<PAGE>

================================================================================

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)
 [X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934
         For the quarterly period ended DECEMBER 31, 2001

 [ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934
         For the transition period from __________ to __________

                         Commission File Number 0-28213

                               KANAKARIS WIRELESS
                 (Name of small business issuer in its charter)

            NEVADA                                               86-0888532
-------------------------------                               ----------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                        3303 HARBOR BOULEVARD, SUITE F-3
                            COSTA MESA, CA 92626-1521
                    (Address of principal executive offices)

         Issuer's telephone number (including area code): (949) 330-6590

         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 registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X]  No [ ]

         The number of shares outstanding of the registrant's only class of
common stock, $.001 par value per share, was 8,576,273 on February 12, 2002.

================================================================================


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS
                       KANAKARIS WIRELESS AND SUBSIDIARIES

Condensed Consolidated Balance Sheet at December 31, 2001..................F-1

Condensed Consolidated Statements of Operations for the Three Months
     Ended December 31, 2001 and 2000......................................F-3

Condensed Consolidated Statements of Comprehensive Loss for the
     Three Months Ended December 31, 2001 and 2000.........................F-4

Condensed Consolidated Statements of Cash Flows for the Three Months
     Ended December 31, 2001 and 2000......................................F-5

Condensed Consolidated Statement of Changes in Stockholders' Equity
     (Deficiency) for the Three Months Ended December 31, 2001.............F-7

Notes to Condensed Consolidated Financial Statements.......................F-8

                                       2


<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheet
                                December 31, 2001
                                   (Unaudited)

ASSETS
------

Current assets:
 Cash and cash equivalents                                            $   44,071
 Accounts receivable                                                     163,296
 Inventories                                                               1,960
 Current maturities of notes receivable -
    shareholders and related parties                                      36,280
 Interest receivable                                                      44,007
 Prepaid expenses                                                         21,041
 Advances to suppliers                                                       700
                                                                      ----------

      TOTAL CURRENT ASSETS                                               311,355
                                                                      ----------

Property and equipment, net of accumulated
 depreciation and amortization                                            43,787
                                                                      ----------

Other assets:
 Investments (at market value)                                            62,400
 Film library - net of amortization                                      359,748
 Goodwill - net of amortization                                          329,444
 Other                                                                     2,135
                                                                      ----------

      TOTAL OTHER ASSETS                                                 753,727
                                                                      ----------

      TOTAL ASSETS                                                    $1,108,869
                                                                      ==========

     See accompanying notes to condensed consolidated financial statements.

                                      F-1

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheet
                                December 31, 2001
                                   (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------

Current liabilities:
 Accounts payable and accrued expenses                             $  1,156,169
 Convertible debentures                                               2,642,500
 Due to former shareholder of subsidiary                                112,946
                                                                   -------------
      TOTAL CURRENT LIABILITIES                                       3,911,615
                                                                   -------------

Stockholders' equity (deficiency):
 Preferred stock, $0.01 par value; 5,000,000 shares
   authorized; 1,000,000 Class A Convertible issued
   and outstanding                                                       10,000
 Common stock, $0.001 par value; 250,000,000
   shares authorized; 8,486,073 issued and
   outstanding                                                            8,486
 Additional paid-in capital                                          30,126,300
 Accumulated deficit                                                (31,574,920)
 Deferred expense                                                    (1,323,012)
 Comprehensive loss                                                     (49,600)
                                                                   -------------

      TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)                        (2,802,746)
                                                                   -------------
      TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIENCY)                            $  1,108,869
                                                                   =============

     See accompanying notes to condensed consolidated financial statements.

                                      F-2

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

                                                     Three Months   Three Months
                                                         Ended         Ended
                                                        Dec 31,       Dec 31,
                                                         2001          2000
                                                     ------------   ------------
Net sales                                            $   222,685    $   554,313

Cost of sales                                            124,010        256,097
                                                     ------------   ------------
      Gross profit                                        98,675        298,216
                                                     ------------   ------------

Operating expenses:
 Executive compensation                                  286,335        673,300
 Salaries                                                 39,932        161,194
 Payroll taxes and employee benefits                       4,695          6,954
 Consulting services                                     372,255      1,070,438
 Travel and entertainment                                 23,073         68,484
 Telephone and utilities                                   5,712         15,458
 Marketing, advertising and investor relations            21,769        393,164
 Professional fees                                       135,952        176,319
 Rent                                                      6,615          6,473
 Office and other expenses                                49,081         97,943
 Equipment rental and expense                              1,018            601
 Insurance                                                22,411         17,940
 Depreciation and amortization                            37,456         35,720
 Taxes - other                                                --          2,400
 Bank charges                                                371            277
 Website development                                         323         29,460
                                                     ------------   ------------
      TOTAL OPERATING EXPENSES                         1,006,998      2,756,125
                                                     ------------   ------------

   Loss before interest and other income
   (expense)                                            (908,323)    (2,457,909)

   Financing and other income (expense), net            (101,692)       (83,513)
                                                     ------------   ------------

   Net loss                                          $(1,010,015)   $(2,541,422)
                                                     ============   ============
   Net loss per common share -
      basic and diluted                              $      (.16)   $     (1.28)
                                                     ============   ============
   Weighted average common shares
      outstanding - basic and diluted                  6,445,633      1,978,990
                                                     ============   ============

     See accompanying notes to condensed consolidated financial statements.

                                      F-3

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
             Condensed Consolidated Statements of Comprehensive Loss
                                   (Unaudited)

                                                 Three Months       Three Months
                                                    Ended              Ended
                                                    Dec 31,            Dec 31,
                                                     2001               2000
                                                 ------------       ------------
Net Loss                                         $(1,010,015)       $(2,541,422)

Other comprehensive loss:
 Unrealized loss on securities                       (49,600)          (752,000)
                                                 ------------       ------------
Comprehensive loss                               $(1,059,615)       $(3,293,422)
                                                 ============       ============

     See accompanying notes to condensed consolidated financial statements.

                                      F-4

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
              For the Three Months Ended December 31, 2001 and 2000
                                   (Unaudited)

                                                          2001         2000
                                                      ------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                             $(1,010,015)  $(2,541,422)
 Adjustments to reconcile net loss
   to net cash used in operating activities:
      Amortization of goodwill                              7,372         7,091
      Depreciation and amortization                        30,085        28,629
      Deferred advertising income realized                     --      (250,000)
      Compensation, consulting, marketing and
        professional services, incurred in exchange
        for common stock                                  521,396     1,683,587
      Consulting services incurred in exchange
        for stock options                                  46,841        31,352
      Convertible debt-interest cost                       59,214       119,942
 Changes in assets and liabilities
   (Increase) decrease in:
         Accounts receivable                              (41,203)      (40,223)
         Inventory                                             --           998
         Prepaid expenses                                    (978)       51,438
         Advances to suppliers and security deposits           --          (175)
         Interest receivable                               (8,702)      (12,102)
   Increase (decrease) in:
         Accounts payable and accrued expenses             92,187       192,695
         Other current liabilities                        (23,349)           --
                                                      ------------  ------------
      NET CASH USED IN OPERATING ACTIVITIES              (327,152)     (728,190)
                                                      ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment                            --        (4,676)
 Decrease in notes receivable -
    shareholders and related parties                       74,530        74,529
 Proceeds from notes receivable - other                        --        24,000
 Acquisition of film library                                   --       (24,940)
                                                      ------------  ------------
      NET CASH PROVIDED BY
      INVESTING ACTIVITIES                                 74,530        68,913
                                                      ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from sale of common stock                       245,220        50,000
                                                      ------------  ------------
      NET CASH PROVIDED BY FINANCING ACTIVITIES           245,220        50,000
                                                      ------------  ------------
Net decrease in cash and cash equivalents                  (7,402)     (609,277)

Cash and cash equivalents, beginning of period             51,473       615,101
                                                      ------------  ------------
Cash and cash equivalents, end of period              $    44,071   $     5,824
                                                      ============  ============

                                      F-5

<PAGE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the three months ended December 31, 2001, the Company issued 2,302,128
shares of common stock for consulting services having a fair value of $686,907.

During the three months ended December 31, 2001, the Company issued 65,000
shares of common stock in lieu of compensation of $49,400.

During the three months ended December 31, 2001, the Company issued 897,991
shares of common stock having a fair value of $173,214 to various debenture
investors representing the conversion of principal and interest.

During the three months ended December 31, 2001, the Company issued 581,250
stock options to a consultant for services having a fair value of $46,841.

During the three months ended December 31, 2000, the Company issued 247,147
shares of common stock for consulting, marketing and professional services
having a fair value of $1,683,587.

During the three months ended December 31, 2000, the Company issued 306,261
shares of common stock having a fair value of $1,450,942 to various debenture
investors representing the conversion of principal and interest.

During the three months ended December 31, 2000, the Company issued 25,000 stock
options to a consultant for current and future services having a fair value of
$125,407, of which $31,352 was expensed in the three months ending December 31,
2000; and $94,055 was expensed during the year ended September 30, 2001.

     See accompanying notes to condensed consolidated financial statements.

                                      F-6

<PAGE>
<TABLE>

                             KANAKARIS WIRELESS AND SUBSIDIARIES
       Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficiency)
                         For the Three Months Ended December 31, 2001
                                         (Unaudited)

<CAPTION>

                              Common Stock Issued         Preferred Stock
                            ----------------------   ------------------------
                              Shares       Amount       Shares        Amount         APIC
                            ----------   ---------   ------------   ---------   ------------
<S>                          <C>         <C>            <C>         <C>         <C>
Balances
September 30, 2001           4,514,704   $   4,514      1,000,000   $  10,000   $ 28,928,690

 Stock issued for cash:        706,250         707             --          --        244,513

 Stock issued for:
    Compensation                65,000          65             --          --         49,335
    Consulting services      2,302,128       2,302             --          --        684,605

 Converted debentures          897,991         898             --          --        172,316

 Issuance of common
   stock option for
   consultants                      --          --             --          --         46,841

 Unrealized loss on
  investment                        --          --             --          --             --

 Net (loss)                         --          --             --          --             --
                            ----------   ---------   ------------   ---------   ------------
Balances
December 31, 2001            8,486,073   $   8,486      1,000,000   $  10,000   $ 30,126,300
                            ==========   =========   ============   =========   ============

continued below:
<CAPTION>

                             Accumulated        Stock       Comprehensive
                               Deficit      Subscriptions       Loss            Total
                            -------------   -------------   -------------   -------------
<S>                         <C>             <C>             <C>             <C>
Balances
September 30, 2001          $(30,564,905)   $ (1,108,101)   $    (48,000)   $ (2,777,802)

 Stock issued for cash:               --              --              --         245,220

 Stock issued for:
    Compensation                      --         126,562              --         175,962
    Consulting services               --        (341,473)             --         345,434

 Converted debentures                 --              --              --         173,214

 Issuance of common
   stock option for
   consultants                        --              --              --          46,841

 Unrealized loss on
  investment                          --              --          (1,600)         (1,600)

 Net (loss)                   (1,010,015)             --              --      (1,010,015)
                            -------------   -------------   -------------   -------------
Balances
December 31, 2001           $(31,574,920)   $ (1,323,012)   $    (49,600)   $ (2,802,746)
                            =============   =============   =============   =============
</TABLE>

          See accompanying notes to condensed consolidated financial statements.

                                      F-7

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Basis of presentation
     -------------------------

     The condensed consolidated financial statements included herein have been
     prepared by Kanakaris Wireless, without audit, pursuant to the rules and
     regulations of the Securities and Exchange Commission. Certain information
     and footnote disclosures normally included in financial statements prepared
     in accordance with generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and regulations. Kanakaris
     Wireless believes that the disclosures are adequate to make the information
     presented not misleading when read in conjunction with its financial
     statements for the year ended September 30, 2001 included in its Form
     10-KSB. The financial information presented reflects all adjustments, which
     are, in the opinion of management, necessary for a fair statement of the
     results for the interim periods presented. The results of operations for
     the three months ended December 31, 2001 are not necessarily indicative of
     the results to be expected for the full year ending September 30, 2002, or
     any other period.

     (B) Business Organization and Activity
     --------------------------------------

     Kanakaris Wireless, which on June 2, 2000 changed its name from Kanakaris
     Communications, Inc. (formerly Big Tex Enterprises, Inc.) (the "Company"),
     was incorporated in the State of Nevada on November 1, 1991. The Company
     develops and supplies Internet products for electronic commerce, an on-line
     on-demand movie network and operates a subsidiary which designs and
     installs modular data control consoles. The Company has introduced a
     website called AK.TV, an interactive TV channel viewable in devices
     including Pocket PCs, laptop and desktop computers and TV's.

     (C) Business Combinations
     -------------------------

     On October 10, 1997 (the "Acquisition Date"), Kanakaris Internetworks, Inc.
     ("KIW") consummated a Stock Purchase Agreement with the shareholder (the
     "Seller") of Desience Corporation ("Desience") to purchase 10,000 common
     shares representing 100% of its issued and outstanding common stock in
     exchange for a 4% royalty on the gross sales (after collection) of Desience
     subsequent to the Acquisition Date, to be paid monthly for as long as
     Desience remains in business or its products are sold. Pursuant to APB 16,
     since the Seller had no continuing affiliation with KIW, the 4% royalty is
     accounted for as an increase to goodwill at the date the amount is
     determinable. In addition, the Seller shall receive 5% of funds which are
     to be allocated to Desience arising from KIW's next securities offering as
     a non-refundable advance on the royalty. As of December 31, 2001, no
     advances have been given. KIW will hold harmless the Seller from any
     claims, causes of action, costs, expenses, liabilities, and prior

                                      F-8

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

     shareholder advances. Immediately following the exchange, Desience became a
     wholly owned subsidiary of KIW. The fair value of the assets and
     liabilities acquired pursuant to the acquisition of Desience was $148,776
     and $468,120, respectively, which resulted in goodwill of $319,344 at the
     Acquisition Date since no trademarks, copyrights, existing or identified
     long term requirement contracts or other intangibles existed at that date.
     Additions to goodwill resulting from the royalty for the three months ended
     December 31, 2001 and 2000 were $8,250 and $11,730, respectively.

     Desience is not a high technology company, but designs and installs
     specialized business furniture for a variety of industries utilizing base
     designs developed in 1985. No changes have been made or are contemplated to
     be made to the basic furniture design, with the exception of minor
     additions or accoutrements. Because of the relative stability of the design
     of the furniture, management considered the goodwill attributable to the
     acquisition to be greater than 10 years. However, because of the potential
     for changes to the basic design in the future, management decided that a
     life of twenty years was not appropriate. Consequently a 15-year life was
     adopted.

     On November 25, 1997, KIW and its stockholders (the "Stockholders")
     consummated an acquisition agreement with Big Tex Enterprises, Inc. ("Big
     Tex"), an inactive public shell with no recent operations at that time,
     whereby the shareholders sold all of their preferred and common stock,
     which represented 100% of KIW's issued and outstanding capital stock, to
     Big Tex in exchange for 1,300,000 shares (300,000 common, 1,000,000
     preferred) of Big Tex's restricted stock, representing 66.67% of the issued
     and outstanding common stock and 100% of the issued and outstanding
     preferred stock of Big Tex, aggregating 75% of the total voting rights (the
     "Exchange"). Big Tex was founded in 1991 for the purpose of lawful business
     or enterprise, but had been inactive since 1991. Immediately following the
     exchange, Big Tex changed its name to Kanakaris Communications, Inc., which
     was subsequently changed to Kanakaris Wireless.

     Generally accepted accounting principles require that the company whose
     stockholders retain the majority interest in a combined business be treated
     as the acquirer for accounting purposes. Accordingly, the Big Tex
     acquisition was accounted for as an acquisition of Big Tex by KIW and a
     recapitalization of KIW.

     (D) Principles of Consolidation
     -------------------------------

     The condensed consolidated financial statements include the accounts of the
     Company, and its wholly owned subsidiaries Kanakaris Internetworks Inc.,
     and Desience. All significant intercompany balances and transactions have
     been eliminated in consolidation.

                                      F-9

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

     (E) Earnings Per Share
     ----------------------

     Earnings (loss) per share is computed using the weighted average of common
     shares outstanding as defined by Financial Accounting Standards No. 128,
     "Earnings Per Share." The assumed exercise of outstanding common share
     equivalents was not utilized in 2001 since the effect was anti-dilutive.

2.   COMMITMENTS AND CONTINGENCIES

     (A) Legal Actions
     -----------------

     Dataview Consoles, Inc., a California corporation dba Swanson Engineering &
     Manufacturing Company, commenced an action against the Company and the
     Company's subsidiary, Desience Corporation, in the Los Angeles Superior
     Court on February 14, 2001. The complaint alleged that the Company and
     Desience owed Dataview $104,601 under several invoices for equipment
     manufactured for Desience by Dataview in 1997. Concurrently with the filing
     of the complaint, Dataview filed an application for a right to attach order
     against the Company and Desience to secure repayment of the debt alleged in
     the complaint. Effective as of April 3, 2001, the parties to the dispute
     entered into a settlement agreement under which the Company and Desience
     paid Dataview $63,584 and agreed to pay Dataview an additional $42,000 in
     twelve monthly installments of $3,500 beginning May 1, 2001. The settlement
     agreement also provides that the Company will be entitled to file a request
     for dismissal after the Company has made all of the installments payments
     in accordance with the settlement agreement. The settlement agreement also
     provides that the Company and Desience, on the one hand, and Dataview and
     its related party, on the other hand, shall all retain the unrestricted
     right to market, sell, distribute and manufacture or have manufactured
     under their own respective names all of the data control consoled products
     that Dataview had been manufacturing for Desience. For the three months
     ended December 31, 2001, the Company made $10,500 in payments.

     On March 8, 2001, Loudeye Technologies, Inc., commenced an action against
     the Company. The complaint alleged breach of contract for $44,107. The
     Company has certain defenses to this claim and intends to seek an
     out-of-court settlement of these claims. A formal answer has been filed to
     the Complaint.

     The Company is subject to certain legal proceedings, claims and litigation
     arising in the ordinary course of business. While the amounts claimed may
     be substantial, the ultimate liability cannot presently be determined
     because of considerable uncertainties that exist. Therefore, it is possible
     the outcome of such legal proceedings, claims and litigation could have a
     material effect on quarterly or annual operating results or cash flows when
     resolved in a future period. However, based on facts currently available,
     management believes such matters will not have a material adverse effect on
     the Company's financial position, results of operations or cash flows.

                                      F-10

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

     (B) Service Agreements
     ----------------------

     On October 9, 2001, the Company entered into a service agreement with Mind
     Pointe, Inc. Based upon the terms of the contract, Mind Pointe, Inc. will
     provide web hosting, development services, and programming and design
     assistance for the Company's website. The Company will pay approximately
     $17,000 each month for these services.

     On November 5, 2001, the Company entered into a consulting agreement to
     obtain assistance in entering and developing international markets. For the
     three months ended December 31, 2001, $28,333 was charged to operations
     under this agreement.

3.   REVOLVING LINE OF CREDIT

     On February 25, 1999, the Company entered into a Revolving Line of Credit
     Agreement ("the Agreement") with Alliance Equities, Inc. ("Alliance"), a
     Florida-based venture capital firm. Under the terms of the Agreement, as
     amended to date, Alliance will make available through December 30, 2003, a
     $7,000,000 revolving line of credit with interest on the unpaid principal
     at 10% per annum. Under the terms of the Agreement, the Company may draw up
     to $500,000 per month on the total line of credit upon written request by
     the Company to the Lender. Additionally the parties have agreed that any
     portion of the indebtedness may be paid back by the Company either with
     cash or by the issuance of common stock. Furthermore, in a separate
     Memorandum of Agreement the two parties agreed that Alliance will provide
     ongoing consulting services to the Company including, but not limited to,
     strategic growth advice and introductions, marketing advice, and business
     ideas. Alliance will be compensated for these services at the option of the
     Company either in cash, or through the issuance of stock or credit towards
     the purchase of stock. As of December 31, 2001, no amounts were outstanding
     under this line of credit.

4.   DEBENTURE INVESTORS

     In order to provide working capital and financing for the Company's
     expansion, on various dates during 2001 and 2000, the Company entered into
     several agreements with four accredited investors the ("Purchaser") whereby
     the Purchaser acquired the Company's 10% and 12% Convertible Debentures,
     due on various dates.

                                      F-11


<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

     The Purchasers have converted portions of the 2001 and 2000 debentures and
     accrued interest into shares of common stock fo the Company at various
     times at the initial conversion prices as stated on the respective
     debenture agreements.

     The debentures contain a contingency provision whereby, if the Company
     issues common stock at a price less than both the fixed conversion price
     and the market price on the date of issuance, the fixed conversion price
     shall be adjusted as stipulated in the agreements governing such
     debentures. (See Note 6.)

     As of December 31, 2001, the Company was indebted for an aggregate of
     $2,642,500 on these convertible debentures.

5.   STOCKHOLDERS' EQUITY AND STOCK ISSUANCES

     A. Debenture Investors
     ----------------------

     During October 2001 and November 2001, the Company issued an aggregate of
     897,991 shares of common stock having a fair value of approximately
     $173,000 to various debenture investors representing the conversion of
     principal and interest.

     B. Consulting
     -------------

     (i)  On October 2, 2001, the Company issued 125,000 shares of common stock
          to a consultant upon the exercise of a common stock purchase warrant
          issued in connection with a consulting agreement. The Company received
          approximately $35,000 as consideration. This amount reflects a
          repricing adjustment of the exercise price for the warrants. The
          original exercise price was stated in the Company's registration
          statement on Form S-8 filed on September 17, 2001.

     (ii) On October 17, 2001, the Company issued 180,000 shares of common stock
          having a fair value of $136,800 to Company personnel for services
          provided between October 1, 2001 and December 31, 2001.

     (iii)On October 26, 2001, as amended November 29, 2001, the Company entered
          into a consulting agreement to obtain assistance in strategic planning
          and acquisitions. The term of the agreement was initially for six
          months, but was amended to include a six month extension retroactive
          to the October 26, 2001 commencement date. Based upon the terms of the
          agreement, the Company issued 1,583,442 shares of the its common stock
          having a fair value of $447,001 for consulting services. In addition,
          the Company provided the consultant the option to purchase 156,250
          shares of common stock at an exercise price of $.80 per share, and
          425,000 shares at an exercise price of $.40 per share, respectively.
          As of December 31, 2001, all of the shares were issued to the
          consultant and the Company received

                                      F-12

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

          approximately $211,000 upon the exercise of the warrants. This amount
          reflects a repricing adjustment of the exercise price for the
          warrants. The original exercise price was stated in the Company's
          registration statement on Form S-8 filed on November 30, 2001.

     (iv) On November 28, 2001, pursuant to a consulting agreement, the Company
          issued 303,572 shares of common stock to a consultant having a fair
          value of approximately $85,000.

     (v)  On December 18, 2001, the Company issued 40 shares of common stock
          having a fair value of approximately $6 to complete rounding
          calculations in connection with its 1 for 20 reverse stock split.

     (vi) On December 19, 2001, the Company issued 200,000 shares of common
          stock for consulting services having a fair value of $29,800.

     C. Settlement Agreement
     -----------------------

     On December 3, 2001, the Company entered into a settlement agreement with a
     former officer in satisfaction of certain claims, and issued 125,000 shares
     of common stock having a fair market value of $37,500, 62,500 of which
     shares have registration rights.

     D. Reverse Stock Split
     -----------------------

     On November 8, 2001, the Board of Directors and a majority of the voting
     power of the Company's stockholders approved an amendment to the
     Restated Articles of Incorporation to reflect a one-for-twenty reverse
     split of the issued and outstanding shares of common stock which has
     been retroactively reflected in the accompanying financial statements.
     All shares and per shares amounts have been restated to reflect the
     one-for-twenty reverse split. The Amendment became effective upon its
     filing with the Nevada Secretary of State on December 7, 2001.

6.   ADJUSTMENTS TO OUTSTANDING SECURITIES

     In January 2002, the Company entered into an agreement with Bank Insinger
     de Beaufort, Bristol Investment Fund, Ltd., Bristol Capital, LLC, and Paul
     Kessler, who is a principal of Bristol Capital, LLC. Under the agreement,
     the conversion price of the 10% Convertible Debenture due May 1, 2002 that
     Bank Insinger purchased in the Company's April 2000 offering was amended to
     be the lesser of $.055 and 50% of the average of the lowest three intraday
     trading prices during the twenty trading days immediately preceding a
     conversion. In addition, the exercise prices of the warrants issued to Bank
     Insinger in the February 2000, April 2000 and May 2001 offerings, the
     warrants issued to Bristol Investment Fund in the January 2001 offering,
     the warrants issued to Bank Insinger in the April 2000 offering that were
     transferred to Bristol Capital, and the option issued to Paul Kessler
     pursuant to a consulting agreement dated as of September 26, 2000 were
     amended so that the exercise prices are equal to 50% of the average of the
     lowest three intraday trading prices during the twenty trading days
     immediately preceding an exercise. The expiration dates of each of the
     warrants and options described in the preceding sentence were extended so
     that each is exercisable until the seventh anniversary of its issuance.

     During the three months ended December 31, 2001, the Company issued an
     aggregate of 879,991 shares of common stock to five accredited investors in
     connection with regular interest payments and upon conversion of an
     aggregate of approximately $114,000 of principal plus related interest on
     the Company's convertible debentures.

                                      F-13

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

     As of December 31, 2001, the Company was indebted for an aggregate of
     $2,642,500 on these convertible debentures. To the extent debentures issued
     by the Company are converted into shares of common stock, the Company will
     not be obligated to repay the converted amounts.

7.   SEGMENT INFORMATION

                                        Internet       Modular
                                        Commerce       Consoles       Total
                                      ------------   ------------  ------------
     For the three months ended December 31:

                2000
     -------------------------------
     Revenues                         $   261,076    $   293,237   $   554,313
     Segment profit (loss)             (2,584,243)        42,821    (2,541,422)
     Total assets                       1,986,574        141,566     2,128,140
     Additions to long-lived assets        29,616             --        29,616
     Depreciation and amortization         35,658             62        35,720

                2001
     -------------------------------
     Revenues                         $    15,095    $   207,590   $   222,685
     Segment Profit (loss)             (1,073,031)        63,016    (1,010,015)
     Total assets                       1,061,330         47,539     1,108,869
     Additions to long-lived assets            --             --            --
     Depreciation and amortization         37,393             63        37,456

8.   RELATED PARTY TRANSACTIONS

     During the three months ended December 31, 2001, the Company issued 180,000
     shares of its common stock to officers, directors and related party
     consultants, having an aggregate fair market value of $136,800.

                                      F-14

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

9.   SUBSEQUENT EVENTS

     In January 2002, the Company issued to Bank Insinger de Beaufort Safe
     Custody NV an aggregate of $200,000 of our 12% Convertible Debentures due
     January 9, 2003, which were accompanied by warrants to purchase up to an
     aggregate of 600,000 shares of common stock. The net proceeds of the
     offering, after payment of some related expenses, were $165,500. Bank
     Insinger may, at its option, purchase an additional $200,000 of the
     Company's 12% convertible debentures and warrants to purchase up to 600,000
     shares of common stock within thirty days after the effective date of a
     registration statement that the Company is required to file on behalf of
     Bank Insinger within thirty days after the issuance of the initial $200,000
     of debentures. The debentures and warrants are immediately convertible into
     or exercisable for shares of common stock at an initial per share price
     equal to the lesser of $.055 and 50% of the average of the lowest three
     intraday trading prices during the twenty trading days immediately
     preceding a conversion or exercise.

     On January 5, 2002, approximately $150,000 of convertible debentures
     matured. Although the Company is in the process of registering stock to
     satisfy this obligation upon conversion by the debenture holders of these
     debentures into shares of the Company's common stock, as of
     February 14, 2002, the Company has not yet completed the registration.

                                      F-15

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussion and analysis should be read with our
consolidated financial statements and notes to financial statements included
elsewhere in this document.

OVERVIEW

         We provide Cyber+Mortar(TM) secure communication services that enable
consumers, businesses and government/military to send, receive, store,
replicate, monitor and interact with media-rich data, including video, audio,
text and real-time telemetry, or two-way wireless monitoring of remote devices.
We provide online delivery of films and books and offer business services,
including encoding of video for online delivery. In addition, we design,
manufacture and install ergonomic data control console systems for high-end
computer command centers.

         We derive our revenue from both our wireless content delivery and sales
of our data control console systems. We expect to continue to place significant
emphasis upon the further development and expansion of our wireless content
delivery and e-commerce activities. As funds become available, we intend to
increase our marketing efforts substantially in order to develop awareness,
brand loyalty and sales for our www.AK.TV interactive online channel and our
CinemaWEAR(TM) video-to-Internet encoding process. We intend to generate revenue
from advertising sponsorships, subscriptions, pay-per-view and product sales
pertaining to the AK.TV channel. We also intend to derive revenue from both
product sales and service fees pertaining to our CinemaWEAR(TM) encoding. As
funds become available, we intend to continue to invest in the development of
new products and services that enhance AK.TV and CinemaWEAR(TM) encoding and to
further develop our existing wireless products and services.

COMPARISON OF RESULTS OF OPERATIONS FOR QUARTERS ENDED DECEMBER 31, 2001 AND
2000

         NET SALES. Net sales decreased $331,628 (59.8%) from $554,313 for the
quarter ended December 31, 2000 to $222,685 for the quarter ended December 31,
2001. Net sales derived from our e-commerce business decreased $245,981 (94.2%)
from $261,076 for the quarter ended December 31, 2000 to $15,095 for the quarter
ended December 31, 2001. This decrease was primarily due to a decrease in
advertising revenue generated from our web sites. Net sales derived from our
data control console business decreased $85,647 (29.2%) from $293,237 for the
quarter ended December 31, 2000 to $207,590 for the quarter ended December 31,
2001. This decrease was primarily due to a decrease in sales of our OPCON
Modular System.

         GROSS PROFIT. Gross profit decreased $199,541 (66.9%) from a gross
profit of $298,216 for the quarter ended December 31, 2000 to a gross profit of
$98,675 for the quarter ended December 31, 2001. This decrease in gross profit
was due primarily to the decrease in total sales noted above.

         OPERATING EXPENSES. Total operating expenses decreased $1,749,127
(63.5%) from $2,756,125 for the quarter ended December 31, 2000 to $1,006,998
for the quarter ended December 31, 2000. This decrease in total operating
expenses was due primarily to a decrease in marketing, advertising and investor
relations costs, executive compensation, salaries, consulting services and other
expenses. Marketing, advertising and investor relations costs decreased $371,395
(94.5%) from $393,164 for the quarter ended December 31, 2000 to $21,769 for the
quarter ended December 31, 2001, primarily due to our decreased consumer and
trade advertising and marketing. Executive compensation decreased $386,965
(57.5%) from $673,300 for the quarter ended December 31, 2000 to $286,335 for
the quarter ended December 31, 2001, primarily due to the reduction in the
number of executives receiving compensation and a decrease in the issuance of
common stock to executives as compensation. Salaries decreased $121,262 (75.2%)
from $161,194 for the quarter ended December 31, 2000 to $39,932 for the quarter
ended December 31, 2001, due to both decreases in staff and decreases in
salaries of existing staff. Consulting services expenses decreased $698,183
(65.2%) from $1,070,438 for the quarter ended December 31, 2000 to $372,255 for
the quarter ended December 31, 2001. Some of these operating expenses were paid
through the issuance of shares of our common stock to the service provider.

         INTEREST AND OTHER EXPENSE. Interest and other expense increased
$18,179 (21.8%) from $83,513 for the quarter ended December 31, 2000 to $101,692
of expense for the quarter ended December 31, 2001. This increase in interest
and other expense was due to the financing cost of issuing stock as payment of
interest accrued and payable on, and upon conversion of portions of the
principal balances of our convertible debentures.

         NET LOSS. Net loss decreased $1,531,407 (60.3%) from $2,541,422 for the
quarter ended December 31, 2000 to $1,010,015 for the quarter ended December 31,
2001. This decrease in net loss was due to decreased operating expenses, as
discussed above.

                                        3

<PAGE>

COMPARISON OF RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED
SEPTEMBER 30, 2001 AND 2000

         NET SALES. Net sales increased by $1,086,000 (176.9%) to $1,700,000 for
the year ended September 30, 2001 from $614,000 for the year ended September 30,
2000. Net sales derived from our e-commerce business increased by $1,164,000
(5,061%) to $1,187,000 for the year ended September 30, 2001 from $23,000 for
the year ended September 30, 2000. Net sales derived from our data control
console business decreased $78,000 (13.2%) to $513,000 for the year ended
September 30, 2001 from $591,000 for the year ended September 30, 2000. This
decrease was primarily due to a decrease in sales of our OPCON Modular System,
which we believe to be a result of customer deferrals of anticipated sales into
the quarter ended December 31, 2001.

         GROSS PROFIT (LOSS). Gross profit as a percentage of net sales
increased to 59.9% for the year ended September 30, 2001 as compared to 39.2%
for the year ended September 30, 2000. In dollar terms, gross profit increased
$778,000 (323.7%) to a gross profit of $1,018,000 for the year ended September
30, 2001 from a gross profit of $240,000 for the year ended September 30, 2000.
Gross loss for our e-commerce business decreased in dollar terms by $3,762,000
(28.9%) to a gross loss of $9,251,000 for the year ended September 30, 2001 from
a gross loss of $13,013,000 for the year ended September 30, 2000. This decrease
in gross loss for our e-commerce business primarily was due to an increase in
revenues and a decrease in various operating expenses. Gross profit for our data
control console business decreased in dollar terms by $8,940 (24.8%) to a gross
profit of $27,090 for the year ended September 30, 2001 from a gross profit of
$36,030 for the year ended September 30, 2000. This decrease in gross profit for
our data control console business primarily was due to the decrease in sales of
our data control consoles as noted above and an increase in installation costs.

         OPERATING EXPENSES. Total operating expenses decreased by $3,092,000
(33.4%) to $6,159,000 for the year ended September 30, 2001 from $9,250,000 for
the year ended September 30, 2000. This decrease in total operating expenses
primarily was due to decreases in consulting fees, marketing, advertising and
investor relations costs, and other professional fees. Consulting fees decreased
$1,898,000 (51.4%) to $1,793,000 for the year ended September 30, 2001 from
$3,691,000 for the year ended September 30, 2000. Marketing, advertising and
investor relations costs decreased by $1,666,000 (73.2%) to $611,000 for the
year ended September 30, 2001 from $2,277,000 for the year ended September 30,
2000. Professional fees decreased by $725,000 (47.0%) to $818,400 for the year
ended September 30, 2001 from $1,543,000 for the year ended September 30, 2000.
Each of these operating expenses was paid primarily through the issuance of
shares of our common stock to the service provider. Consulting fees, marketing,
advertising and investor relations costs and other professional fees were
reduced through cost constraints dictated by management.

         These decreases in operating expenses were offset by an increase in
executive compensation of $1,020,000 (240.3%) to $1,444,000 for the year ended
September 30, 2001 from $424,000 for the year ended September 30, 2000, which
increase was paid primarily through the issuance of stock, an increase in
salaries of $190,000 (74.8%) to $444,000 for the year ended September 30, 2001
from $254,000 for the year ended September 30, 2000, which increase resulted
primarily from annual base salary adjustments, and an increase in rent of
$70,800 (309%) to $94,000 for the year ended September 30, 2001 from $23,000 for
the year ended September 30, 2000, which increase resulted primarily from our
use of a separate facility for our e-commerce business between March and
September 2001.

         INTEREST AND OTHER EXPENSE. Interest and other expense increased
$117,000 (2.9%) to $4,083,000 for the year ended September 30, 2001 from
$3,967,000 for the year ended September 30, 2000. This increase in other expense
primarily was due to a $980,000 loss on impairment of investment in marketable
securities that were received for services rendered, partially offset by a
$998,000 (23.5%) decrease in the financing cost of issuing stock through
convertible debentures to $3,241,000 for the year ended September 30, 2001 from
$4,239,000 for the year ended September 30, 2000.

         NET LOSS. Net loss decreased $3,753,000 (28.9%) to $9,224,000 for the
year ended September 30, 2001 from $12,977,000 for the year ended September 30,
2000. This decrease in net loss primarily was due to increases in revenues and
decreases in various operating expenses, as described above.

LIQUIDITY AND CAPITAL RESOURCES

         We currently finance our operations primarily through private
placements of securities and revenue generated from our operations. We also have
available to us a $7,000,000 revolving line of credit from Alliance Equities
that can be drawn upon by us for up to $500,000 per month, with interest to
accrue at the rate of 10% per annum. However, during the fiscal year ended
September 30, 2001 and through February 12, 2002, no amounts were outstanding
under the line of credit.

                                       4


<PAGE>

         In January 2001, we issued $650,000 of 12% convertible debentures due
January 5, 2002 to four accredited investors in the first stage of a two-stage
offering. The debentures were accompanied by warrants to purchase up to an
aggregate of 195,000 shares of common stock. The net proceeds of that offering,
after payment of related expenses, were approximately $631,500. In March 2001,
we issued $650,000 of 12% convertible debentures due March 9, 2002 in the second
stage of the offering. The net proceeds of that offering, after payment of some
related expenses, were approximately $647,500.

         On June 29, 2001, we issued an aggregate of $500,000 of 12% convertible
debentures in a private offering to three accredited investors. The debentures
were accompanied by warrants to purchase up to an aggregate of 75,000 shares of
common stock. The net proceeds of that offering, after payment of related
expenses, were approximately $420,000.

         As of December 31, 2001, we had negative working capital of $3,600,260
and an accumulated deficit of $31,574,920. As of that date, we had approximately
$44,000 in cash, $163,000 in accounts receivable - net, $44,000 of interest
receivable, and $36,280 in notes receivable from stockholders and related
parties. We had accounts payable and accrued expenses of $1,156,169 and
outstanding convertible debentures of $2,642,500, including convertible
debentures issued prior to the beginning of fiscal year 2001. To the extent
convertible debentures we have issued are converted into shares of common stock,
we will not be obligated to repay the converted amounts.

         Cash used in our operating activities totaled $327,152 for the quarter
ended December 31, 2001 as compared to $728,190 for the quarter ended December
31, 2000. Cash provided by our investing activities totaled $74,530 for the
quarter ended December 31, 2001 as compared to cash provided by our investing
activities of $68,913 for the quarter ended December 31, 2000.

         Cash provided by our financing activities totaled $245,220 for the
quarter ended December 31, 2001 as compared to $50,000 for the quarter ended
December 31, 2000. We raised none of the cash provided by financing activities
during the quarters ended December 31, 2001 and 2000 from the issuance of
convertible debentures.

         For the quarter ended December 31, 2001, we had net sales of $222,685
and a net loss of $1,010,015, of which loss $664,908 (66%) consisted of non-cash
expenses. These non-cash expenses included $521,396 of compensation, marketing
and professional services expenses incurred in exchange for common stock.

         In January 2002, we issued an aggregate of $200,000 of our 12%
Convertible Debentures due January 9, 2003, which were accompanied by warrants
to purchase up to an aggregate of 600,000 shares of common stock. The net
proceeds of that offering, after payment of some related expenses, were
$165,500. The investor may, at its option, purchase an additional $200,000 of
our 12% convertible debentures and warrants to purchase up to 600,000 shares of
common stock within 30 days after the effective date of the registration
statement covering shares of common stock issuable upon conversion of the
debentures and warrants issued in January 2002. However, the investor is not
committed to purchase the additional debentures. Our continued operations are
dependent on securing additional sources of liquidity through debt and/or equity
financing.

         We have been, and currently are, working toward identifying and
obtaining new sources of funding. Deteriorating global economic conditions and
the effects of ongoing military actions against terrorists may cause prolonged
declines in investor confidence in and accessibility to capital markets.
Further, our current debenture financing documents contain notice and right of
first refusal provisions and the grant of a security interest in substantially
all of our assets in favor of a debenture investor, all of which provisions will
restrict our ability to obtain debt and/or equity financing.

                                      5

<PAGE>

         Any future financing that we may obtain may cause significant dilution
to existing stockholders. Any debt financing or other financing of securities
senior to common stock that we are able to obtain will likely include financial
and other covenants that will restrict our flexibility. At a minimum, we expect
these covenants to include restrictions on our ability to pay dividends on our
common stock. Any failure to comply with these covenants would have a material
adverse effect on our business, prospects, financial condition, results of
operations and cash flows.

         If adequate funds are not available, we may be required to delay, scale
back or eliminate portions of our operations and product and service development
efforts or to obtain funds through arrangements with strategic partners or
others that may require us to relinquish rights to certain of our technologies
or potential products or other assets. Accordingly, the inability to obtain such
financing could result in a significant loss of ownership and/or control of our
proprietary technology and other important assets and could also adversely
affect our ability to fund our continued operations and our product and service
development efforts that historically have contributed significantly to our
competitiveness.

         In an effort to increase sales related to our wireless business, we are
implementing an enhanced marketing and sales strategy. For example, we are
selling advertising sponsorships to our AK.TV 24-hour streaming Internet
television channel. We also are completing research and development of
additional attributes to our CinemaWEAR(TM) technology with the goal of
launching an interactive personal meeting site within the AK.TV interactive
channel.

         Also, we are enhancing our efforts to obtain online user registration
for movie viewing on AK.TV, soliciting monthly subscriptions to and pay-per-view
sales of movie viewing on AK.TV, introducing revenue-sharing web partner
programs and improving tracking of our market share. We believe that if we are
successful in implementing the above business strategies, we will generate
increased revenues from our Internet and e-commerce business segment.

         In an effort to increase sales of our data control console products by
increasing our production capacity for our Desience Division OPCON Modular
System, we reached agreement with two established manufacturers to provide for
our original equipment manufacturing production needs. In addition, we launched
a marketing campaign that includes high-impact sales literature and a
cutting-edge web site at www.desience.com. We believe that if we are successful
in implementing our business strategies for our modular consoles segment, we
will generate increased revenues from this segment.

RISK FACTORS

         An investment in our common stock involves a high degree of risk. In
addition to the other information contained in this document, you should
carefully consider the following risk factors before deciding to invest in
shares of our common stock. If any of the following risks actually occurs, it is
likely that our business, financial condition and operating results would be
harmed. As a result, the trading price of our common stock could decline, and
you could lose part or all of your investment.

WE HAVE INCURRED OPERATING LOSSES, EXPECT CONTINUED LOSSES AND MAY NOT ACHIEVE
PROFITABILITY. IF WE CONTINUE TO LOSE MONEY, WE MAY HAVE TO CURTAIL OUR
OPERATIONS.

         Our consolidated financial statements have been prepared assuming we
will continue as a viable business. We have not been profitable and we may
continue to lose money for the foreseeable future. Historically, we have
incurred losses and experienced negative cash flow. As of December 31, 2001, we
had an accumulated deficit of approximately $31,574,920. We may continue to
incur losses and may never achieve or sustain profitability. An extended period
of losses and negative cash flow may prevent us from operating and expanding our
business, especially our Internet-based business.

                                      6

<PAGE>

BECAUSE WE BELIEVE THAT PROPRIETARY RIGHTS ARE MATERIAL TO OUR SUCCESS,
MISAPPROPRIATION OF THESE RIGHTS OR CLAIMS OF INFRINGEMENT OR LEGAL ACTIONS
RELATED TO INTELLECTUAL PROPERTY COULD ADVERSELY IMPACT OUR FINANCIAL CONDITION.

         We currently rely on a combination of contractual rights, copyrights,
trademarks and trade secrets to protect our proprietary technology and
intellectual property rights. We do not hold any patents. However, we believe
that some of our proprietary technologies, including our CinemaWEAR(TM) Encoding
technology, our CinemaWEAR(TM) Wireless Delivery technology and our Embedded
Electronic Commerce(TM) technology, could benefit from patent protection.
Accordingly, we intend to file patent applications for those technologies with
the United States Patent and Trademark Office. There can be no assurance that
our means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop comparable or superior technologies
or obtain unauthorized access to our proprietary technologies.

         We own, license or have otherwise obtained the right to use
technologies incorporated into our web sites and products. We may receive
infringement claims from third parties relating to our technologies. In those
cases, we intend to investigate the validity of the claims and, if we believe
the claims have merit, to respond through licensing or other appropriate
actions. To the extent claims relate to technology that we have licensed from
third parties for incorporation into our web sites or products, we would forward
those claims to the appropriate third party. If we were unable to license or
otherwise provide any necessary technology on a cost-effective basis, we could
be prohibited from using that technology, incur substantial costs in redesigning
our web sites and products that incorporate that technology, or incur
substantial costs defending any legal action taken against us, all of which
could have a material adverse effect on our business, prospects, financial
condition, results of operations and cash flows.

         We hold the Internet domain names "AK.TV," "KKRS.Net," "WordPop.com,"
"CinemaPop.com" and many others. Under current domain name registration
practices, no one else can obtain an identical domain name, but someone might
obtain a similar name, or the identical name with a different suffix, such as
".org," or with a country designation. The regulation of domain names in the
United States and in foreign countries is subject to change, and we could be
unable to prevent third-parties from acquiring domain names that infringe or
otherwise decrease the value of our domain names.

                                        7

<PAGE>

WE NEED AND MAY BE UNABLE TO OBTAIN ADDITIONAL FUNDING ON SATISFACTORY TERMS,
WHICH COULD DILUTE OUR STOCKHOLDERS OR IMPOSE BURDENSOME FINANCIAL RESTRICTIONS
ON OUR BUSINESS.

         Historically, we have relied upon cash from financing activities and
revenues generated from operations to fund all of the cash requirements of our
activities. We have not been able to generate significant cash from our
operating activities in the past and cannot assure you that we will be able to
do so in the future. We require new financing. Deteriorating global economic
conditions and the effects of ongoing military actions against terrorists may
cause prolonged declines in investor confidence in and accessibility to capital
markets. Future financing may not be available on a timely basis, in sufficient
amounts or on terms acceptable to us. This financing may also dilute existing
stockholders' equity. Any debt financing or other financing of securities senior
to common stock will likely include financial and other covenants that will
restrict our flexibility. At a minimum, we expect these covenants to include
restrictions on our ability to pay dividends on our common stock. Any failure to
comply with these covenants would have a material adverse effect on our
business, prospects, financial condition and results of operations because we
could lose any existing sources of funding and impair our ability to secure new
sources of funding.

WE RELY HEAVILY ON OUR KEY EMPLOYEES, AND THE LOSS OF THEIR SERVICES COULD
MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS.

         Our success is highly dependent upon the continued services of key
members of our management, including our Chairman of the Board, President and
Chief Executive Officer, Alex Kanakaris. We have not entered into any employment
agreement with Mr. Kanakaris or any other officer of Kanakaris Wireless. The
loss of Mr. Kanakaris could have a material adverse effect on Kanakaris Wireless
because Mr. Kanakaris has experience, skills and vision upon which we draw
heavily in our day-to-day operations and strategic planning and financing
activities. We are the beneficiary of 80% of the proceeds of a term life
insurance policy in the amount of $10,000,000 covering Mr. Kanakaris. However,
we cannot assure you that receipt of these proceeds would be sufficient to
enable us to continue our business without significant temporary or permanent
disruption following the loss of Mr. Kanakaris.

                                        8


<PAGE>

IF COMMUNICATIONS TO OUR PRIMARY SERVERS ARE INTERRUPTED, OUR OPERATIONS COULD
BE NEGATIVELY IMPACTED.

         Our movies and general web sites, including www.AK.TV, our principal
web site, are hosted on servers owned and operated by a third party. Although
off site backup servers are maintained by our host, all of our primary servers
are vulnerable to interruption by damage from fire, flood, power loss,
telecommunications failure, break-ins and other events beyond our control. We
have, from time to time, experienced periodic systems interruptions and
anticipate that these interruptions will occur in the future. We do not maintain
business interruption insurance. If we experience significant system
disruptions, our business, results of operations and financial condition would
be materially adversely affected because we would be unable to deliver our
Internet-related products and services during the disruption and may therefore
lose existing and potential customers.

OUR COMPUTER INFRASTRUCTURE MAY SUFFER SECURITY BREACHES. ANY SUCH BREACHES
COULD JEOPARDIZE CONFIDENTIAL INFORMATION TRANSMITTED OVER THE INTERNET, CAUSE
INTERRUPTIONS IN OUR OPERATIONS OR CAUSE US TO HAVE LIABILITY TO THIRD PARTIES.

         We rely on technology that is designed to facilitate the secure
transmission of confidential information. Our computer infrastructure is
potentially vulnerable to physical or electronic computer break-ins, viruses and
similar disruptive problems. A party who is able to circumvent our security
measures could misappropriate proprietary information, jeopardize the
confidential nature of information transmitted over the Internet or cause
interruptions in our operations. Concerns over the security of Internet
transactions and the privacy of users could also inhibit the growth of the
Internet in general, particularly as a means of conducting commercial
transactions. To the extent that our activities involve the storage and
transmission of proprietary information, including personal financial
information, security breaches could expose us to a risk of financial loss,
litigation and other liabilities. Our insurance does not currently protect us
against these losses. Consequently, any security breach could have a material
adverse effect on our business, results of operations and financial condition.

OUR FAILURE TO MANAGE GROWTH EFFECTIVELY COULD IMPAIR OUR BUSINESS.

         Our business strategy envisions a period of rapid growth that may put a
strain on our administrative and operational resources. Our ability to
effectively manage growth will require us to continue to expand the capabilities
of our operational and management systems and to attract, train, manage and
retain qualified engineers, technicians, salespersons and other personnel. There
can be no assurance that we will be able to do so, particularly if our losses
continue and we are unable to obtain sufficient financing. If we are unable to
successfully manage our growth, our business, prospects, financial condition and
results of operations could be adversely affected.

ALTHOUGH INTERNET COMMERCE HAS YET TO ATTRACT SIGNIFICANT REGULATION, GOVERNMENT
REGULATION MAY RESULT IN FINES, PENALTIES, TAXES OR OTHER COSTS OR CONSEQUENCES
THAT MAY REDUCE OUR FUTURE EARNINGS.

         The United States Congress has passed or is considering passing
legislation regulating certain aspects of the Internet, including online
content, copyright infringement, user privacy, taxation, access charges, digital
signatures and liability for third-party activities. The European Union also has
enacted several directives relating to the Internet, including directives that
address the use of personal data, e-commerce activities, security, commercial
piracy, consumer protection and taxation of e-commerce transactions. Various
states have adopted and are considering Internet-related legislation and
regulations. Governmental authorities in the United States and abroad are
considering other legislative and regulatory proposals to further regulate the
Internet. Areas of potential regulation include libel, pricing, quality of
products and services and intellectual property ownership. We cannot predict
what new laws will be enacted, or how courts will interpret existing and new
laws, and therefore are uncertain as to how new laws or the application of
existing laws will affect our business. In addition, our business may be
indirectly affected by legislation that affects the ability of our customers to
engage in e-commerce activities. Increased regulation of the Internet may
decrease the growth in the use of the Internet, which could decrease the demand
for our products and services, increase our cost of doing business or otherwise
harm our business, results of operations and financial condition.

                                       9

<PAGE>

CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS ALLOW
CONCENTRATION OF VOTING POWER IN ONE INDIVIDUAL, WHICH MAY, AMONG OTHER THINGS,
DELAY OR FRUSTRATE THE REMOVAL OF INCUMBENT DIRECTORS OR A TAKEOVER ATTEMPT,
EVEN IF SUCH EVENTS MAY BE BENEFICIAL TO OUR STOCKHOLDERS.

         Provisions of our articles of incorporation and bylaws may delay or
frustrate the removal of incumbent directors and may prevent or delay a merger,
tender offer or proxy contest involving Kanakaris Wireless that is not approved
by our board of directors, even if those events may be beneficial to the
interest of our stockholders. For example, Alex Kanakaris, our Chairman of the
Board, President and Chief Executive Officer, is the holder of all of the
1,000,000 authorized, issued and outstanding shares of our Class A Convertible
Preferred Stock. Under our articles of incorporation, each share of Class A
Preferred Stock is entitled to 100 non-cumulative votes per share on all matters
presented to our stockholders for action. Consequently, Mr. Kanakaris has
sufficient voting power to control the outcome of all corporate matters
submitted to the vote of our common stockholders. Those matters could include
the election of directors, changes in the size and composition of the board of
directors, and mergers and other business combinations involving Kanakaris
Wireless. In addition, through his control of the board of directors and voting
power, he may be able to control certain decisions, including decisions
regarding the qualification and appointment of officers, dividend policy, access
to capital (including borrowing from third-party lenders and the issuance of
additional equity securities), and the acquisition or disposition of assets by
Kanakaris Wireless. In addition, the concentration of voting power in the hands
of Mr. Kanakaris could have the effect of delaying or preventing a change in
control of Kanakaris Wireless, even if the change in control would benefit our
stockholders, and may adversely affect the market price of our common stock.

WE ARE UNABLE TO PREDICT THE IMPACT THAT THE CONTINUING THREAT OF TERRORISM AND
THE RESPONSES TO THAT THREAT BY MILITARY, GOVERNMENT, BUSINESS AND THE PUBLIC
MAY HAVE ON OUR BUSINESS, PROSPECTS, FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND CASH FLOWS.

         The recent terrorist attacks in the United States, which have brought
devastation to many people and shaken consumer confidence, have disrupted
commerce throughout the world. The continuing threat of terrorism in the United
States and other countries and heightened security measures, as well as current
and any future military action in response to such threat, may cause significant
disruption to the global economy, including widespread recession. To the extent
that such disruptions result in a general decrease in government, business and
consumer spending that could decrease demand for our current and planned
products and services, in our inability to effectively market our products and
services, or in financial or operational difficulties for the service providers,
such as server operators, on which we rely, our business and results of
operations could be materially and adversely affected. We are unable to predict
whether the continuing threat of terrorism or the responses to such threat will
result in any long-term commercial disruptions or whether such terrorist
activities or responses will have a long-term material adverse effect on our
business, prospects, financial condition, results of operations and cash flows.

BECAUSE OUR STOCK IS NOT LISTED ON A NATIONAL SECURITIES EXCHANGE, YOU MAY FIND
IT DIFFICULT TO DISPOSE OF OR OBTAIN QUOTATIONS FOR OUR COMMON STOCK.

         Our common stock trades under the symbol "KKRW" on the NASD's OTC
Electronic Bulletin Board. Because our stock trades on the OTC Electronic
Bulletin Board rather than on a national securities exchange, you may find it
difficult to either dispose of, or to obtain quotations as to the price of, our
common stock.

                                        10

<PAGE>

CONVERSION OF OUR OUTSTANDING CONVERTIBLE SECURITIES COULD SUBSTANTIALLY DILUTE
AN INVESTMENT IN OUR COMMON STOCK AND CAUSE THE PRICE OF OUR COMMON STOCK TO
DECLINE BECAUSE THE CONVERSION PRICE OF THOSE SECURITIES DEPENDS UPON THE MARKET
PRICE OF OUR COMMON STOCK, AND THERE IS NO CEILING ON THE NUMBER OF SHARES OF
OUR COMMON STOCK THAT ARE ISSUABLE UPON EXERCISE OF THOSE SECURITIES.

         We have issued to several security holders debentures and warrants that
are convertible or exercisable at prices that are equal to the lesser of a fixed
price and a variable price that is based upon a discount on the market price of
our common stock. As of January 9, 2002, we had a total of 8,511,073 shares of
common stock outstanding, the closing price of a share of our common stock on
the OTC Electronic Bulletin Board was $.12, and the debentures and warrants with
the variable conversion and exercise prices were convertible or exercisable into
approximately 55,245,102 shares of common stock. The number of shares that those
debentures and warrants ultimately may be converted into or exercised for could
prove to be greater than this estimate if the market price of our common stock
declines. You could, therefore, experience substantial dilution and a decline in
the value of your investment as a result of the conversion of the debentures and
exercise of the warrants.

IF OUR SECURITY HOLDERS ENGAGE IN SHORT SALES OF OUR COMMON STOCK, INCLUDING
SALES OF SHARES TO BE ISSUED UPON CONVERSION OR EXERCISE OF DERIVATIVE
SECURITIES, THE PRICE OF OUR COMMON STOCK MAY DECLINE.

         Selling short is a technique used by a stockholder to take advantage of
an anticipated decline in the price of a security. A significant number of short
sales or a large number of other sales within a relatively short period of time
can create a downward pressure on the price of the security. The decrease in
market price would allow holders of our debentures and warrants that have
conversion or exercise prices based upon a discount on the market price of our
common stock to convert their debentures and exercise their warrants into an
increased number of shares of our common stock. Further sales of common stock
issued upon conversion of debentures or exercise of warrants could cause even
greater declines in the price of our common stock due to the number of
additional shares available in the market, which could encourage short sales
that could further undermine the value of our common stock. You could,
therefore, experience a decline in the value of your investment as a result of
short sales of our common stock.

OUR STOCK PRICE IS SUBJECT TO SIGNIFICANT VOLATILITY, WHICH COULD RESULT IN
SUBSTANTIAL LOSSES FOR INVESTORS AND LITIGATION AGAINST US.

         The stock market as a whole and individual stocks historically have
experienced extreme price and volume fluctuations, which often have been
unrelated to the performance of the related corporations. Our common stock
trades on the OTC Electronic Bulletin Board under the symbol "KKRW." For the
quarter ended December 31, 2001, taking into account the 1-for-20 reverse common
stock split that occurred on December 7, 2001, the high and low closing bid
prices for a share of our common stock were $0.80 and $0.11, respectively. The
trading prices of our common stock could experience wide fluctuations in the
future in response to:

         o        quarter-to-quarter variations in our operating results;

         o        material announcements of technological innovations;

         o        significant customer orders or establishment of strategic
                  partnerships by us or our competitors or providers of
                  alternative products and services;

         o        general conditions in the Internet, e-commerce and data
                  control console industries; or

         o        other events or factors, many of which are beyond our control.

         If our operating results in future quarters fall below the expectations
of market makers, securities analysts and investors, the price of our common
stock likely will decline, perhaps substantially. In the past, securities class
action litigation often has been brought against a company following periods of
volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management's attention and resources.
Consequently, the price at which you purchase shares of our common stock may not
be indicative of the price that will prevail in the trading market. You may be
unable to sell your shares of common stock at or above your purchase price,
which may result in substantial losses to you.

                                        11

<PAGE>

BECAUSE WE ARE SUBJECT TO THE "PENNY STOCK" RULES, THE LEVEL OF TRADING ACTIVITY
IN OUR STOCK MAY BE REDUCED.

         Broker-dealer practices in connection with transactions in "penny
stocks" are regulated by penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks, like shares of our common stock, generally
are equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on Nasdaq). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and, if the broker-dealer is the sole market maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over the market, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors" must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules, and investors in our common stock may find it difficult to
sell their shares.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This document contains forward-looking statements, including among
others:

         o        the projected growth in the Internet, e-commerce and data
                  control console industries and the markets for our products
                  and services within these industries;

         o        our business strategy for expanding our presence in the
                  existing and proposed markets in which our products and
                  services could be used;

         o        anticipated trends in our financial condition and results of
                  operations;

         o        the impact of the continuing threat of terrorism and the
                  responses to such threat by military, government, business and
                  the public; and

         o        our ability to distinguish ourselves from our current and
                  future competitors.

         You can identify forward-looking statements generally by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"intends," "plans," "should," "could," "seeks," "pro forma," "anticipates,"
"estimates," "continues," or other variations thereof, including their use in
the negative, or by discussions of strategies, opportunities, plans or
intentions. You may find these forward-looking statements under the captions
"Risk Factors," and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," as well as captions elsewhere in this document. A
number of factors could cause results to differ materially from those
anticipated by forward-looking statements, including those discussed under "Risk
Factors" and "Business."

         These forward-looking statements necessarily depend upon assumptions
and estimates that may prove to be incorrect. Although we believe that the
assumptions and estimates reflected in the forward-looking statements are
reasonable, we cannot guarantee that we will achieve our plans, intentions or
expectations. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in
significant ways from any future results expressed or implied by the forward-
looking statements.

                                        12

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         Dataview Consoles, Inc., a California corporation dba Swanson
Engineering & Manufacturing Company, commenced an action against Kanakaris
Wireless and our subsidiary, Desience Corporation, in the Los Angeles Superior
Court (Case No. BC245203) on February 14, 2001. The complaint alleged that
Kanakaris and Desience owed Dataview $104,601 under several invoices for
equipment manufactured for Desience by Dataview in 1997. Concurrently with the
filing of the complaint, Dataview filed an application for a right to attach
order against Kanakaris and Desience to secure repayment of the debt alleged in
the complaint. Effective as of April 3, 2001, the parties to the dispute entered
into a settlement agreement under which Kanakaris and Desience paid Dataview
$63,584 and agreed to pay Dataview an additional $42,000 in twelve monthly
installments of $3,500 beginning May 1, 2001. The agreement provides that we
will be entitled to file a request for dismissal after we have made all of the
installment payments in accordance with the agreement. The agreement also
provides that Kanakaris and Desience, on the one hand, and Dataview and Nels
Swanson, on the other hand, shall all retain the unrestricted right to market,
sell, distribute and manufacture or have manufactured under their own respective
names all of the data control console products that Dataview had been
manufacturing for Desience.

         Loudeye Technologies, Inc., or Loudeye, filed a complaint for money due
and owing against us in the Superior Court for the State of Washington (King
County) (Case No. 01-2-07608-6SEA) on March 8, 2001. Loudeye claims we failed to
pay $44,107 owing for encoding services furnished by Loudeye under the parties'
purported contract. The complaint also seeks attorneys' fees, court costs and
late charges. We filed an answer to the Loudeye complaint on October 11, 2001
that includes a general denial of all allegations made by Loudeye.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         In October 2001, we issued an aggregate of 747,182 shares of common
stock to five accredited investors upon conversion of an aggregate of
approximately $153,000 in principal and related interest on our convertible
debentures.

         In October 2001, we issued an aggregate of 125,000 shares of common
stock to one consultant upon the exercise of a warrant at an exercise price of
approximately $.28 per share for a total of $35,000.

         In October 2001, we issued an aggregate of 180,000 shares of common
stock valued at $136,800 to seven persons as compensation for services rendered,
of whom two were directors and officers, two were directors and employees, one
was an employee, one was a director and consultant and one was a consultant.

         In November 2001, we issued an aggregate of 150,809 shares of common
stock to three accredited investors upon conversion of an aggregate of $20,000
of principal plus related interest on our convertible debentures.

         In November 2001, we issued an aggregate of 1,887,014 shares of common
stock valued at approximately $532,001 to two consultants as compensation for
services rendered. We also issued 156,250 shares of common stock upon the
exercise of a warrant at an initial exercise price of $.80 per share and 425,000
shares of common stock upon the exercise of a warrant at an initial exercise
price of $.40 per share, but due to certain adjustments of the exercise prices
of these warrants, we only received an aggregate of $211,000 in connection with
their exercise.

         In December 2001, we issued an aggregate of 125,000 shares of common
stock valued at $37,500 to one individual in settlement of a dispute.

         In December 2001, we issued an aggregate of 40 shares of common stock
valued at approximately $6 to complete rounding calculations in connection with
our 1-for-20 reverse stock split that was effective December 7, 2001.

         In December 2001, we issued an aggregate of 200,000 shares of common
stock valued at $29,800 to one entity for services rendered.

         Exemption from the registration provisions of the Securities Act of
1933 for the transactions described above is claimed under Section 4(2) of the
Securities Act of 1933, among others, on the basis that such transactions did
not involve any public offering and the purchasers were sophisticated with
access to the kind of information registration would provide.

         Dividend Policy
         ---------------

         We have never paid any dividends on our common stock and do not
anticipate declaring or paying cash dividends in the foreseeable future. We
intend to retain future earnings, if any, to reinvest in our business. We expect
that covenants in our future financing agreements will prohibit or limit our
ability to declare or pay cash dividends.

                                        13

<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         On October 1, 2001, Alex Kanakaris, our Chairman, President and Chief
Executive Officer, who holds a majority of the voting power of our outstanding
common stock and our Class A Convertible Preferred Stock, took action by written
consent to approve the 1-for-20 reverse stock split that was effective December
7, 2001. The written consent also approved the maintenance of our authorized
capital stock at 255,000,000 shares with 250,000,000 of those shares being
designated common stock, $.001 par value per share, 1,000,000 of those shares
being designated Class A Convertible Preferred Stock, $.01 par value per share,
and 4,000,000 of those shares being designated preferred stock, $.01 par value
per share. This resulted in an effective 20 fold increase in our authorized
capital stock. Additionally, the written consent approved the effective 20 fold
increase in the voting rights attributable to the Class A Convertible Preferred
Stock and the circulation of an information statement to our stockholders
concerning these matters. By written consent, Mr. Kanakaris approved these
matters by voting 10,569,546 shares of common stock held by him and 1,000,000
shares of Class A Preferred Stock held by him, each of which shares of preferred
stock had 100 votes, voting together with the outstanding common stock, and as a
separate class, on matters on which the common stock and preferred stock are
entitled to vote.

ITEM 5.  OTHER INFORMATION.

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits
                  --------

Exhibit No.    Description
-----------    -----------

    10.1       Consulting Agreement dated as of October 26, 2001 by and between
               the Registrant and Kevin Welch (1)

    10.2       Common Stock Purchase Warrant dated as of October 26, 2001 by
               and between the Registrant and Kevin Welch (1)

    10.3       Consulting Agreement dated as of November 5, 2001 by and between
               the Registrant and Paul Lemmon (2)

    10.4       Common Stock Purchase Warrant dated as of November 29, 2001
               made by the Registrant in favor of Kevin Welch (3)

    10.5       Consulting Agreement Extension dated as of November 29, 2001
               by and between the Registrant and Kevin Welch (3)

    10.6       Letter dated December 13, 2001 from Alliance Equities, Inc.
               to the Registrant regarding Extension of Line of Credit (4)

----------
(1)      Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on November 1, 2001
         (Registration No. 333-72618) and incorporated herein by reference.
(2)      Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on November 28, 2001
         (Registration No. 333-74040) and incorporated herein by reference.
(3)      Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on November 30, 2001
         (Registration No. 333-74238) and incorporated herein by reference.
(4)      Filed as an exhibit to the Registrant's Form 10-KSB filed with the
         Securities and Exchange Commission on January 15, 2002 (File No.
         0-28213)and incorporated herein by reference.

         (b)      Reports on Form 8-K
                  -------------------

                  None.

                                        14

<PAGE>

                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    KANAKARIS WIRELESS

Dated: February 14, 2002          By: /S/ DAVID SHOMAKER
                                    --------------------------------------------
                                    David Shomaker
                                    Acting Chief Financial Officer
                                    (principal financial and accounting officer)

                                       15