UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

     [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
             ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

       [ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.

                      DIRECT WIRELESS COMMUNICATIONS, INC.
               (Name of small business corporation in its charter)

           TEXAS                                                74-3002154
----------------------------                               ---------------------
(State or other jurisdiction                                (I.R.S. Employer
      of incorporation)                                    Identification No.)

2068 N. Valley Mills Drive Waco, Texas                          76710
--------------------------------------                 -----------------------

                    Issuer's telephone number (512) 583-4500
         Securities registered under Section 12(g) of the Exchange Act:

                      COMMON STOCK, NO PAR VALUE PER SHARE
                      ------------------------------------
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10K-SB. [X]

State issuer's revenues for its most recent fiscal year. $ 0.00

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices for such stock, as of a specified date within the past 90
days. $1,192,823 as at January 31, 2003.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 29,820,564 at January 31, 2003.

Transitional Small Business Disclosure Format (Check one): Yes ___, No X

<page>

                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS.

Direct Wireless Corporation was formed in 1997 for the purpose of developing and
exploiting a wireless telephone technology intended to eliminate the need for
expensive control towers and related equipment currently in use in the cellular
communications industry. To the present its sole business has been the
development of patents relating to wireless telephone technology. Several
communications industry consultants to Direct Wireless Corporation strongly
advised that company to protect its patents and improvements on those patents,
as well as any new patents that it might obtain, from any potential claims by
completely separating the marketing and licensing functions from the business of
developing and patenting wireless communications technology. Specifically, they
advised Direct Wireless Corporation to transfer the marketing functions to a
separate corporation.

Direct Wireless Corporation has followed that advice. In April 2001 it organized
us under the name Direct Wireless Communications, Inc., and has now licensed us
to market and/or sublicense in the United States the wireless communications
technology it has developed and on which it holds the patents. On October 17,
2001 Direct Wireless Corporation further separated itself from the marketing
function by divesting itself of all ownership of our stock by distributing its
entire holdings as a stock dividend to its stockholders. It no longer owns any
equity interest in us.

THE TECHNOLOGY WE WILL MARKET AND SUBLICENSE.

GENERAL DESCRIPTION OF THE TECHNOLOGY.

We have acquired from Direct Wireless Corporation the right to market and
sublicense the technology covered by three patents, No. 5,995,849 issued on
November 30, 1999, No. 6,141,531 issued on October 31, 2000, and No. 6,374,078
issued on April 16, 2002 and a fourth patent application #10/0632283 filed on
April 8, 2002. Expenditures by Direct Wireless Corporation for patent costs have
been $ 85,284.26. These patents relate to a new wireless communication system
(named Timed Shared Full Duplex) that uses radio frequencies for transmitting
and receiving voice and data signals. The technology covered by the patents uses
a self-contained radio network with several different routes for the wireless
signals to take within that network and many different routes to connect that
self-contained network to other outside networks.

The internal network consists of telephone handsets that allow for wireless
communication that is not controlled from a central point and can travel along
multiple communication routes. If several handsets are within range, they can
communicate directly through signal extenders (radio repeaters) without the need
for a central control center, unlike cellular or other mobile wireless
communication systems. If the handsets are farther apart, they can communicate
through signal extenders (radio repeaters) and network extenders (connectors to
the public telephone network)

<page>


that relay the call to destination handsets, also eliminating the need for a
central call control center. The internal network also has the capability of
communicating with outside telephone networks, such as existing public telephone
systems, satellite communication systems, or emergency radio or paging systems.

The Time Shared Full Duplex wireless transmission system has been proven to
operate effectively in laboratory tests performed in late 1998 through early
1999. This initial "Proof of Concept" system transmitted data at a lower rate
than the technology currently in development and was only in single channel
form. Expenditures by Direct Wireless Corporation for this phase were
$381,711.00.

To reach higher data transmission rates and greater reliability than were
achieved in the initial prototype, the wireless program was moved to Southwest
Research Institute, a large research and design company located in San Antonio,
Texas, which is not affiliated with Direct Wireless Corporation, where a
complete systems specification analysis was completed over a 12 weeks period in
late 1999 through early 2000 for a cost to Direct Wireless Corporation of
$338,797.97. The systems specification analysis is a document demonstrating that
from the scientific standpoint the system will work as designed and that the
patented technology can be developed from components currently available. Based
on the system specification analysis it prepared, Southwest Research Institute
has now proposed a contract to Direct Wireless Corporation for the completion
and testing of a new prototype and market ready system capable of the higher
transmission rates.

When compared to currently deployed personal wireless communications systems
that broadcast at data rates of up to 28 kilobits per second, the quality of the
Direct Wireless Time Shared Full Duplex technology is expected to be superior.
The Method of data transmission covered by Direct Wireless Corporation patents
can reach speeds of up to 200 kilobits per second through the handsets. The more
data that can be transmitted in a wireless phone call, the higher quality the
signal and the better the sound a person hears. Also, because of the patented
broadcasting methods, cell towers do not control the Direct Wireless phone call.
The quality of the wireless call is then designed to be higher due to less
electronic signal processing.

UNIQUENESS OF THE DIRECT WIRELESS CORPORATION TECHNOLOGY.

The method used today in the wireless communications industry evolved when the
wireless industry began to serve the public in the early 1980s. At that time no
computer chips were available that could be included in handsets; accordingly
the handsets, which are actually hand-held, bi-directional radios, had to be
controlled by electronic devices contained in control towers in order to make
sure that they stayed on the right frequencies and to prevent the overlapping of
conversations. The essential feature of this method was then, and is today, that
the tower controls all aspects of the wireless communication; the handset makes
no broadcast decisions. This traditional system, in place today, requires
control towers and control equipment that are expensive to build and makes it
economically impractical to provide wireless service to sparsely settled areas.

<page>

The Direct Wireless Corporation technology differs from all other wireless
communications systems because the handsets contain miniature computers that
allow the handset to make virtually all broadcast decisions, eliminating the
need for expensive towers and associated control equipment. The handsets can
communicate directly with one another through signal extenders, or the range of
their signals can be extended through the use of inexpensive towers that do not
have to contain expensive control equipment. As a result, wireless service can
be provided economically to sparsely settled and remote areas.

THE LICENSING AGREEMENT WITH DIRECT WIRELESS CORPORATION.

The technology licensing agreement under which we have acquired the rights to
market and sublicense the technology in the territory of the United States
provides that we shall pay to Direct Wireless Corporation an initial license fee
of 1,448,425 shares of our common stock (10,138,975 as adjusted for a subsequent
7-1 stock split) and the sum of ten million dollars. The shares of common stock
were delivered to Direct Wireless Corporation on September 26, 2001 and
distributed by that company on October 17, 2001 as a stock dividend to its
stockholders of record on May 15, 2001. We have already paid Direct Wireless
Corporation $224,539. The remaining $9,775,461 must be paid according to the
terms of the license agreement, which requires us to pay on a quarterly basis
sixty percent (60%) of the all our revenues until the license fee is paid in
full. In addition to the initial license fee, we must also pay a royalty in the
amount of thirty percent of all royalty fees we receive from marketing or
sublicensing the technology. The technology license agreement is for an initial
term of ten (10) years. Direct Wireless Corporation has two (2) renewal options
of ten (10) years each.

Direct Wireless Corporation may terminate the technology license agreement upon
the occurrence of any of the following events:

o we fail to make timely payments of royalties;

o we dissolve, cease active business operations, liquidate or become bankrupt;

o our management changes from the current management.

These provisions of the technology license agreement effectively prevent any
hostile takeover by means of a proxy solicitation, a tender offer for our stock
or any other device, so during the term of the technology agreement we will
remain under control of the management of Direct Wireless Corporation.

OUR EMPLOYEES.

At present our employees are our officers and directors, who are also officers
and directors of Direct Wireless Corporation. Bill Williams and Robert Braswell
expect to devote 70% of their time to our business. When we begin business
operations it will be necessary to hire additional personnel. We do not
anticipate any difficulties in hiring appropriate persons.



<page>

ITEM 2. DESCRIPTION OF PROPERTY.

We share approximately 1,100 square feet of office space at 2068 N. Valley Mills
Dr. Waco, Texas 76710 with Direct Wireless Corporation. The monthly rental is
$672.00, which is paid by Direct Wireless Corporation. We believe that the
facilities we share are adequate for the foreseeable future. At the present
time, we do not own any communications equipment. Direct Wireless Communication
Inc. records $425 per month in administrative fees, which includes rent.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a) Our common stock is traded on the OTC Bulletin Board; symbol DWCM. The range
of bids for our common stock, as reported on Bloomberg.com during the quarter
ended December 31, 2002, was a high of $0.10 and a low of $0.02.

(b) At December 31, 2002, there were 379 holders of record of our common stock.

(c) We have not paid any cash dividends since inception.

ITEM 6. PLAN OF OPERATION.

At the present time, our cash requirements for operations are limited. We
currently pay no cash compensation to our officers and directors. We are using
office space provided at no charge by Direct Wireless Corporation.

Our present plans are to make a private placement of our common stock to
accredited investors under Regulation D promulgated under the Securities Act of
1933 to raise funds to pay Direct Wireless Corporation for the purpose of
conducting field tests of the electronic components and circuitry specified in
the completed systems specification analysis. To begin any operations, however,
it will be necessary for us to raise additional funds in the next twelve months.

Management also recognizes the current market conditions and will in addition to
the above seek to acquire or merge with an operating company in order to enhance
shareholder value become an operating company and take advantage of current
economic conditions to add value to under priced profitable companies.


<page>

After field tests have begun, we intend to make a public offering of our common
stock to raise enough capital to permit us to pay Direct Wireless Corporation
the remaining amount of the initial license fee for the purpose of completing
and testing a prototype of the system. We expect that the field tests and the
final phase of the testing can be completed within the next twelve months.

While Direct Wireless Corporation completes development of the new
pre-production prototype, we will begin negotiations with prospective licensees
and manufacturers in preparation for the performance testing and the
manufacturing of the production systems and handsets. We expect this process to
take the next six to eight months to complete all the tasks necessary for a
successful demonstration of the technology. Once this phase of the development
is complete, we will concentrate our efforts for the next four months on
negotiating and signing contracts with licensees for territories and for
equipment purchases. Down payments on any contracts signed will represent the
first income from operations for the company.

We do not expect to perform any product research and development or purchase any
plant or significant equipment in the next twelve months. However, before
marketing operations begin, we expect to employ personnel with marketing
experience.

OUR MARKETING STRATEGY.

Many regions in the United States are too sparsely settled to justify the
expense of central call control centers required for cellular and other wireless
technology. Because the Direct Wireless Corporation technology needs no central
control center it is particularly suited to operate in these remote or isolated
areas. We intend to market the technology in rural areas of the United States
that have limited cellular service or no wireless services of any kind. Rural,
as defined by the Office of Management and Budget in Washington, D.C., and
accepted for use by the U.S. Census and other government agencies, is generally
defined as non-metropolitan areas of open country where less than 2,500 persons
live. According to the 1990 United States census, 23% of the population was
accountable to rural, non-metropolitan areas. This figure appears to be on the
rise: according to the 1998 World Bank Economic Indicators, 34%, or 62 million
people then lived in non-metropolitan, rural areas of the United States.

We intend to market and sublicense the technology to existing service providers
who desire to extend their service to these sparsely settled areas or to public
utility companies that have customers in these areas and desire to provide
wireless services to their existing customers. We do not intend to begin
marketing activities until it appears that the field tests and final tests of
the technology will be successfully completed. At that time, we will employ any
sales personnel necessary to present to existing providers of cellular and other
telephone services the opportunity to extend their services to sparsely
populated areas their services have not yet reached.

Under this marketing strategy we do not expect much competition from established
cellular and/or other service providers, which are primarily located in urban
markets and cannot afford to enter these rural markets because of the high cost
of their equipment. Moreover, the company is not aware of any other existing
technologies that would allow established cellular service providers to expand
their services economically into sparsely settled or rural areas.


<page>

Furthermore, we will not be required to apply for separate licenses from the
Federal Communications Commission. The technology does not set any requirements
for pre-assigned licenses from the Federal Communications Commission. Direct
Wireless Corporation has represented that the handsets may be manufactured to
function normally on cellular and other wireless communication licensed
frequencies where enough signal space and unoccupied licenses are available, as
well as in ranges where no Federal Communications Commission licenses are
required. Accordingly, the technology may be used by any existing service
provider that has existing licenses and wishes to extend the nature of its
services.

ITEM 7. FINANCIAL STATEMENTS.

Financial statements appear at pages F1 through F9 of this Report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

Our executive officers and directors are:

<table>
<caption>

NAME                       AGE     POSITION

                        <c>     <c>
Bill G. Williams           68      Chief Executive Officer and Chairman of the Board

Robert S. Braswell, IV     47      President, Director

Jerry W. Petermann         52      Director

W. Steven Walker           52      Secretary, Director

</table>

The present directors were appointed in May 2001 and will serve until their
successors are elected at an annual meeting of the shareholders. Thereafter
directors will serve a term of one year.

MR. WILLIAMS has been Chairman of the Board and CEO of Direct Wireless
Corporation since September 1997. During the period from 1995 until September
1997 he was self-employed in entrepreneurial activities that culminated in the
founding of Direct Wireless Corporation. He was previously Chairman of the Board
and Chief Executive Officer of Cafe Quick Enterprises, Inc from 1988-1995. Cafe
Quick is in the vending industry market and uses a unique patented air
impingement technology to cook fresh frozen food in a vending machine. Mr.
Williams and his management team acquired the technology, developed the
prototype and ultimately licensed the


<page>

technology worldwide. From 1985 to 1988, Mr. Williams was Chairman of the Board
and CEO of Ameritron Corporation, a multi-business public holding company. In
his capacity as chairman, Mr. Williams was instrumental in acquiring
thirty-seven businesses over a period of five years. Prior to his employment
with Ameritron Corporation, Mr. Williams was involved in real estate projects
and land development. Mr. Williams is co-inventor of the Direct Wireless
Communication System.

MR. BRASWELL has been President of Direct Wireless Corporation since November
1999 and a member of the board of directors since January 1999. He was an
independent businessman with eighteen years experience in the common carrier
freight business, working for Central Freight Lines, Inc from 1974-1992. During
his tenure Mr. Braswell worked in all aspects of the Company operations. His
last position with Central Freight Lines was Director of Data Processing for
Shop Maintenance and Inventory Control. He managed the parts, tires and fuel
inventories in addition to the Maintenance Reporting System. During this period,
Mr. Braswell was a study group chairman and a committee member of the Board of
Directors for the American Trucking Association Maintenance Council. Before
joining Direct Wireless Corporation, 1992-1999 he was engaged in business
evaluations, real estate development and new home construction. Mr. Braswell
graduated from the University of Houston in 1983 with a Bachelor of Business
Administration in Organizational Behavior Management.

MR. PETERMANN has been Vice President of Direct Wireless Corporation since
January 1999. Mr. Petermann is co-inventor of the Direct Wireless Communication
System and has been continuing the development of system features and
capabilities since October 1997. He served as a consulting engineer to Direct
Wireless Corporation from October 1997 until January 1999, during which time he
was engaged in developing the system features and capabilities and writing the
patent applications for Direct Wireless Corporation. From 1995 until October
1997 he was a design engineer for Ramtech Electronics, a company that was then
in the business of electronics design and assembly. Mr. Petermann has a long
career, beginning in 1972, as an engineer and inventor in a variety of
disciplines. As founder of Warrington Laboratories he developed several
successful concepts and inventions for clients that include the Department of
Defense, U.S. Navy, Los Alamos National Laboratories, Housing and Urban
Development and the United Nations, among others. He has extensive experience in
concept-to-patent management, research and development firms, manufacturers and
patent attorneys. Mr. Petermann holds a Bachelor of Applied Science in
Telecommunications from the University of Mary Hardin-Baylor, 1972.

MR. WALKER is Secretary/Treasurer of Direct Wireless Corporation and acts as
principal legal advisor to the Company. For approximately twenty-five years Mr.
Walker has been engaged in the private practice of law with emphasis in
commercial and business litigation and corporate finance. He has been a Board
Member of several public companies and represents a number of corporations. Mr.
Walker received a Bachelor of Arts Degree with Honors from the University of
Texas, Austin, Texas, and a Doctor of Jurisprudence Degree from the University
of St. Mary's School of Law, San Antonio, Texas. He received his law license in
November of 1976.


ITEM 10. EXECUTIVE COMPENSATION.

We do not have any revenue producing operations at the present time, and it may
be some period of time before revenues are produced in amounts sufficient to pay
executive salaries. When we


<page>

have sufficient revenues we intend to pay annual executive salaries as set forth
in the following compensation table

            NAME                                      PROPOSED SALARY
            ----                                      ---------------
            Bill G. Williams                              $100,000
            Robert S. Braswell, IV                         100,000





ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

At December 31, 2001, the following persons were beneficial owners of 5% or more
of our common stock.

                                 AMOUNT AND NATURE
NAME AND ADDRESS              OF BENEFICIAL OWNERSHIP          PERCENT OF CLASS
----------------              -----------------------          ----------------
Shirley Williams               3,584,438 Direct                      12.02%
4800 Ridgeview
Waco, TX 76710

Bill G. Williams               3,584,438 Indirect (1)                12.02%
2068 N valley Mills Dr
Waco, TX 76710

Robert S. Braswell IV          2,602,153 Direct (2)                  08.73%
2068 N Valley Mills Dr.          780,000 Indirect (3)                 2.62%
Waco, TX 76710

--------------
(1)      These shares are owned of record by Shirley Williams, Mr. Williams'
         wife.
(2)      Includes 11,667 shares are owned by Mr. Braswell and his wife as joint
         tenants.
(3)      Includes 226, 676 shares are owned by Mr. Braswell's wife, 140,000
         shares owned by a corporation controlled by Mr. Braswell and 413,324
         shares owned by his minor children.


<page>

Our officers and directors own shares of our common stock as shown in the
following table.

                                NUMBER OF SHARES
NAME AND POSITION              BENEFICIALLY OWNED              PERCENT OF CLASS
-----------------              ------------------              ----------------
Bill G. Williams               3,584,438 Indirect                    12.02%
Chairman and CEO
2068 N valley Mills Dr
Waco, TX 76710

Robert S. Braswell IV          2,602,153 Direct                       8.73%
President and Director           780,000 Indirect                     2.62%
2068 N valley Mills Dr
Waco, TX 76710

Jerry W. Petermann             1,400,000 Direct                       4.69%
Director
P.O. Box 890
Pflugerville, TX 78691

W. Steven Walker               1,376,536 Direct                       4.62%
Secretary, Treasurer
And Director
223 E. College
Grapevine, TX 76051

All officers and directors as 9,743,127                              32.67%
a group (four persons)

Information as to the nature of the security holdings of officers and directors
is given in the notes to the preceding table.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Direct Wireless Corporation organized us on April 6, 2001. On that date we
issued 1000 shares of common stock to Direct Wireless Corporation (7000 shares
as adjusted for the subsequent 7-1 stock split) in consideration of the
furnishing of initial capitalization of $1000. Direct Wireless Corporation can
therefore be considered to be a promoter.

On May 15, 2001, we entered into an agreement with Direct Wireless Corporation
under which we were licensed to market and/or sublicense the Direct Wireless
Corporation technology in the territory of the United States. As partial payment
for the license agreement, we issued to Direct Wireless Corporation 1,448,425
shares of our common stock (10,138,975 shares as adjusted for a 7-1 stock split
effective September 26, 2001). In addition, the license agreement requires
Direct Wireless Communications, Inc. to pay royalties and an aggregate of ten
million dollars cash to Direct Wireless Corporation. In December 2001 we paid to
Direct Wireless Corporation the sum of $176,645 as partial payment of the
required cash fee.

On September 26, 2001, we issued an aggregate of 7,000,000 shares of our common
stock in consideration of services rendered to our officers and directors as
follows: Bill G. Williams: 2,459,000; Robert S. Braswell IV: 2,100,000; Jerry W.
Petermann: 1,400,000; and W. Steven Walker: 1,050,000

<page>



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.

3.1 Articles of Incorporation. Registrant incorporates by reference Exhibit
3.1 to Registration Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

3.1 (a) Articles of Amendment to Articles of Incorporation. Registrant
incorporates by reference Exhibit 2.2 to Form10-QSB, File No.
333-62216, filed 11/14/2001.

3.2 By-Laws. Registrant incorporates by reference Exhibit 3.2 to Registration
Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

4.1 Copy of Specimen Certificate for shares of common stock. Registrant
incorporates by reference Exhibit 4.1 to Registration Statement on Form SB-2,
File No. 333-62216, filed 6/04/2001.

4.2 Excerpt from By-Laws. Registrant incorporates by reference Exhibit 4.2 to
Registration Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

4.2(A) Corrected Article 3.02 of By-Laws. Registrant incorporates by reference
Exhibit 4.2(A) to Amendment No. 2 to Registration Statement on Form SB-2, File
No. 333-62216, filed 8/15/2001

10.1(a) Technology License Agreement dated May
15, 2001, as amended July 17, 2001 between Direct Wireless Corporation and
Direct Wireless Communications, Inc. Registrant incorporates by reference
Exhibit 10.1(a) to Amendment No.1 to Registration Statement on Form SB-2, File
No. 333-62216, filed 7/24/ 2001.

23. Consent of Darilek, Butler & Co., P.C., certified public accountants.

(B) REPORTS ON FORM 8-K. None.


<page>




                      DIRECT WIRELESS COMMUNICATIONS, INC.
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 2002



                         TABLE OF CONTENTS

                                                               Page
                                                               ----

Independent Auditors' Report                                   F-2


Balance Sheet                                                  F-3

Statement of Loss                                              F-4

Statement of Changes in Stockholders' Equity                   F-5

Statement of Cash Flows                                        F-6

Notes to Financial Statements                                  F-7









                                       F-1


<PAGE>


                           DARILEK, BUTLER & CO., P.C.
                         2702 N. Loop 1604 E., Suite 202
                            San Antonio, Texas 78232
                               210-979-0055 phone
                                210-979-0058 fax


INDEPENDENT AUDITORS' The Board of Directors
Direct Wireless Communications, Inc.
San Antonio, Texas

We have audited the accompanying balance sheet of Direct Wireless
Communications, Inc. (a Development Stage Company) as of December 31, 2002 and
the related statements of income and cash flows for the year ended December 31,
2002 and the period from inception (April 6, 2001) to December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Direct Wireless Communications,
Inc. as of December 31, 2002 and the results of its operations and its cash
flows for the initial period then ended in conformity with accounting principles
generally accepted in the United States of America, consistently applied.

"Darilek, Butler & Co., P.C."

San Antonio, Texas
February 25, 2003



                                       F-2


<PAGE>



DIRECT WIRELESS COMMUNICATIONS, INC.                                    Page 2
(A Development Stage Company)
Balance Sheet
December 31, 2002

<table>
<caption>
                                                                                          2002
                                                                                     ---------------

                                                                                  <c>
ASSETS:

Current Assets
     Cash                                                                            $             79
                                                                                      ----------------
          Total Current Assets                                                                     79
                                                                                      ----------------

Other Assets

     Accounts Receivable - Stockholders                                                         1,200
     Accounts Receivable - Sale of Escrow Shares                                                1,840
     Accounts Receivable - Related Party                                                       15,500
                                                                                      ----------------
                                                                                               18,540
                                                                                      ----------------
          Total Assets                                                               $         18,619
                                                                                      ================

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current Liabilities
     Accounts Payable - Trade                                                        $          8,417
                                                                                      ----------------
          Total Current Liabilities                                                             8,417
                                                                                      ----------------
          Total Liabilities                                                                     8,417
                                                                                      ----------------

Stockholders' Equity

    Common Stock, No Par Value, 200,000,000 Shares Authorized 29,820,564 Shares
         Issued and Outstanding                                                               853,666
    Additional Paid-In Capital                                                                 35,419
    Deficit Accumulated During Development Stage                                             (878,883)
                                                                                      ----------------
          Total Stockholders' Equity                                                           10,202
                                                                                      ----------------
          Total Liabilities and Stockholders' Equity                                 $         18,619
                                                                                      ================
</table>





The Accompanying Notes are an Integral Part of These Financial Statements.

                                       F-3


<page>







<page>




DIRECT WIRELESS COMMUNICATIONS, INC.                                   Page 3
(A Development Stage Company)
Statements of Loss
For the Year Ended December 31, 2002 and
the Period from April 6, 2001 (Date of Inception) to December 31, 2002

<table>
<caption>
                                                                                                            April 6, 2001
                                                                                          Year Ended        (Inception) to
                                                                                         December 31,        December 31,
                                                                                             2002                2002
                                                                                        ---------------     ---------------

                                                                                   <c>                 <c>
Revenues
     Capital Gain (Loss) on Sale of Assets                                            $            198    $            (20)
     Dividend Income                                                                                56                  64
     Miscellaneous Income                                                                          326                 326
                                                                                        ---------------     ---------------
Total Revenues                                                                                     580                 370
                                                                                        ---------------     ---------------

Expenses
     Administrative Fees                                                                        20,400              35,419
     Advertising                                                                                 3,070               3,070
     Auto Expense                                                                                    0                 271
     Bank Charges                                                                                  100                 100
     Dues and Subscriptions                                                                        400                 800
     Insurance                                                                                      94                 276
     License Fees                                                                               47,560             224,539
     Federal Grading
     Meals and Entertainment                                                                       340                 340
     Office Expense                                                                              2,360               4,891
     Other Expense                                                                                 114                 118
     Outside Services                                                                            1,484               4,216
     Postage and Delivery                                                                        1,079               2,065
     Professional and Consulting Fees                                                          268,960             591,327
     Rent Expense                                                                                1,160               1,160
     Repairs and Maintenance                                                                         0                  55
     Stock Transaction Fees                                                                      8,085               8,085
     Telephone                                                                                   1,013               1,836
     Travel                                                                                        129                 685
                                                                                        ---------------     ---------------
          Total Expenses                                                                       356,348             879,253
                                                                                        ---------------     ---------------
Net Loss Before Provision for Federal Income Tax                                              (355,768)           (878,883)

Provision For Federal Income Tax                                                                     0                   0
                                                                                        ---------------     ---------------
Net Loss                                                                              $       (355,768)    $      (878,883)
                                                                                        ===============     ===============


Average Outstanding Shares                                                                  24,427,041          16,636,740

Loss Per Share                                                                        $          (0.01)    $         (0.05)
</table>




   The Accompanying Notes are an Integral Part of These Financial Statements.

                                       F-4


<page>


DIRECT WIRELESS COMMUNICATIONS, INC.                                    Page 4
Statement of Changes in Stockholders' Equity
For the Period from April 6, 2001 (Date of
Inception) to December 31, 2002

<table>
<caption>
                                                                                                Deficit
                                                                                              Accumulated
                                                       Common Stock            Additional        During            Total
                                                ----------------------------    Paid-In       Development       Stockholders'
                                                   Shares          Amount       Capital          Stage            Equity
                                                ---------------  -----------  -------------  ----------------  ---------------

                                                 <c>        <c>          <c>            <c>               <c>
Balance - April 6, 2001 (Inception)                          0 $          0 $            0 $               0 $              0
Contributed Services                                         0            0         35,419                 0           35,419
Stock Issued for Cash                                2,469,150      256,455              0                 0          256,455
Stock Issued to Direct Wireless Corporation         10,138,975            0              0                 0                0
Stock Issued to Officers                             7,100,000            0              0                 0                0
Stock Issued for Services                            5,812,439      563,596              0                 0          563,596
Stock Held In Escrow                                 3,257,000            0              0                 0                0
Cash Received for Sale of Escrowed Shares            1,043,000       33,615              0                 0           33,615
Net Loss                                                     0            0              0         (878,883)         (878,883)
                                                ---------------  -----------  -------------  ----------------  ---------------
Balance - December 31, 2002                         29,820,564 $    853,666 $       35,419 $       (878,883) $         10,202
                                                ===============  ===========  =============  ================  ===============
</table>







   The Accompanying Notes are an Integral Part of These Financial Statements.

                                       F-5

<page>


DIRECT WIRELESS COMMUNICATIONS, INC.                                   Page 5
(a Development Stage Company)
Statement of Cash Flows
From the Date of Inception (April 6, 2001) to December 31, 2002


<table>


                                                                           <c>
Cash Flows From Operating Activities
         Net Loss                                                             $          (878,883)
         Adjustments to Reconcile Net Loss to Net Cash
           Provided by (Used for) Operating Activities:
                   Services Contributed                                                     35,419
                   Services Provided for Stock                                             563,596
                   Loss On Investments                                                          20
           Increase in:
               Accounts Payable                                                              8,417
                                                                                  -----------------
                  Net Cash Provided (Used) by Operating Activities                       (271,431)

Cash Flows From Investing Activities
         Sale of Mutual Funds                                                                9,023
         Purchase of Mutual Funds                                                          (9,043)
                                                                                  -----------------
                   Net Cash Provided (Used) by Investing Activities                           (20)

Cash Flows From Financing Activities
         Cash from Sale of Stock                                                           290,070
         Advance to Direct Wireless Corporation                                           (15,500)
         Advance to Shareholder and Broker                                                 (3,040)
                                                                                  -----------------
                   Net Cash Provided (Used) by Financing Activities                        271,530

          Net Increase (Decrease) in Cash                                                       79

Cash, at Beginning of Period                                                                     0
                                                                                  -----------------

Cash, at End of Period                                                        $                 79
                                                                                  =================
</table>




Non-Cash Transactions:
----------------------

Services Contributed for Administration                              $ 35,419
                                                                     ========

Stock Issued for Professional and Consulting Services                $563,596
                                                                     ========



                                       F-6


<page>

DIRECT WIRELESS COMMUNICATIONS, INC.                                     Page 6
(a Development Stage Company)

Notes to Financial Statements
December 31, 2002

Note A - Summary of Significant Accounting Policies
---------------------------------------------------

NATURE OF OPERATIONS AND DESCRIPTION OF DEVELOPMENT STAGE ACTIVITIES

Direct Wireless Communications, Inc. (the Company) has been in the development
stage since the date of incorporation on April 6, 2001. The Company is primarily
engaged in the activity of developing technology for a wireless telephone
system. On May 15, 2001, the Company entered into a Technology Licensing
Agreement with Direct Wireless Corporation (Direct Wireless). Under this
agreement, Direct Wireless was granted a license to market and/or sublicense in
the United States the wireless telephone communications technology on which
Direct Wireless holds the patents. The Company has not yet begun operations.
Upon completion of the working prototype telephone employing the technology, the
Company intends to market and sublicense the technology primarily to existing
service providers who desire to extend their services to sparsely settled areas
or to public utilities who have customers in such areas and desire to provide
wireless services to them.

BASIS OF ACCOUNTING

The financial statements of the Company have been prepared on the accrual basis
of accounting. As such, revenue is recognized as earned and expenses are
recorded when accrued. This basis of accounting conforms to generally accepted
accounting principles.

BASIS FOR ASSIGNING AMOUNTS TO EQUITY SECURITIES ISSUED FOR OTHER THAN CASH

Shares of common stock issued to individuals and/or companies for other than
cash have been assigned amounts equal to the fair value of the service provided
or the fair value of the shares of the Company issued, whichever was most
readily determinable.

CASH FLOWS

For the purpose of the cash flow statement, cash and cash equivalents represent
funds deposited in banks and investments maturing within three months.

USE OF ESTIMATES

Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions effect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities, and the reported
revenue and expenses. Actual results could differ from those estimates.

                                       F-7

<page>

DIRECT WIRELESS COMMUNICATIONS, INC.                                     Page 7
(a Development Stage Company)

Notes to Financial Statements
December 31, 2002

NOTE B - RELATED PARTY TRANSACTIONS
-----------------------------------

Direct Wireless Corporation provided office space and administrative services to
the Company for the period ended December 31, 2002. The estimated value for the
services provided totaled $20,400 for the year ended December 31, 2002 and
$35,419 from inception (April 6, 2001) until December 31, 2002 and are recorded
as administrative services in the accompanying financial statements.

NOTE C - LICENSE FEES EXPENSE - LICENSE AGREEMENT
-------------------------------------------------

Effective April 30, 2001, the Company entered into a license agreement with
Direct Wireless Corporation. Under the terms of the agreement, the Company has
agreed to pay $10,000,000 under the terms of the license agreement to be paid as
the Company gains money from the sale or sales of sub-licenses for the United
States. The Company has also agreed to pay a percentage of all fees collected of
licensed products to Direct Wireless under the terms of the agreement.

The accompanying financial statements include $47,560 of license fees expensed
for the year ended December 31, 2002 and $224,539 expensed from inception (April
6, 2001) until December 31, 2002.


NOTE D - ESCROW AGREEMENT
-------------------------

During the period from inception until December 31, 2002, the Company
established an irrevocable escrow agreement with a brokerage firm. During this
period, five stockholders, none of whom were officers, directors, or affiliates,
deposited an aggregate of 6,000,000 shares into the escrow fund. The escrow
agent distributed 1,700,000 shares to a brokerage firm as fees for investment
services and sold 1,043,000 shares for $33,615. The funds received from the sale
of escrow shares were recorded as additional capital in the accompanying
financial statements. As of December 31, 2002, the escrow agent has 3,257,000
shares remaining in the escrow fund.

                                       F-8


<page>


DIRECT WIRELESS COMMUNICATIONS, INC.                                    Page 8
(a Development Stage Company)

Notes to Financial Statements
December 31, 2002

NOTE E - FEDERAL INCOME TAXES
-----------------------------

At December 31, 2002, the Company had net operating loss carryforwards totaling
$878,883 which expire in 2022. Realization of deferred assets resulting from the
NOL carryforwards have been offset by a valuation allowance.


                                       F-9


<page>

                                   SIGNATURES

In accordance with Section 15(d) of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                      DIRECT WIRELESS COMMUNICATIONS, INC.

                        By: /s/ Robert S. Braswell, IV
                            ---------------------------------
                            Robert S. Braswell, IV, President



In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


<table>
<caption>


                            <c>                                         <c>
/s/ Bill G. Williams           Chief Executive Officer                     March 28, 2003
--------------------------     Chairman of Board of Directors
    Bill G. Williams           CEO/CBD

/s/ Robert S. Braswell, IV     President, Treasurer, Chief Financial       March 28, 2003
--------------------------     Officer, Chief Accounting Officer
    Robert S. Braswell, IV     Director

/s/ W. Steven Walker           Secretary                                   March 28, 2003
--------------------------     Office, Secretary
    W. Steven Walker           Director

</table>


                                       S-1


<PAGE>



                                    EXHIBITS
                                INDEX TO EXHIBITS

3.1 Articles of Incorporation. Registrant incorporates by reference Exhibit 3.1
to Registration Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

3.1 (a) Articles of Amendment to Articles of Incorporation. Registrant
incorporates by reference Exhibit 2.2 to Form 10-QSB, File No. 333-62216, filed
11/14/2001.

3.2 By-Laws. Registrant incorporates by reference Exhibit 3.2 to Registration
Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

4.1 Copy of Specimen Certificate for shares of common stock. Registrant
incorporates by reference Exhibit 4.1 to Registration Statement on Form SB-2,
File No. 333-62216, filed 6/04/2001.

4.2 Excerpt from By-Laws. Registrant incorporates by reference Exhibit 4.2 to
Registration Statement on Form SB-2, File No. 333-62216, filed 6/04/2001.

4.2(A) Corrected Article 3.02 of By-Laws. Registrant incorporates by reference
Exhibit 4.2(A) to Amendment No. 2 to Registration Statement on Form SB-2, File
No. 333-62216, filed 8/15/2001

10.1(a) Technology License Agreement dated May 15, 2001, as amended July 17,
2001 between Direct Wireless Corporation and Direct Wireless Communications,
Inc. Registrant incorporates by reference Exhibit 10.1(a) to Amendment No.1 to
Registration Statement on Form SB-2, File No. 333-62216, filed 7/24/ 2001.

23. Consent of Darilek, Butler & Co., P.C., certified public accountants...Page
E-2

24. Certification of Chief Financial Officer Page E-3

(B) Reports on Form 8-K. None.



                                       E-1