<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 JUNE 30, 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.)

                             65 ENTERPRISE, SUITE 365
                          ALISO VIEJO, CALIFORNIA 92656
                    (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 76,018,858 on August 3, 2001.

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


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS

                         KANAKARIS WIRELESS AND SUBSIDIARIES
                 (formerly known as Kanakaris Communications, Inc.)


Condensed Consolidated Balance Sheet at June 30, 2001......................F-1

Condensed Consolidated Statements of Operations for the Three Months
     and Nine Months Ended June 30, 2001 and 2000..........................F-3

Condensed Consolidated Statements of Comprehensive Loss for the Three
     Months and Nine Months Ended June 30, 2001 and 2000...................F-4

Condensed Consolidated Statements of Cash Flows for the Nine Months
     Ended June 30, 2001...................................................F-5

Condensed Consolidated Statements of Changes in Stockholders' Equity
     (Deficiency) for the Nine Months Ended June 30, 2001..................F-7

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

                                        2


<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (formerly known as Kanakaris Communications, Inc.)
                      Condensed Consolidated Balance Sheet
                                  June 30, 2001
                                   (Unaudited)

ASSETS
------

Current assets:
   Cash and cash equivalents                                        $     1,664
   Accounts receivable                                                   35,197
   Inventories                                                            1,960
   Current maturities of note and loan receivable - net                 106,745
   Current maturities of notes receivable -
      stockholders and related parties                                   74,530
   Interest receivable                                                   26,603
   Prepaid expenses                                                      93,672
   Advances to suppliers                                                    700
                                                                    ------------

           Total current assets                                         341,071
                                                                    ------------

Property and equipment, net of accumulated
   depreciation and amortization                                         53,568
                                                                    ------------

Other assets:
   Investments                                                          153,600
   Notes receivable - stockholders and
      related parties - noncurrent                                       36,280
   Note and loan receivable - noncurrent                                 51,255
   Film library - net of amortization                                   410,122
   Goodwill - net of amortization                                       328,303
   Other                                                                  7,285
                                                                    ------------

           Total other assets                                           986,845
                                                                    ------------

           Total assets                                             $ 1,381,484
                                                                    ============

     See accompanying notes to condensed consolidated financial statements.

                                      F-1

<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (formerly known as Kanakaris Communications, Inc.)
                      Condensed Consolidated Balance Sheet
                                  June 30, 2001
                                   (Unaudited)

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
   Accounts payable and accrued expenses                           $  1,151,816
   Due to former stockholder of subsidiary                               97,199
   Convertible debentures                                             3,088,500
                                                                   -------------

           Total current liabilities                                  4,337,515

Stockholders' 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; 100,000,000
       shares authorized; 68,520,847 issued and
       outstanding                                                       68,521
   Additional paid-in capital                                        28,037,111
   Accumulated deficit                                              (28,476,449)
   Deferred expenses                                                 (1,155,554)
   Less subscription receivable
       (1,260,000 shares, common)                                      (501,260)
   Comprehensive loss                                                  (938,400)
                                                                   -------------

           Total stockholders' deficiency                            (2,956,031)
                                                                   -------------

           Total liabilities and
           stockholders' deficiency                                $  1,381,484
                                                                   =============

     See accompanying notes to condensed consolidated financial statements.

                                      F-2

<PAGE>
<TABLE>

                                      KANAKARIS WIRELESS AND SUBSIDIARIES
                               (formerly known as Kanakaris Communications, Inc.)
                                Condensed Consolidated Statements of Operations
                                                  (Unaudited)
<CAPTION>

                                                    Three Months    Three Months    Nine Months     Nine Months
                                                       Ended          Ended           Ended            Ended
                                                      June 30,       June 30,        June 30,         June 30,
                                                       2001            2000            2001             2000
                                                   -------------   -------------   -------------   -------------

<S>                                                <C>             <C>             <C>             <C>
Net sales                                          $    388,106    $     51,970    $  1,472,369    $    253,112

Cost of sales                                          (117,536)         26,508         457,375         204,419
                                                   -------------   -------------   -------------   -------------

           Gross profit                                 270,570          25,462       1,014,994          48,693
                                                   -------------   -------------   -------------   -------------

Operating expenses:
   Executive compensation                               460,535         130,268       1,223,585         326,380
   Salaries                                             121,596          62,526         384,742         174,988
   Payroll taxes and employee benefits                   11,837          24,766          33,573          50,973
   Consulting services                                  348,745         677,460       1,602,934       2,583,195
   Royalties                                                  -               -               -           2,333
   Travel and entertainment                              35,601          59,400         138,104         144,332
   Telephone and utilities                               12,511          17,331          42,281          42,784
   Marketing, advertising and investor relations         73,446       1,204,538         626,703       2,093,300
   Professional fees                                    226,632         219,356         656,752       1,335,014
   Rent                                                  46,967           7,761          82,263          19,540
   Office and other expenses                             32,205          13,250         187,874          31,871
   Equipment rental and expense                             671             713           2,529           2,932
   Insurance                                             19,166          18,184          56,301          38,341
   Depreciation and amortization                         37,153          13,413         109,627          35,803
   Taxes - other                                          1,909             383           4,309           6,436
   Bank charges                                             508           1,127           1,321           2,411
   Website development                                    4,464               -          42,609               -
   Miscellaneous                                         12,224          27,247          20,879          77,191
                                                   -------------   -------------   -------------   -------------

           Total operating expenses                   1,446,170       2,477,723       5,216,386       6,967,824
                                                   -------------   -------------   -------------   -------------

       Loss before interest and other income
           (expense)                                 (1,175,600)     (2,452,261)     (4,201,392)     (6,919,131)

       Financing and other income (expense), net     (1,786,739)     (2,406,405)     (2,934,211)     (3,377,491)
                                                   -------------   -------------   -------------   -------------

       Net loss                                    $ (2,962,339)   $ (4,858,666)   $ (7,135,603)   $(10,296,622)
                                                   =============   =============   =============   =============

       Net loss per common share -
          basic and diluted                        $       (.06)   $       (.18)   $       (.14)   $       (.35)
                                                   =============   =============   =============   =============

       Weighted average common shares
          outstanding - basic and diluted            53,753,463      28,069,151      49,752,754      29,326,819
                                                   =============   =============   =============   =============

                     See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                                      F-3
<PAGE>
<TABLE>

                            KANAKARIS WIRELESS AND SUBSIDIARIES
                     (formerly known as Kanakaris Communications, Inc.)
                  Condensed Consolidated Statements of Comprehensive Loss
                                        (Unaudited)

<CAPTION>

                                   Three Months   Three Months  Nine Months    Nine Months
                                      Ended          Ended         Ended          Ended
                                     June 30,       June 30,      June 30,       June 30,
                                      2001            2000          2001           2000
                                   ------------   ------------  ------------   ------------
<S>                                <C>            <C>           <C>            <C>
Net loss                           $(2,962,339)   $         -   $(7,135,603)   $         -

Other comprehensive loss:
   Unrealized loss on securities          (880)             -      (938,400)             -
                                   ------------   ------------  ------------   ------------

Comprehensive loss                 $(2,963,219)    $        -   $(8,074,003)   $         -
                                   ============   ============  ============   ============

           See accompanying notes to condensed consolidated financial statements.

                                            F-4
</TABLE>
<PAGE>
<TABLE>
                             KANAKARIS WIRELESS AND SUBSIDIARIES
                     (formerly known as Kanakaris Communications, Inc.)
                       Condensed Consolidated Statements of Cash Flows
                      For the Nine Months Ended June 30, 2001 and 2000
                                         (Unaudited)
<CAPTION>

                                                                   2001            2000
                                                               -------------   -------------
<S>                                                            <C>             <C>
Cash flows from operating activities:
   Net loss                                                    $ (7,135,603)   $(10,296,622)
   Adjustments to reconcile net loss
       to net cash used in operating activities:
           Amortization of goodwill                                   8,463          19,975
           Depreciation and amortization                             88,323          15,828
           Write off of organizational costs                              -           1,451
           Netbooks.com settlement                                    3,750               -
           Income from judgment                                           -        (250,000)
           Deferred income realized                              (1,092,000)              -
           Compensation, consulting, marketing and
             professional services, incurred in exchange
             for common stock                                     1,991,283       4,157,650
           Consulting services incurred in exchange
             for stock options                                      334,706               -
           Convertible debt - marketing cost                        190,100         520,000
           Convertible debt - financing cost                      2,621,018       2,977,500
           Convertible debt - interest cost                         254,863         128,625
   Changes in assets and liabilities (increase) decrease in:
              Accounts receivable                                   267,049         109,715
              Inventory                                               2,495          (2,784)
              Prepaid expenses                                       71,362        (183,407)
              Advances to suppliers and security deposits            (6,585)              -
              Interest receivable                                   (16,534)          1,041
       Increase (decrease) in:
              Accounts payable and accrued expenses                 350,001        (491,107)
              Royalties payable                                      12,841          46,526
              Other current liabilities                               3,823               -
                                                               -------------   -------------

           Net cash used in operating activities                 (2,050,645)     (3,245,609)
                                                               -------------   -------------
Cash flows from investing activities:
   Purchase of property and equipment                               (17,824)        (26,671)
   Loans to stockholders and related parties                              -        (175,000)
   Decrease in notes receivable -
      stockholders and related parties                              234,529          61,694
   Proceeds from notes receivable - other                            47,000               -
   Proceeds from judgement receivable                                     -          45,000
   Acquisition of film library                                      (31,397)       (242,563)
                                                               -------------   -------------
           Net cash provided by (used in)
           investing activities                                     232,308        (337,540)
                                                               -------------   -------------
Cash flows from financing activities:
   Payment to former stockholder of subsidiary                       (5,000)              -
   Proceeds from  notes payable - stockholder                             -          54,500
   Payments on notes payable - stockholder                                -         (54,500)
   Proceeds from convertible debt                                 1,109,900       3,817,500
   Proceeds from sale of common stock                               100,000             416
   Proceeds from additional paid in capital                               -         152,584
                                                               -------------   -------------

           Net cash provided by financing activities              1,204,900       3,970,500
                                                               -------------   -------------

Net increase (decrease) in cash and cash equivalents               (613,437)        387,351

Cash and cash equivalents, beginning of period                      615,101         155,063
                                                               -------------   -------------
Cash and cash equivalents, end of period                       $      1,664    $    542,414
                                                               =============   =============

           See accompanying notes to condensed consolidated financial statements.

                                             F-5
</TABLE>
<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (formerly known as Kanakaris Communications, Inc.)
           Condensed Consolidated Statements of Cash Flows (Continued)
                For the Nine Months Ended June 30, 2001 and 2000
                                   (Unaudited)


Supplemental disclosure of non-cash investing and financing activities:

During the nine months ended June 30, 2001, the Company issued 15,865,568 shares
of common stock for consulting, compensation and professional services having a
fair value of $1,991,283.

During 2000, the Company issued 500,000 stock options to a consultant for
current and future services having a fair value of $125,407, of which $94,055
has been expensed in the current nine month period and $31,352 has been
included in equity as a deferred expense.

During the nine months ended June 30, 2000, the Company issued 3,354,752 shares
of common stock for consulting, marketing and professional services having a
fair value of $4,113,250.

During the nine months ended June 30, 2000, the Company distributed 99,024 of
shares of treasury stock and issued 10,000 shares of common stock for
compensation of $32,000 and $12,400, respectively.

During the nine months ended June 30, 2000, the Company recorded a judgment
receivable in the amount of $250,000 which represented a legal settlement.

     See accompanying notes to condensed consolidated financial statements.

                                      F-6

<PAGE>
<TABLE>
                                             KANAKARIS WIRELESS AND SUBSIDIARIES
                                     (formerly known as Kanakaris Communications, Inc.)
                      Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficiency)
                                           For the Nine Months Ended June 30, 2001
                                                         (Unaudited)
<CAPTION>

                                        Common Stock Issued             Preferred Stock
                                    ----------------------------  ----------------------------                  Accumulated
                                       Shares         Amount         Shares         Amount          APIC          Deficit
                                    -------------  -------------  -------------  -------------  -------------  -------------
<S>                                   <C>          <C>               <C>         <C>            <C>            <C>
Balances
September 30, 2000                    34,597,678   $     34,598      1,000,000   $     10,000   $ 19,178,359   $(21,340,846)

  Stock issued for cash:                 566,667            567              -              -         99,433              -

  Stock issued for:
    Compensation                      11,747,619         11,747              -              -      1,817,127              -
    Consulting services                3,217,949          3,218              -              -      1,061,394              -
    Marketing, advertising
      and investor relations             600,000            600              -              -        177,400              -
    Professional
      services                           300,000            300              -              -         43,700              -

  Netbooks.com settlement                 25,000             25              -              -          3,725              -

  Converted debentures                17,465,934         17,466              -              -      2,668,897              -

  Convertible debt
   financing costs                             -              -              -              -      2,621,018              -

  Issuance of 500,000 common
    stock options to a consultant              -              -              -              -        366,058              -

  Unrealized loss on
   investment                                  -              -              -              -              -              -

  Net (loss)                                   -              -              -              -              -     (7,135,603)
                                    -------------  -------------  -------------  -------------  -------------  -------------

Balances
June 30, 2001                         68,520,847   $     68,521      1,000,000   $     10,000   $ 28,037,111   $(28,476,449)
                                    =============  =============  =============  =============  =============  =============
</TABLE>

continued below:

<PAGE>
continued from previous page - continuation of statement.

<TABLE>
<CAPTION>

                                      Deferred          Stock       Comprehensive
                                      Expenses      Subscriptions        Loss           Total
                                    -------------   -------------   -------------   -------------

<S>                                 <C>             <C>               <C>           <C>
Balances
September 30, 2000                  $               $     (1,260)     $        -    $ (2,119,149)

  Stock issued for cash:                       -               -               -         100,000

  Stock issued for:
    Compensation                      (1,124,202)              -               -         704,672
    Consulting services                  (31,352)              -               -       1,033,260
    Marketing, advertising
      and investor relations                   -               -               -         178,000
    Professional
      services                                 -               -               -          44,000

  Netbooks.com settlement                      -               -               -           3,750

  Converted debentures                         -        (500,000)              -       2,186,363

  Convertible debt
   financing costs                             -               -               -       2,621,018

  Issuance of 500,000 common
    stock options to a consultant              -               -               -         366,058

  Unrealized loss on
   investment                                  -               -        (938,400)       (938,400)

  Net (loss)                                   -               -               -      (7,135,603)
                                                    -------------   -------------   -------------

Balances
June 30, 2001                       $ (1,155,554)   $   (501,260)   $   (938,400)   $ (2,956,031)
                                    =============   =============   =============   =============

              See accompanying notes to condensed consolidated financial statements.

                                               F-7
</TABLE>
<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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 accounting principles generally accepted in the United States of
America 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, 2000. The financial information
presented reflects all adjustments, that 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 nine months ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year ending
September 30, 2001, or any other period.

The accounting policies followed by Kanakaris Wireless and other information are
contained in the notes to the Kanakaris Wireless financial statements filed as
part of the Kanakaris Wireless annual report on Form 10-KSB for the fiscal year
ended September 30, 2000. This quarterly report should be read in conjunction
with such annual report.

Business Organization and Activity
----------------------------------

Kanakaris Wireless (formerly Big Tex Enterprises, Inc.) (the "Company") was
incorporated in the State of Nevada on November 1, 1991. The Company provides
online delivery of films and books and offers Internet business services
including encoding, hosting and transport/bandwidth. In addition, the Company
designs, manufactures and installs ergonomic data control console systems for
high-end computer command centers.

Business Combinations
---------------------

On October 10, 1997 (the "Acquisition Date"), Kanakaris Internetworks, Inc.
("KIW") consummated a Stock Purchase Agreement with the stockholder (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 has no continuing
affiliation with the Company, the 4% royalty is accounted for as an increase to
goodwill at the date the amount is determinable. KIW will hold harmless the
Seller from any claims, causes of action, costs, expenses, liabilities and prior
stockholder advances. Immediately following the exchange, Desience became a
wholly-owned subsidiary of KIW.

                                      F-8

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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 stockholders
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 7,000,000
shares (6,000,000 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, the Company changed its name to Kanakaris
Communications, Inc., which was subsequently changed to Kanakaris Wireless on
June 2, 2000.

Principles of Consolidation
---------------------------

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

Inventories
-----------

Inventories at June 30, 2001 consisted of parts and finished goods and were
recorded at the lower of cost or market, cost being determined using the
first-in, first-out method.

Earnings Per Share
------------------

Earnings per share are computed using the weighted average of common shares
outstanding as defined by Financial Accounting Standards No. 128, "Earnings Per
Share".

COMMITMENTS AND CONTINGENCIES
-----------------------------

Legal Actions
-------------

On August 5, 1999, the Company filed a complaint in the Los Angeles Superior
Court against its former securities attorney along with 20 unnamed defendants
claiming damages for breach of contract, conversion, fraud and deceit and
negligence. The complaint arose out of the alleged transfer of certain funds
without the Company's authorization to an unknown entity by the defendants. In
January 2000, the claims were settled for $250,000, receivable by the Company
over a three year period, at $5,694 per month.

                                      F-9

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

On September 15, 1999, an individual filed a complaint against the Company and
the executive who is the Chairman of the Board, President and Chief Executive
Officer in Los Angeles Superior Court alleging breach of contract and fraud. The
fraud claim was based primarily on alleged misrepresentation and concealment
involving a consulting agreement between the Company and the individual. The
individual alleged that he is entitled to certain stock options, of which 75% of
the option price allegedly is already deemed paid in exchange for services
allegedly rendered to the Company. The individual is attempting to exercise the
options for the purchase of a certain number of shares to which he claims to be
entitled pursuant to the agreement. The claim against the Company executive was
dismissed. The case was submitted for mediation, and a hearing was held
resulting in the Company and the individual entering into a Settlement Agreement
and General Release on November 1, 2000 whereby the Company agreed to pay
$24,000 to the individual and his attorney in three equal installments of $8,000
in exchange for dismissal with prejudice of the entire action after the three
payments have been made. As of June 30, 2001, the first two payments of $8,000
each were made leaving a balance of $8,000. One additional payment of $8,000 was
due on July 1, 2001. The financial statements include $8,000 of accounts payable
attribute to this settlement. The final payment was made in July 2001, and the
Company presently is awaiting an order from the court dismissing the case.

On October 14, 1999, an Illinois corporation filed suit against the Company and
the Company's stock transfer agent and registrar, in the Circuit Court of Cook
County, Illinois. The case was removed to the United States District Court for
the Northern District of Illinois, Eastern Division. In the complaint, the
Illinois corporation sought damages in excess of $50,000 under breach of
contract and various other state law theories in connection with the Company's
unwillingness to permit them to transfer shares of the Company's common stock
held by the Illinois corporation. The Company believes that the shares were
wrongfully converted by a predecessor to the Illinois corporation. The Company
engaged counsel to analyze the complaint and vigorously defend the Company
against all of the Illinois corporation's claims.

The Company counterclaimed and commenced a third-party action against affiliates
of the Illinois corporation. The Illinois corporation and its affiliates filed a
separate action in Utah, but the Utah court stayed that action in favor of the
action pending in Illinois.

The stock at issue was in the hands of the Company's transfer agent and a stock
brokerage firm that clears the trades of introducing brokers. Both of these
parties filed actions for interpleader, by which they were prepared to tender to
the court the stock certificates to which the Company and the Illinois
corporation each laid claim. In July 2000, that tender was effectuated, and the
claims asserted by and against the transfer agent and brokerage firm were
dismissed. The stock, therefore, was issued and was to remain issued in the name
of the United States District Court until the dispute is resolved.

                                      F-10

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

On July 26, 2001, the parties involved entered into a Settlement Agreement and
Mutual Release of Claims. Under that agreement, the Company agreed to release
all of its claims and to direct the court to execute an assignment of the stock
at issue and deliver the stock to Alpha Tech for reissuance to various
designated parties in exchange for releases of all claims by parties adverse to
the Company in the case and dismissal of the actions in Illinois and Utah. The
Company presently is awaiting orders from the courts in Illinois and Utah
dismissing the 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
installment 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 console
products that Dataview had been manufacturing for Desience.

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-11

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

License Agreement
-----------------

On February 18, 1999, the Company entered into a License Agreement ("Agreement")
with ION Systems, Inc. ("ION"), a Missouri corporation. The Agreement is through
December 31, 2004, and thereafter will be renewed automatically for additional
renewal terms of five years each, ending on December 31 of each fifth year.
Under the terms of the Agreement, ION grants to the Company a license to use its
products, the E*Web and the X*Maker computer software enabling the secure
downloading and viewing of web sites, for or in connection with the Company's
web sites. The two parties agreed that the software may be used solely for the
publishing, displaying, promoting, marketing, offering and selling for a fee of
certain specified book categories as well as of products or services listed in
the books published. The aforementioned activities are meant to be offered
directly to customers and end users using the facilities of a web site. No
geographic or territorial restrictions apply to the use of the software. The
agreed fee for each book conversion performed by ION will be $100, and the
royalties for each book sale and product sale shall be 12% and 5%, respectively,
of the gross revenue. Furthermore, ION shall have the right to buy 100,000
shares of the Company's common stock at a price of $0.30 per share at any time
between June 1, 1999 and December 31, 2005, 175,000 shares at $.01 until May 1,
2003, and 87,500 shares at $1.295 until May 1, 2003.

Advertising Agreement
---------------------

On November 14, 2000, the Company entered into an advertising agreement with
eConnect, a publicly traded corporation. The terms of the agreement grant
eConnect the exclusive ability to place banner advertisements with hyperlinks on
the home pages of CinemaPop.com and WordPop.com, the Company's web sites for
movies and books. The Company will also send one e-mail message per month to
each member of its subscriber and web partner base with a message provided by
eConnect and include information about eConnect's eCash pad products in trade
magazine advertisements. Additionally, the Company plans to provide, through a
hyperlink included on eConnect's web site, access to several video feature films
so that it may demonstrate the eCash pad ordering system.

The term of this agreement is for six months, with one six-month renewal option.
In consideration for the services the Company will render under this agreement,
the Company was paid $1,000,000 in the form of eConnect restricted stock valued
at the closing price of $1.25 per share on November 14, 2000, amounting to
800,000 shares. As of June 30, 2001, the stock was valued at $.072 per share and
the Company recorded an unrealized loss on investment of $942,400. This amount
is included in the Company's statement of comprehensive loss.

                                      F-12

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Service Agreements
------------------

The Company signed an agreement with ValueClick in January 2000 whereby
ValueClick will drive advertisers to the Kanakaris web site. The Company
receives $.20 each time a customer clicks on a ValueClick-served ad. The Company
will also receive $.03 per click whenever a customer clicks on a Company
referred web site.

On May 3, 2001, the Company entered into a service agreement with Collectible
Concepts, a publicly traded corporation. The Company performed various
technological services in exchange for $92,000 in the form of Collectible
Concepts restricted stock valued at the closing price of $.023 per share on May
3, 2001, amounting to 4,000,000 shares. As of June 30, 2001, the stock was
valued at $.024 per share and the Company recorded an unrealized gain on
investment of $4,000. This amount is included in the Company's statement of
comprehensive loss.

Internet Data Center Services Agreements
----------------------------------------

Effective August 9, 1999, the Company entered into an agreement with Microsoft
Corporation whereby Microsoft will promote certain of the Company's web sites in
consideration for the Company's promotion of specified Microsoft Windows Media
Technology on the Company's web sites through December 30, 2001. No expense or
income has been recorded by the Company relating to this agreement because under
APB No. 29, Accounting For Non-monetary Transactions, the fair values of such
web site promotions are not determinable within reasonable limits.

On November 17, 1999, and effective December 7, 1999, the Company entered into
an agreement with Microsoft Corporation ("Microsoft"). Microsoft is assisting
the Company with the development of an audio/video enhanced web site which
delivers timely and relevant audio-visual content using Windows Media
technologies in a broadband network infrastructure.

On March 6, 2000, the Company entered into a one year Jumpstart Program
Agreement with Microsoft whereby Microsoft is assisting the Company with the
development of an audio/video enhanced web site which delivers timely and
relevant audio/visual content. No expense or income has been recorded by the
Company relating to this agreement because under APB No. 29, Accounting For
Non-monetary Transactions, the fair values of such web site promotions are not
determinable within reasonable limits.

On April 20, 2000, the Company entered into a distribution agreement with John
Clark for the Internet distribution rights to his book "Dead Angel" which
pertain to Clark's relationship to Jerry Garcia. In consideration for this,
Clark agreed to pay to the Company in perpetuity a 50% royalty on the gross
sales of the book over the Internet and for two years to pay to the Company 50%
of all royalties generated by the book, and the interview and party video, as
well as all other ancillary rights.

                                      F-13

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

In May 2000, the Company entered into an agreement with Meiselman-Rede Media
Group (MRMG). Based upon the terms of the agreement, the Company paid MRMG
$100,000 in exchange for the future Internet distribution rights to the first
sixteen (16) two (2) minute duration episodes of a project known as Paris Falls.
The $100,000 payment has been accounted for as a prepaid expense. As of June 30,
2001, $50,000 is still prepaid and $12,500 was expensed during the nine months
ended June 30, 2001.

Also, in May 2000, the Company paid MRMG $100,000 for a 90 minute filmed version
of a project known as the L.A. River Story. As of June 30, 2001, the Company and
MRMG are still in the process of editing this film.

On April 9, 2001, the Company entered into a 36 month agreement with S4R. Based
upon the terms of the contract, S4R is to provide web site hosting and managed
services to the Company.

On May 1, 2001, The Company signed a Memorandum of Understanding with Ricoh
Business Systems whereby Ricoh will provide its technology commonly described as
"print on demand" services to the Company for purposes of delivering printed
copies of books via the Company's WordPop.com web site. Based upon the terms of
the agreement, the Company will pay a certain percentage of the sales price of
the books as compensation to Ricoh.

CONSULTING AGREEMENT
--------------------

On June 7, 2001, the Company entered into a one year consulting agreement with
Peter Benz. Based upon the terms of the agreement, the Company granted to Peter
Benz 1,000,000 shares of the Company's common stock valued at $165,000 plus the
option to purchase 2,000,000 shares of the Company's common stock at an exercise
price of $.10 per share. As of June 30, 2001, Peter Benz had exercised the
option as to 500,000 shares.

                                      F-14

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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, which Agreement expires December 10, 2001.
Under the terms of the Agreement, Alliance has made available a $7 million
revolving line of credit with interest on the unpaid principal at 10% per annum.
The funds from the line of credit could enable the Company to pursue current
Internet opportunities and e-commerce development. 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. As of June 30,
2001, no amounts were outstanding under this line of credit. 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 June 30, 2001, the Company had issued to Alliance
1,600,000 shares of the Company's common stock valued at approximately $554,400
for consulting services.

STOCK OPTION PLAN
-----------------

In May 2000, the Company's board of directors and stockholders approved a stock
option plan (the "2000 Plan"). The 2000 Plan was designed to offer an
incentive-based compensation system to employees, officers and directors of the
Company, and to employees of companies which do business with the Company. The
2000 Plan provided for the grant of incentive stock options and non-qualified
stock options. A total of 3,000,000 shares of common stock were authorized for
issuance under the Plan. Effective March 14, 2001, the Company's board of
directors approved a motion to cancel 2,537,500 of the 3,000,000 options
previously granted to various officers, directors and employees, with the
consent of those officers, directors and employees.

DEBENTURE INVESTORS
-------------------

In order to provide working capital and financing for the Company's expansion,
on various dates during 2000, the Company entered into several agreements with
four accredited investors the ("Purchasers") whereby the Purchasers acquired
aggregates of $1,000,000 and $4,500,000 of the Company's 10% Convertible
Debentures, due February 1, 2001 and May 1, 2001, respectively.

The Purchasers converted portions of the 2000 debentures and accrued interest
into shares of common stock of the Company at various times. The initial
conversion price of these debentures was equal to the lesser of $.97 and 66.66%
of the average closing bid price during the 20 trading days immediately
preceding the conversion dates.

                                      F-15

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Also, in order to provide working capital and financing for the Company's
expansion, effective as of January 5, 2001, the Company entered into a
securities purchase agreement and related agreements with four accredited
investors (the "Purchasers") for the purchase of the Company's 12% Convertible
Debentures due January 5, 2002 and March 9, 2002.

The Purchasers made investments in tranches, the first in the aggregate amount
of $650,000, which was received upon signing of the definitive investment
agreements and the second, in the aggregate amount of $650,000, which was
received in March 2001.

Upon the issuance of the first $650,000 of convertible debentures, the
Purchasers received five-year term warrants to purchase three shares of the
Company's common stock for each $1.00 invested or which may have been invested
in the two $650,000 tranches of convertible debentures. The initial exercise
price of the warrants was equal to the lesser of (i) $0.125 and (ii) the average
of the lowest three intraday trading prices during the twenty trading days
immediately preceding the exercise date. For all debentures issued in January
and March 2001, interest is 12% per annum, payable quarterly in common stock or
cash at the option of the Purchasers.

The debentures are immediately convertible into shares of the Company's common
stock. The initial conversion price for the January and March 2001 debentures
was equal to the lesser of (i) $0.15 and (ii) the average of the lowest three
intraday trading prices during the twenty trading days immediately prior to the
conversion date, discounted by 37.5%.

As of April 30, 2001, $1,848,500 of the original $4,500,000 principal balance of
10% Convertible Debentures due May 1, 2001 remained outstanding. As of April 30,
2001, the Company entered into an agreement with the holders of these debentures
to extend the due date of these debentures to May 1, 2002. In consideration for
the extension, the Company granted to the holders warrants to purchase up to an
aggregate of 1,350,000 shares of common stock at an initial exercise price equal
to the lesser of the average of the lowest three intraday trading prices during
the 20 trading days immediately preceding the grant of the warrants, discounted
by 37.5%, and the average of the lowest three intraday trading prices of a share
of common stock during the 20 trading days immediately preceding exercise of the
warrants.

                                      F-16

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

In order to provide working capital and financing for the Company's expansion,
as of June 29, 2001, the Company entered into a securities purchase agreement
and related agreements with three accredited investors (the "Purchasers") for
the purchase of $500,000 of the Company's 12% Convertible Debentures due June
29, 2002. The debentures bear interest at a rate of 12% per annum, payable
quarterly in common stock or cash at the option of the Purchasers.

The debentures initially are convertible into shares of common stock at the
lesser of $.10 per share and 50% of the average of the lowest three intraday
trading prices of a share of common stock during the trading days immediately
preceding conversion.

Upon the issuance of the issuance of the June 2001 debentures, the Purchasers
received five-year term warrants to purchase three shares of the Company's
common stock for each $1.00 invested. The initial exercise price of the warrants
was equal to the lesser of $0.0584 and the average of the lowest three intraday
trading prices of a share of common stock during the 20 trading days immediately
preceding exercise.

Pursuant to the rules and regulations of the SEC regarding beneficial conversion
features, the Company expensed as financing costs any excess of the fair market
value of the common stock at the debenture issuance date over the fixed
conversion price, which amounted to approximately $1,014,000 for the nine months
ended June 30, 2001. There was no amortization period for these financing costs
since the debentures were convertible immediately upon issuance.

The Company's convertible debentures and related warrants contain anti-dilution
provisions whereby, if the Company issues common stock or securities convertible
into or exercisable for common stock at a price less than the conversion or
exercise prices of the debentures or warrants, the conversion and exercise
prices of the debentures or warrants shall be adjusted as stipulated in the
agreements governing such debentures and warrants.

As of June 29, 2001, the Company entered into a letter agreement with certain
of its debenture investors, which letter agreement which provided various
anti-dilution adjustments to the debentures and warrants issued in the April
2000, January 2001 and March 2001 debenture offerings. These adjustments were
made partly in lieu of other adjustments that would have been imposed under the
terms of the April 2000, January 2001 and March 2001 debenture offering
documents. As a result of these adjustments, the conversion prices for the
debentures held by these entities and issued in the April 2000, January 2001 and
March 2001 offerings were reduced to the lesser of (i) $.10 per share, and (ii)
50% of the average of the three lowest intraday trading prices of a share of our
common stock for the 20 trading days immediately preceding the conversion of the
debentures. In addition, the exercise prices of the warrants issued in
connection with the April 2000, January 2001 and March 2001 offerings were
reduced to the lesser of (i) $0.0584 per share, and (ii) the average of the
three lowest intraday trading prices of a share of our common stock for the 20
trading days immediately preceding the exercise of the warrants.

The Company recorded financing costs of approximately $1,607,000 for the
nine months ended June 30, 2001 in connection with the repricing of
existing debentures and warrants that occurred as a result of the June 29,
2001 debenture offering.

                                      F-17

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

During the nine months ended June 30, 2001, the Company issued an aggregate of
17,465,934 shares of common stock to five accredited investors in connection
with regular interest payments and upon conversion of an aggregate of $2,668,897
of principal plus related interest on the Company's convertible debentures.

As of June 30, 2001, the Company was indebted for an aggregate of $3,088,500 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.

RELATED PARTY TRANSACTIONS
--------------------------

During the nine months ended June 30, 2001, the Company issued 12,222,619 shares
of its common stock to officers, directors, accountants and consultants who
subsequently became directors, having an aggregate fair market value of
$1,935,250.

                                      F-18

<PAGE>

<TABLE>
                         KANAKARIS WIRELESS AND SUBSIDIARIES
                 (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)
<CAPTION>

SEGMENT INFORMATION

                                        Internet        Modular
                                        Commerce        Consoles           Total
                                      -------------   -------------   --------------
<S>                                   <C>             <C>             <C>
For the nine months ended June 30:

2000
----
   Revenues                           $     16,843    $    236,269    $    253,112
   Segment profit (loss)               (10,209,535)        (87,087)    (10,296,622)
   Total assets                          1,983,588          39,238       2,022,826
   Additions to long-lived assets           24,515           2,156          26,671
   Depreciation and amortization            13,533           2,295          15,828

2001
----
   Revenues                           $  1,147,847    $    324,522    $  1,472,369
   Segment profit (loss)                (7,123,954)        (11,649)     (7,135,603)
   Total assets                          1,459,891         (78,407)      1,381,484
   Additions to long-lived assets           17,824               -          17,824
   Depreciation and amortization           100,623             187         100,810

For the three months ended June 30:

2000
----
   Revenues                           $      5,835    $     46,135    $     51,970
   Segment profit (loss)                (4,815,727)        (42,939)     (4,858,666)
   Total assets                          1,983,588          39,238       2,022,826
   Additions to long-lived assets           16,680           2,156          18,836
   Depreciation and amortization             8,141           1,530           9,671

2001
----
   Revenues                           $    369,383    $     18,723    $    388,106
   Segment profit (loss)                (2,904,216)        (58,123)     (2,962,339)
   Total assets                          1,459,891         (78,407)      1,381,484
   Additions to long-lived assets            4,070               -           4,070
   Depreciation and amortization            28,273              63          28,336
</TABLE>

                                        F-19

<PAGE>
                       KANAKARIS WIRELESS AND SUBSIDIARIES
               (FORMERLY KNOWN AS KANAKARIS COMMUNICATIONS, INC.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

PREFERRED STOCK
---------------

At a special meeting of the Company's stockholders held on March 14, 2001, the
holders of preferred stock and common stock agreed to amend the Company's
articles of incorporation so that the voting rights of the preferred stock were
increased from twenty non-cumulative votes per share, voting together with the
common stock on all matters on which the holders of common stock are entitled to
vote, to 100 non-cumulative votes per share on such matters. On May 2, 2001, the
Company filed the amendment to its articles of incorporation. As a result of
this increase in voting rights and as a result of his ownership of shares of
common stock and preferred stock, the Company's Chairman of the Board, President
and Chief Executive Officer became entitled to exercise voting control over the
Company.

COMMON STOCK
------------

On May 2, 2001, the Company filed an amendment to its articles of incorporation
that increased the number of shares of common stock authorized from 100,000,000
shares to 250,000,000 shares.

                                      F-20
<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 condensed
consolidated financial statements and notes to financial statements included
elsewhere in this document. Except for historical information, the following
discussion contains forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions and our current beliefs regarding revenues we might earn if we are
successful in implementing our business strategies. See "Special Note Regarding
Forward-Looking Statements" for further information regarding forward-looking
statements. Our actual results may differ materially from the results discussed
in the forward-looking statements as a result of a number of factors, many of
which are beyond our control, including those factors discussed under "Risk
Factors" and other headings in this document.

OVERVIEW

         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
our data control 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 newly introduced 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.
We also intend to continue to invest in the development of new products and
services that enhance AK. TV and CinemaWEAR(TM) encoding. In addition, we
intend to further develop our existing wireless products and services.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000

         NET SALES. Net sales increased $336,000 (647%) from $52,000 for the
three months ended June 30, 2000 to $388,000 for the three months ended June 30,
2001. The portion of net sales derived from our wireless businesses increased
$363,000 (6,000%) from $6,000 for the three months ended June 30, 2000 to
$369,000 for the three months ended June 30, 2001, due primarily to an
increase in advertising sponsorship revenues. We are working to increase our
advertising sponsorship revenue by making additional sponsorship opportunities
available in conjunction with AK.TV. The portion of net sales derived from the
sales of our data control console systems decreased $27,000 (59%) from $46,000
for the three months ended June 30, 2000 to $19,000 for the three months ended
June 30, 2001. This decrease primarily was due to a slowdown in the economy
that resulted in slower sales. We expect our data control console sales to
increase as a result of our enhanced sales activities and an increase in our
original equiment manufacturing capacity.

         GROSS PROFIT. Gross profit increased $246,000 (984%) from a gross
profit of $25,000 for the three months ended June 30, 2000 to a gross profit of
$271,000 for the three months ended June 30, 2001. This increase in gross
profit was due primarily to the increase in advertising revenues noted above.

         OPERATING EXPENSES. Total operating expenses decreased $1,032,000
(42%) from $2,478,000 for the three months ended June 30, 2000 to $1,446,000
for the three months ended June 30, 2001. This decrease in total operating
expenses primarily was due to decreases in consulting services and marketing,
advertising and investor relations costs. Consulting services decreased $328,000
(48%) from $677,000 for the three months ended June 30, 2000 to $349,000 for
the three months ended June 30, 2001. Marketing, advertising and investor
relations costs decreased $1,132,000 (94%) from $1,205,000 for the three
months ended June 30, 2000 to $73,000 for the three months ended June 30, 2001.

                                       3
<PAGE>

These fees and costs decreased primarily because of an emphasis placed on
reducing such costs. The decreases in these fees and costs were offset by
increases in executive compensation of $330,000 (254%) and in salaries of
$59,000 (94%) for the three months ended June 30, 2001 as compared to the
comparable prior year period.

         OTHER EXPENSE. Other expense decreased $619,000 (26%) from
$2,406,000 for the three months ended June 30, 2000 to $1,787,000 for the three
months ended June 30, 2001. This decrease primarily was due to a decrease in
the cost of convertible debt financing costs.

         NET LOSS. Net loss decreased $1,897,000 (39%) from $4,859,000 for the
three months ended June 30, 2000 to $2,962,000 for the three months ended June
30, 2001. This decrease in net loss was due to a combination of increased
revenues and decreased operating expenses, as discussed above.

NINE MONTHS ENDED JUNE 30, 2001 COMPARED TO NINE MONTHS ENDED JUNE 30, 2000

         NET SALES. Net sales increased $1,219,000 (481%) from $253,000 for the
nine months ended June 30, 2000 to $1,472,000 for the nine months ended June 30,
2001. The portion of net sales derived from our wireless businesses increased
$1,131,000 (6,652%) from $17,000 for the nine months ended June 30, 2000 to
$1,148,000 for the nine months ended June 30, 2001, due primarily to an increase
in advertising sponsorship revenues. The portion of net sales derived from the
sales of our data control console systems increased $88,000 (37%) from $236,000
for the nine months ended June 30, 2000 to $325,000 for the nine months ended
June 30, 2001. This increase primarily was due to our enhanced sales activities.
We expect our data control console sales to increase further as a result of our
enhanced sales activities and an increase in our original equipment
manufacturing capacity.

         GROSS PROFIT. Gross profit increased $966,000 (1,971%) from a gross
profit of $49,000 for the nine months ended June 30, 2000 to a gross profit of
$1,015,000 for the nine months ended June 30, 2001. This increase in gross
profit was due primarily to the increase in advertising sponsorship revenues
noted above.

         OPERATING EXPENSES. Total operating expenses decreased $1,752,000 (25%)
from $6,968,000 for the nine months ended June 30, 2000 to $5,216,000 for the
nine months ended June 30, 2001. This decrease in total operating expenses
primarily was due to decreases in consulting services, marketing, advertising
and investor relations costs, and professional fees. Consulting services
decreased $980,000 (38%) from $2,583,000 for the nine months ended June 30, 2000
to $1,603,000 for the nine months ended June 30, 2001. Marketing, advertising
and investor relations costs decreased $1,466,000 (70%) from $2,093,000 for the
nine months ended June 30, 2000 to $627,000 for the nine months ended June 30,
2001. Professional fees decreased $678,000 (51%) from $1,335,000 for the nine
months ended June 30, 2000 to $657,000 for the nine months ended June 30, 2001.
These fees and costs each decreased primarily as a result of our successful
completion of several steps in the development of our business. These steps,
which required consulting, marketing and professional services, included content
acquisition, encoding of our content, database building, web site design,
e-commerce applications and other one-time expenses. The decreases in these fees
and costs were offset by increases in executive compensation of $897,000 (275%)
and in salaries of $210,000 (120%) for the nine months ended June 30, 2001 as
compared to the comparable prior year period.

         OTHER EXPENSE. Other expense decreased $443,000 (13%) from
$3,377,000 for the nine months ended June 30, 2000 to $2,934,000 for the nine
months ended June 30, 2001. This decrease primarily was due to a decrease in
the cost of convertible debt financing costs.

         NET LOSS. Net loss decreased $3,162,000 (31%) from $10,297,000 for
the nine months ended June 30, 2000 to $7,135,000 for the nine months ended
June 30, 2001. This decrease in net loss was due to a combination of increased
revenues and decreased operating expenses, as discussed above.

                                       4

<PAGE>

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, 2000 and through August 14, 2001, no amounts were outstanding
under the line of credit.

         In January 2000, our convertible debentures that were outstanding as of
December 31, 1999 were converted into an aggregate of 1,783,334 shares of our
common stock, which shares were registered by us for resale by the purchasers.

         In February 2000, we issued $1,000,000 of our 10% Convertible
Debentures due February 1, 2001, which debentures were accompanied by warrants
to purchase up to 300,000 shares of common stock. The net proceeds of that
offering, after the payment of some related expenses, were $870,000. In March
and April 2000, $750,000 of the principal amount plus interest was converted
into shares of common stock. In June 2000, the remaining $250,000 of the
principal amount plus interest was converted into shares of common stock. The
shares of common stock issued upon conversion were registered by us for resale
by the purchasers.

         In April and August 2000, we issued an aggregate of $4,500,000 of our
10% Convertible Debentures due May 1, 2001, which were accompanied by warrants
to purchase up to an aggregate of 1,350,000 shares of common stock. The net
proceeds of that offering, after payment of some related expenses, were
$3,905,000. The shares of common stock underlying the debentures and warrants
were registered by us for resale by the purchasers. As of April 30, 2001,
$1,848,500 of the principal amount remained outstanding under these debentures.
As of April 30, 2001, we entered into an agreement with the holders of these
debentures to extend the due date of these debentures to May 1, 2002. In
consideration for the extension, we granted to the holders warrants to purchase
up to an aggregate of 1,350,000 shares of common stock at an exercise price
equal to the lesser of the average of the lowest three intraday trading prices
during the 20 trading days immediately preceding the grant of the warrants,
discounted by 37.5%, and the average of the lowest three intraday trading prices
of a share of common stock during the 20 trading days immediately preceding
exercise of the warrants. As of August 8, 2001, $1,688,500 of the original
$4,500,000 principal balance of these debentures remained outstanding.

         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 3,900,000 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. We have
registered for resale by the investors the shares of common stock underlying the
January and March debentures and warrants.

         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
initially are convertible into shares of common stock at the lesser of $.10 per
share and 50% of the average of the lowest three intraday trading prices of a
share of common stock during the 20 trading days immediately preceding
conversion. The debentures were accompanied by warrants to purchase up to an
aggregate of 1,500,000 shares of common stock. The net proceeds of that
offering, after payment of related expenses, were approximately $420,000. We are
in the process of registering for resale by the purchasers shares of common
stock underlying these debentures and warrants.

                                       5

<PAGE>

         As of June 29, 2001, we entered into a letter agreement with some of
our debenture holders. The agreement provided various anti-dilution adjustments
to the debentures and warrants issued in April and August 2000 and in January
2001 and March 2001. These adjustments were made partly in lieu of other
adjustments that would have been imposed under the terms of the debenture
offering documents. As a result of these adjustments, the conversion prices for
the debentures issued to these holders in April and August 2000 and in January
2001 and March 2001 were reduced to the lesser of $0.10 per share and 50% of the
average of the three lowest intraday trading prices of a share of our common
stock for the 20 trading days immediately preceding the conversion of the
debentures. In addition, the exercise prices of the warrants issued to the
holders in connection with the offering of the debentures in April and August
2000 and in January 2001 and March 2001 were reduced to the lesser of $0.0584
per share and the average of the three lowest intraday trading prices of a share
of our common stock for the 20 trading days immediately preceding the exercise
of the warrants.

         As of June 30, 2001, we had negative working capital of approximately
$3,996,000 and an accumulated deficit of approximately $28,476,000. As of that
date, we had approximately $1,660 in cash, and approximately $142,000 of
accounts and notes receivable. We had accounts payable of approximately
$1,152,000 and convertible debentures of $3,088,500. To the extent debentures
issued by us are converted into shares of common stock, we will not be obligated
to repay the converted amounts.

         Cash used in our operating activities totaled $2,051,000 for the nine
months ended June 30, 2001 and $3,246,000 for the nine months ended June 30,
2000. Cash provided by our investing activities totaled $232,000 for the nine
months ended June 30, 2001, and cash used in our investing activities totaled
$338,000 for the nine months ended June 30, 2000.

         Cash provided by our financing activities totaled $1,205,000 for the
nine months ended June 30, 2001 and totaled $3,971,000 for the nine months ended
June 30, 2000. We raised $1,110,000 of the cash provided by financing activities
during the nine months ended June 30, 2001 and $3,818,000 of the cash provided
by financing activities during the nine months ended June 30, 2000 from the
issuance of our convertible debentures.

         For the quarter ended June 30, 2001, we had net sales of $388,000 and a
net loss of $2,962,000, of which loss $2,239,000 (76%) consisted of non-cash
expenses. These non-cash expenses included $1,718,018 of convertible debt
financing costs incurred with respect to converted debentures.

         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 wireless content and technology 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 recently 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.

                                       6

<PAGE>

         We believe that current and future available capital resources,
revenues generated from operations, and other existing sources of liquidity,
including our revolving line of credit with Alliance Equities, will be adequate
to meet our anticipated working capital and capital expenditure requirements for
at least the next twelve months. If, however, our capital requirements or cash
flow vary materially from our current projections or if unforeseen circumstances
occur, we may require additional financing sooner than we anticipate. Failure to
raise necessary capital could restrict our growth, limit our development of new
products and services or hinder our ability to compete.

RISK FACTORS

         An investment in our common stock involves a high degree of risk. You
should consider, among other things, the following factors carefully before
deciding to purchase any shares of our common stock.

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 going concern. 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 June 30, 2001, we had
an accumulated deficit of approximately $26,869,000. 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.

OUR COMMON STOCK IS SUBJECT TO SUBSTANTIAL DILUTION, AND WE MAY NEED AND BE
UNABLE TO OBTAIN ADDITIONAL FUNDING ON SATISFACTORY TERMS, WHICH COULD FURTHER
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 any significant cash from our
operating activities in the past and cannot assure you that we will be able to
do so in the future. As a result, we have issued securities that are convertible
into or exercisable for a substantial number of shares of our common stock, many
of which shares are or may become eligible for public resale under this
prospectus or through other methods. We may require new financing in addition to
our line of credit with Alliance Equities. This may not be available on a timely
basis, in sufficient amounts or on terms acceptable to us. This financing may
also further 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 our existing sources of funding and impair our
ability to secure new sources of funding.

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.

                                       7

<PAGE>

OUR STOCK PRICE IS SUBJECT TO SIGNIFICANT VOLATILITY, WHICH COULD RESULT IN
LITIGATION AGAINST US.

         There is currently an extremely limited trading market for our common
stock. Our common stock trades on the OTC Bulletin Board under the symbol
"KKRS." There can be no assurance that any regular trading market for our common
stock will develop or, if developed, will be sustained. The trading prices of
our common stock have fluctuated significantly over time. In fact, for the
quarter ended June 30, 2001, the high and low closing bid prices for a share of
our common stock were $.26 and $.10, 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.

         In addition, the stock market as a whole and individual stocks have
experienced extreme price and volume fluctuations, which have often been
unrelated to the performance of the related corporations. Our operating results
in future quarters may be below the expectations of market makers, securities
analysts and investors. In any such event, the price of our common stock will
likely decline, perhaps substantially. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has occurred against the issuing company. There can be no
assurance that such litigation will not occur in the future with respect to our
company. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
on our business, prospects, financial condition and results of operations. Any
adverse determination in such litigation could also subject us to substantial
liabilities.

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 certain 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.

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

                                       8

<PAGE>

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.

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.

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. 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, 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 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 "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.

                                       9

<PAGE>

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

         Our movies and general KKRS.Net web site are hosted on servers owned
and operated by Myrient in a tier 1 facility in Los Angeles, California.
Although offsite 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.

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
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 may have 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.

                                       10

<PAGE>

                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
                  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; 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. A number of factors could cause our financial results, including our
net income (loss) or growth in net income (loss) to differ materially from those
anticipated by forward-looking statements, including those factors discussed
under "Risk Factors." We do not undertake to update, revise or correct any
forward-looking statements.

                                       11

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         On September 15, 1999, Robert Adams filed a complaint against our
company and our Chairman of the Board, President and Chief Executive Officer,
Alex Kanakaris, individually, in Los Angeles Superior Court (Case No. LC050023)
alleging breach of contract and fraud. Mr. Adams based his fraud claim primarily
on alleged misrepresentations and concealment involving a consulting agreement
between Kanakaris Wireless and Mr. Adams. Mr. Adams alleged that he was entitled
to certain stock options, of which 75% of the option price allegedly was already
deemed paid in exchange for services allegedly rendered by Mr. Adams to our
company. Mr. Adams attempted to exercise the options for the purchase of a
certain number of shares to which he claimed to be entitled under the agreement.
The claims against Mr. Kanakaris individually were dismissed. On November 1,
2000, Mr. Adams and Kanakaris Wireless entered into a Settlement Agreement and
General Release under which we agreed to pay a total of $24,000 to Mr. Adams and
his attorney in three equal installments of $8,000 each on November 1, 2000,
March 1, 2001 and July 1, 2001 in exchange for dismissal with prejudice of the
entire action after the three payments have been made. The final payment was
made in July 2001, and we are presently awaiting an order from the court
dismissing the case.

         On October 14, 1999, Institutional Management, Inc., an Illinois
corporation, filed suit against Kanakaris Wireless and Alpha Tech Stock Transfer
& Trust Company, our stock transfer agent and registrar, in the Circuit Court of
Cook County, Illinois (Case No. 99L 011509). The case was removed to the United
States District Court for the Northern District of Illinois, Eastern Division
(Case No. 99C 7100). In the complaint, Institutional Management sought damages
in excess of $50,000 under breach of contract and various other state law
theories in connection with our unwillingness to permit them to transfer shares
of Kanakaris Wireless common stock held by Institutional Management. We believe
that the shares were wrongfully converted by a predecessor to Institutional
Management. We engaged counsel to vigorously defend us against all of
Institutional Management's claims.

         We also counterclaimed against Institutional Management and commenced a
third-party action against the Institutional Management affiliates, namely Power
Media Group, Pinnacle Management, Inc., and Frank Custable. In our counterclaim
and cross-claims, we have sought injunctive relief to block any further transfer
of the converted shares held by any of the parties, and damages for breach of a
consulting agreement, for fraud, conversion and for unjust enrichment. We intend
to vigorously pursue all available remedies against the other parties.

         Institutional Management, Pinnacle and Power Media countered by
attempting to assert claims against us in a separate action in Utah. In the Utah
action, the parties were challenging our right to block their transfer of the
stock at issue and attempting to recover for damage they claim to have suffered
in the interim. The Utah court stayed the Utah action in favor of the action
pending in Illinois.

         The stock at issue was in the hands of Alpha Tech and Miller, Johnson &
Kuehn, Inc., a stock brokerage firm that clears the trades of introducing
brokers. Both Alpha Tech and MJ&K filed actions for interpleader, by which they
were prepared to tender to the court the stock certificates to which Kanakaris
Wireless, Institutional Management and Pinnacle Management are each laying
claim. In July 2000, that tender was made, and the claims asserted by and
against Alpha Tech and MJ&K were dismissed. The stock was issued and was to
remain issued in the name of the United States District Court until the dispute
is resolved.

         On July 26, 2001, the parties involved entered into a Settlement
Agreement and Mutual Release of Claims. Under that agreement, we agreed to
release all of our claims and to direct the court to execute an assignment of
the stock at issue and deliver the stock to Alpha Tech for reissuance to various
designated parties in exchange for releases of all claims by parties adverse to
us in the case and dismissal of the actions in Illinois and Utah. We are
presently awaiting orders from the courts in Illinois and Utah dismissing the
actions.

                                       12

<PAGE>

         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.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         In April 2001, we issued 25,000 shares of common stock valued at
approximately $3,750 to one entity in settlement of a dispute.

         In April 2001, we issued 250,000 shares of common stock valued at
$31,250 to a director and officer as compensation for services rendered.

         In April 2001, we issued an aggregate of 1,425,000 shares of common
stock valued at $142,500 to four directors and officers and three employees as
compensation for services rendered.

         In April 2001, we issued 250,000 shares of common stock valued at
$25,000 to our accountants for services rendered.

         As of April 1, 2001 we issued 300,000 shares of common stock valued at
$42,180 to one consultant for services rendered.

         In April 2001, we issued an aggregate of 3,063,256 shares of common
stock to five accredited investors in connection with regular interest payments
and upon conversion of an aggregate of $170,000 of principal plus related
interest on our convertible debentures.

         As of April 30, 2001, $1,748,500 of the original $4,500,000 principal
balance of 10% Convertible Debentures due May 1, 2001 remained outstanding. As
of April 30, 2001, we entered into an agreement with the four accredited holders
of these debentures to extend the due date of these debentures to May 1, 2002.
In consideration for the extension, we granted to the investors warrants to
purchase up to an aggregate of 1,350,000 shares of common stock at an exercise
price equal to the lesser of the average of the lowest three intraday trading
prices during the 20 trading days immediately preceding the grant of the
warrants, discounted by 37.5%, and the average of the lowest three intraday
trading prices of a share of common stock during the 20 trading days immediately
preceding exercise of the warrants.

         In May 2001, we issued 297,619 shares of common stock valued at $31,250
to an officer and director as compensation for services rendered.

         In May 2001, we issued 733,249 shares of common stock to one accredited
investor upon conversion of $50,000 of principal plus related interest on our
convertible debentures.

         In May 2001, we issued 7,500,000 shares of common stock to our Chairman
of the Board, President and Chief Executive Officer as compensation for services
rendered and to be rendered.

         In June 2001, we issued 1,000,000 shares of common stock valued at
$170,000 and an option to purchase up to 2,000,000 shares of common stock at
$0.10 per share to one consultant for services to be rendered. We subsequently
reduced the exercise price to $0.05 per share with respect to 1,500,000 shares
covered by this option. We issued 500,000 shares of common stock to the
consultant in June 2001 at $0.10 per share and 1,500,000 shares of common stock
to the consultant in July 2001 at $0.05 per share upon exercise of the option.

                                       13

<PAGE>

         In June 2001, we issued 1,630,614 shares of common stock to four
accredited investors upon conversion of an aggregate of $140,000 of principal
plus related interest on our convertible debentures.

         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.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         None.

ITEM 5.  OTHER INFORMATION.

         None.

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

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

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

         3.1.     Amendment to Article III of the Amended and Restated Bylaws
                  adopted by the Kanakaris Wireless Board of Directors on
                  June 21, 2001

         10.1.    Form of Convertible Debenture due March 9, 2002 made by
                  Kanakaris Wireless in favor of AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC, Equilibrium Equity, LLC
                  and Bristol Investment Fund, Ltd.

         10.2.    Securities Purchase Agreement dated as of June 29, 2001
                  between Kanakaris Wireless and AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.3.    Form of 12% Convertible Debenture due June 29, 2002 made by
                  Kanakaris Wireless in favor of each of AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.4.    Form of Stock Purchase Warrant dated June 29, 2001 issued by
                  Kanakaris Wireless to each of AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.5.    Registration Rights Agreement dated as of June 29, 2001 by and
                  between Kanakaris Wireless and AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.6.    Letter Agreement dated as of June 29, 2001 by and among
                  Kanakaris Wireless and AJW Partners, LLC, New Millennium
                  Capital Partners II, LLC and Equilibrium Equity, LLC

                                       14

<PAGE>

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

                  We filed a report on Form 8-K on May 7, 2001 in connection
                  with matters approved by our stockholders at the 2001 annual
                  meeting of stockholders held on March 14, 2001, the results of
                  which meeting were included in that report. The Form 8-K
                  included "Item 1. Changes in Control of Registrant" and "Item
                  5. Other Events."

                  We filed a report on Form 8-K on June 1, 2001 in connection
                  with our execution of a letter of intent to acquire the Los
                  Angeles Film School. A copy of our related press release was
                  included in that report. The Form 8-K included "Item 5. Other
                  Events" and "Item 7. Financial Statements and Exhibits."

                                         15
<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: August 15, 2001           By: /S/ DAVID SHOMAKER
                                    --------------------------------------------
                                    David Shomaker
                                    Acting Chief Financial Officer
                                    (principal financial and accounting officer)

                                       16
<PAGE>

                                EXHIBITS

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

         3.1.     Amendment to Article III of the Amended and Restated Bylaws
                  adopted by the Kanakaris Wireless Board of Directors on
                  June 21, 2001

         10.1.    Form of Convertible Debenture due March 9, 2002 made by
                  Kanakaris Wireless in favor of AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC, Equilibrium Equity, LLC
                  and Bristol Investment Fund, Ltd.

         10.2.    Securities Purchase Agreement dated as of June 29, 2001
                  between Kanakaris Wireless and AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.3.    Form of 12% Convertible Debenture due June 29, 2002 made by
                  Kanakaris Wireless in favor of each of AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.4.    Form of Stock Purchase Warrant dated June 29, 2001 issued by
                  Kanakaris Wireless to each of AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.5.    Registration Rights Agreement dated as of June 29, 2001 by and
                  between Kanakaris Wireless and AJW Partners, LLC, New
                  Millennium Capital Partners II, LLC and Alliance Equities,
                  Inc.

         10.6.    Letter Agreement dated as of June 29, 2001 by and among
                  Kanakaris Wireless and AJW Partners, LLC, New Millennium
                  Capital Partners II, LLC and Equilibrium Equity, LLC

                                       17