensed                 (1,425,357)                -

    Changes in assets and liabilities:
        Accounts receivable                                             (3,230)           (5,226)
        Inventory                                                       (6,228)           64,190
        Deposits                                                       (16,957)          (56,562)
        Prepaid expenses                                               (27,876)          (52,802)
        Other assets                                                    14,190                 -
        Payroll taxes                                                  362,182                 -
        Accounts payable and accrued expenses                          486,222         1,186,765
                                                             ------------------   ---------------
    Net cash used in operating activities                             (583,152)         (869,696)
                                                             ------------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition / disposition of equipment                                (380)         (228,519)
    Other                                                                    -           (31,110)
                                                             ------------------   ---------------
NET CASH USED IN INVESTING ACTIVITIES                                     (380)         (259,629)
                                                             ------------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of warrants                                  10,000                 -
    Payments of capital leases                                         (66,405)                -
    Proceeds of private placement                                      555,000                 -
    Payments of convertible debentures                                  (4,470)                -
    Proceeds from convertible debentures                               125,000           699,486
    Increase in deferred finance costs                                 (27,500)                -
    Proceeds from notes payable                                         78,942           446,506
                                                             ------------------   ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                              670,567         1,145,992
                                                             ------------------   ---------------

INCREASE (DECREASE) IN CASH                                             87,035            16,667

CASH - BEGINNING OF PERIOD                                              36,601            23,626
                                                             ------------------   ---------------

CASH - END OF PERIOD                                         $         123,636    $       40,293
                                                             ==================   ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION:
        Cash paid for interest                               $         109,377    $       36,788
                                                             ==================   ===============

NON-CASH INVESTING AND FINANCING ACTIVITIES:
        Conversion of debentures and interest into stock     $         387,327    $      305,000
                                                             ==================   ===============
        Conversion of notes and interest into stock          $          30,000    $    1,107,837
                                                             ==================   ===============
        Common stock issued in connection with settlements   $         900,000    $    1,105,340
                                                             ==================   ===============
        Capital leases                                       $               -    $      607,172
                                                             ==================   ===============
        Unamortized beneficial conversion                    $               -    $       50,158
                                                             ==================   ===============
</TABLE>


            See notes to unaudited consolidated financial statements

                                        5
<PAGE>

                           ICOA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Six Months Ended June 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 $24,860,522 and
         $23,375,805 at June 30, 2006 and December 31, 2005, respectively. The
         Company also had a working capital deficiency of $7,230,817 and
         $8,192,239 at June 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

         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.

                                       6
<PAGE>

         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.

         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.

                                       7
<PAGE>

         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.


Note 4 - Convertible Debentures

                                      Lender                       Amount
                 Cornell Capital Partners,                 $          2,125,000
                 5% interest, due March 2007
                 Accredited individual investors
                 10% to 12% interest
                 due various dates in 2006                              845,510
                                                           ---------------------
                                                                      2,970,510

                 Notes payable discounts                             (1,107,429)
                                                           ---------------------

                                                Total      $          1,863,081
                                                           =====================

         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.

         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.

                                       8
<PAGE>

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 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.

                                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,                                   319,280
                 12 to 15% interest, due on demand
                 Accredited individual investors,
                 9% to 36% interest, due on demand                  314,783
                                                             ---------------

                                                      Total  $      979,063
                                                             ===============

Note 6 - Stockholders 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 $0.098 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.

                                       9
<PAGE>

         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.

         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 continues to cooperate in this effort, and is working with
         Agility to either bring the lease payments current or re-age the
         delinquent lease payments.


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.

                                       10
<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>

     -------------------------- -------------------------- -------------------------- ---------------------------
               2005                 As reported, Six            Pre-Acquisition               Pro Forma,
                                      Months Ended                Operations               Six Months Ended
                                      June 30, 2005                                         June 30, 2005
     -------------------------- -------------------------- -------------------------- ---------------------------
<S>                             <C>                        <C>                        <C>
     Revenues                   $                 928,664  $                 422,159  $                1,350,823
     -------------------------- -------------------------- -------------------------- ---------------------------
     Loss before                               (3,613,210)                  (826,105)                (4,439,315)
     extraordinary items
     -------------------------- -------------------------- -------------------------- ---------------------------
     Net Loss                                  (3,613,210)                  (826,105)                (4,439,315)
     -------------------------- -------------------------- -------------------------- ---------------------------
     Loss per common share      $                  (0.017)                            $                   (0.019)
     -------------------------- -------------------------- -------------------------- ---------------------------
     Shares outstanding                       211,729,349                                           232,276,636
     -------------------------- -------------------------- -------------------------- ---------------------------
</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.

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.

                                       11
<PAGE>

         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 $200,000 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 June 30, 2006 amounted to $1,462,422
         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 June 30, 2006, is as
         follows:
<TABLE>
<CAPTION>

                                                 At Inception       At Dec. 31, 2006          At June 30, 006
                                           ---------------------- ---------------------- ----------------------
<S>                                        <C>                    <C>                    <C>
       Discount on convertible debentures  $           1,421,102  $           1,407,110  $           1,107,429
       Liability associated with prior
       convertible debentures and
       warrants                                          832,450                672,870               (452,806)
                                           ---------------------- ---------------------- ----------------------

        Total derivative liability         $           2,253,552  $           2,079,980  $             654,623
                                           ====================== ====================== ======================
</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.


Note 13 - Subsequent Events

         In July 2006, the Company received $55,600 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 $0.0058 per share.

                                       12
<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.

Recent Events
On June 26, 2006,  the Board of Directors of ICOA,  Inc., a Nevada  corporation
("ICOA" or the  "Company")  requested and received the immediate  resignations
of Richard  Schiffmann,  as CEO and Stephen N. Cummings, as CFO. Simultaneously,
the Board  appointed Board Chairman,  George  Strouthopoulos as President and
Chief Executive Officer,  and Erwin Vahlsing,  Jr. as Chief Financial Officer.
Both Mr.  Strouthopoulos  and Mr. Vahlsing,  had led the Company through its
transition from kiosk based Internet  services into the current Wi-Fi (wireless)
service  offerings  and through a series of  acquisitions  in 2003 and 2004
(Airport  Network  Solutions,  QGo, and AuthDirect), which laid the foundation
for the revenue growth experienced during  2005 and early 2006.

The Board came to believe that a change in management was necessary to:
1.       Attempt to dramatically cut the negative operating cash flow;
2.       Attempt to achieve operational cash flow break even as quickly as
         possible;
3.       Focus on core areas of the business that provide higher margins and
         growth; and
4.       Attempt to restructure the balance sheet and the overall financial
         structure of the Company in cooperation with its largest creditors and
         investors.

Since the management change, the Company has accomplished the following:
1.       Eliminated approximately $600,000 per year in recurring operating
         expenses;
2.       Stabilized deteriorating revenue;
3.       Begun an extensive program to increase margins ;
4.       Raised $305,600 in equity and convertible debenture funding; and
5.       Established an ongoing overhead reduction program.

Strategy
Our goal is to be a leading and innovative national provider of broadband
solutions. As part of our overall strategy to compete in each relevant market
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.

ICOA's growth strategy is to build and acquire the expertise, infrastructure and
scale for the profitable delivery of wireless broadband services. This strategy
is based on the use of unlicensed spectrum to meet the increased demand for
wireless data services: more bandwidth for more services in more places.

Today, we sell, install, support and provide wired and wireless Ethernet and
Internet access services, primarily through Wi-Fi "hot spots" (public wireless
local area networks). As of June 30, 2006, ICOA owned or operated over 1,800
broadband access installations in high-traffic locations servicing millions of
annual patrons across 45 states. The Company currently generates revenue from:

     o    the  design,  sale and  installation  of Wi-Fi  systems  to  airports,
          hotels, universities, travel plazas, convention centers, quick-service
          restaurants,  marinas, MDU's and other high-traffic locations, usually
          coupled with operating and maintenance contracts;

     o    providing service  management  capabilities to Wi-Fi service providers
          who need back office,  network  management,  customer care and related
          services to support their on-going operations; and

     o    end  users of  Wi-Fi  hot  spots  and  Internet  access  terminals  on
          "pay-for-use" transactions, usually provided in public locations under
          long term  contracts  with  airports,  marinas,  hotels and other high
          traffic locations.

                                       13
<PAGE>

Until recently, the Company's revenue has had a strong reliance on one time
equipment sales and installation projects. The revenue mix has changed with
recurring revenue increasing to 84.1% of total revenue for the six months ended
June 30, 2006 as compared to 64.2% 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.

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.

                                       14
<PAGE>

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.

During the first and second quarters of 2006, we continued our focus on a
vertical driven view of our business. This focus may bring about a future
reorganization along these lines to bring acquired assets in line with the
verticals and our sales, marketing, and support platforms. These new business
verticals include ICOA Airport Networks and ICOA Managed Services. We will
continue for the near-term with the market-forward LinkSpot, iDockUSA, Cafe.com
and WiSE units operating under the umbrella of ICOA, Inc.

ICOA Airport Networks
Under long-term contracts, our Airport Network Solutions subsidiary has
installed and operates Wi-Fi networks in 23 airports within the United States.
Fifteen networks provide full facility coverage, while under the WiSE brand we
offer select coverage within the facilities of 8 airports. Our services are
designed to provide travelers with convenient, ease of access to broadband
Internet services, as well as private, wholesale, security-related and facility
service offerings. We believe the airport market segment continues to offer high
growth potential, both in expansion of the number of facilities as well as the
increased utilization and commensurate monetization of existing assets. Our
strategy is to continue to focus on securing long-term contacts with tier two
and tier three properties.

ICOA Managed Services
Our managed services business unit is focused on the sale, design, deployment
and management of amenity networks, as well as deployments and management of
hospitality, municipal and wholesale back office market segments. This includes
the offering of Tollbooth(TM), our turn-key back office solution, to
unaffiliated wireless service providers globally. Our back office solution suite
also includes network operating center and customer care center services to the
marketplace, as well as for our wholly-owned segment-focused units such as ICOA
Airport Networks, LinkSpot and iDockUSA. The managed services customer base has
increased 88% since January 2005. ICOA is an innovator of large-scale amenity
Wi-Fi currently managing over 1,600 amenity locations nationally. In numerous
segments, such as restaurants, hospitality, cafes, we believe amenity Wi-Fi
services will experience increased acceptance.

LinkSpot / RV Resort and Campground Segments
Acquired in the third quarter of 2005, our LinkSpot subsidiary provides Wi-Fi
service to recreational vehicle (RV) parks and campgrounds nationwide. LinkSpot
currently serves 69 RV resort and campground properties which cover
approximately 20,000 sites. The percentage of Americans moving into retirement
is rising and is forecast to continue to do so through this decade. LinkSpot
services include both subscription-based and amenity offerings. Our strategy is
to continue expanding this segment through aggressive sales from our existing
assets, strategic partnerships with related outdoor recreation partners, and
potential acquisitions of accretive assets in this segment.

iDock/Marina Segment
Our iDockUSA division provides broadband wireless Internet and related services
in over 55 marinas reaching over 20,000 slips. In California, iDock has secured
a dominate market position, and is expanding to other geographic markets. Our
strategy is to continue to expand geographically, develop strategic partnerships
with related marina segment companies, offer ancillary services and content and
continue to explore accretive acquisitions.

WiSE Technologies
Our Wise Technologies subsidiary provides Wi-Fi services to 8 airports, and
various hospitality, higher education, MDU's, highway plazas and cafes. The WiSE
footprint is in the process of being reassigned to segment-focused business
units within the Company, such as ICOA Airport Networks and ICOA Managed
Services.

                                       15
<PAGE>

Cafe.com
Acquired in the third quarter of 2005, Cafe.com provides Wi-Fi services in
various quick service cafe locations predominantly on the West Coast. The
Cafe.com assets are being incorporated into ICOA's segment-focused business
units, including ICOA Managed Services.

Municipal
We also operate Wi-Fi municipal "hot zones" in Lexington, KY, and the harbor
district of Newport, RI. Our strategy is to provide all or distinct portions of
our turn-key offerings to this rapidly expanding segment through leveraging our
existing national infrastructure, full back-office suite of products and
services.

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 June 30, 2006 as compared to the three months ended June 30,
2005, and six months ended June 20, 2006 as compared to the six months ended
June 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 June 30, 2006, quarterly revenue increased $328,841 or 75%
to $767,590 as compared to $438,749 for the quarter ended June 30, 2005.

The Company realized a 70% increase in revenue generating $1,581,580 in revenue
for the six months ended June 30, 2006 as compared to $928,664 for the six
months ended June 30, 2005.

The revenue growth for the six months ended June 30, 2006 is primarily due to
the increasing Transaction Service Fees and an increase in Managed Services Fees
period over period as well as 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. A portion of this 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 six months ended
                                          June 30,           June 30,           June 30,           June 30,
                                            2006               2005               2006               2005
                                      ------------------ ------------------ ------------------ ------------------
<S>                                   <C>                <C>                <C>                <C>
Transaction Service Fees              $         475,522  $         292,847  $       1,008,762  $         440,822
Wi-Fi Equipment Sales and Service               117,558             61,153            252,219            332,745
Managed Services                                174,510             84,749            320,599            155,096
                                      ------------------ ------------------ ------------------ ------------------
                               Total  $         767,590  $         438,749  $       1,581,580  $         928,663
                                      ================== ================== ================== ==================
</TABLE>



                                       16
<PAGE>

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

                                           For the three months ended             For the six months ended
                                      ------------------------------------- -------------------------------------
                                          June 30,           June 30,           June 30,           June 30,
                                            2006               2005               2006               2005
                                      ------------------ ------------------ ------------------ ------------------
<S>                                   <C>                <C>                <C>                <C>
Telecom/Co-Location/Hosting Costs     $         199,919  $          94,080  $         394,494  $         167,378
Wi-Fi Equipment and Installation                143,755            123,714            216,028            265,883
Managed Services                                217,186            146,346            393,487            257,188
Depreciation Expense                            345,186            150,504            689,970            213,046
                                      ------------------ ------------------ ------------------ ------------------
                               Total  $         906,046  $         514,644  $       1,693,979  $         903,495
                                      ================== ================== ================== ==================
</TABLE>

For the quarter ended June 30, 2006, the Company recorded a negative gross
margin of ($138,456), as compared to a negative gross margin of ($75,895) for
the quarter ended June 30, 2005 an increase of $62,561 or 82%. This was
primarily due to the increase in depreciation and amortization of $194,682
coupled with added telecommunication costs.

For the six months ended June 30, 2006, the negative gross margin was
($112,399), as compared to a gross margin of $25,168 for June 30, 2005 an
increase of 547%. This was primarily due to the increase in depreciation and
amortization of $476,924.

Cost of Services increased 76% or $391,401 to $906,406 for the three months
ended June 30, 2006 versus $514,645 for the three months ended June 30, 2005.

Similarly, the Cost of Services increased 87% or $790,483 to $1,693,979 for the
six months ended June 30, 2006 versus $903,495 for the six months ended June 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 129% or $194,682 for the three months ended June
30, 2006 compared to the three months ended June 30, 2005, and 224% or $476,924
for the six months ended June 30, 2006 compared to the six months ended June 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 June 30, 2006 these costs decreased $184,906 or 17% from
$1,090,888 for the quarter ended June 30, 2005 to $905,982 for the quarter ended
June 30, 2006.

For the six months ended June 30, 2006, these expenses decreased $686,806 or 29%
to $1,649,689 from $2,336,495 for the six months ended June 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 in for the six
month period ended June 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 similar or decreased levels over the current year as the Company works
to effectively manage the costs of the business even as it pursues continued
growth.

                                       17
<PAGE>

<TABLE>
<CAPTION>

                                Quarterly increases (decreases) in selling, general and administrative

                                                 For the three months ended           For the six months ended
                                                June 30, 2006 as compared to        June 30, 2006 as compared to
                                                       June 30, 2005                       June 30, 2005
                                             ----------------------------------- -----------------------------------
<S>                                          <C>                                 <C>
            Payroll                          $                            2,392  $                          117,974
            Consulting                                                  (53,468)                           (226,465)
            Legal                                                       (54,801)                            (98,043)
            Accounting                                                   32,022                              42,522
            Finance Fees                                                (20,655)                            (52,989)
            Insurance                                                    46,052                              46,948
            Employment related expense                                  132,000                            (304,652)
            Travel & Entertainment                                     (206,843)                           (105,271)
            Other                                                       (61,605)                           (106,830)
                                             ----------------------------------- -----------------------------------
                   Increase Quarter and YTD  $                         (184,906) $                         (686,806)
                                             =================================== ===================================
</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 $239,482 to $310,861 for the three months ended
June 30, 2006 as compared to $550,343 for the three months ended June 30, 2005.

Interest expense decreased by $753,577 to $548,305 for the six months ended June
30, 2006 as compared to $1,301,882 for the six months ended June 30, 2005.

The decrease for the three and six month periods is primarily attributable to a
reduction in beneficial conversion feature recorded on convertible debentures
issued in the first quarter.

Other Expense

The Company recorded income of $1,658,032 for the three months ended June 30,
2006 and $1,219,511 for the six months ended June 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 June 30, 2006, the Company had a loss of $91,102 as
compared to a loss of $1,717,128 for the three months ended June 30, 2005 a
decrease of $1,626,026 or 95%.

For the six months ended June 30, 2006, the Company had a loss of $1,484,717 as
compared to a loss of $3,613,210 for the six months ended June 30, 2005 a
decrease of $2,128,493 or 59%.

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.

                                       18
<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 $123,636 at June 30, 2006. Net cash used in
operating activities of $583,152 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 June 30, 2006, the Company had a working capital deficit of $7,230,817. The
Company made a capital expenditure of $380 during the three months ended June
30, 2006.

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.

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.

                                       19
<PAGE>

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.


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.

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 July 2006, the Company received $55,600 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 $0.0058 per share.

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 June 30, 2005, the Company's Principal Executive Officer and
Principal Financial Officer have determined that there are no change 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.

                                       20
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

None.

Item 2.  Changes in Securities

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

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.

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 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
to accredited investors 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
to an accredited investor 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.

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 continues to
cooperate in this effort, and is working with Agility to either bring the lease
payments current or re-age the delinquent lease payments.

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

None.

Item 5.   Other Information

None.


                                       21
<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             Provided herewith
                      Sarbanes-Oxley Act of 2002

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

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

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


                                       22
<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:  August 18, 2006
                                                     ICOA, INC.


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


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