SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549

                                FORM 10-KSB
               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

  For the Fiscal Year Ended December 31, 2000 Commission File No. 0-22750

                      ADVANCED WIRELESS SYSTEMS, INC.
              (Name of Small Business Issuer in its charter)

    ALABAMA                                                63-1205304
(State or other jurisdiction                              (IRS Employer
of incorporation or organization                         Identification No.)



                        716 COLLEGE AVENUE, #A-2
                       SANTA ROSA, CALIFORNIA 95404
                  (Address of principal executive office)
                Issuer's telephone number:    (480) 946-3242

     SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

 SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Common
                            Stock, no par value

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [  ]  No [X]

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained herein, and will not be contained,
to the best or registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [  ]

State issuer's revenues for its most recent fiscal year:  $1,092,637

At May 17, 2001, 21,105,789 shares of registrant's Common Stock were
outstanding.  On May 17, 2001, 17,606,472 shares of the registrant's stock
were held by non-affiliates, with an aggregate market value of
approximately $7,746,847.68, based on the closing price on the OTC Bulletin
Board on that day.

DOCUMENTS INCORPORATED BY REFERENCE:  None

Exhibit Index appears on page 19.

<PAGE>
                             TABLE OF CONTENTS


PART I.................................................................. 1

  Item 1. Description of Business....................................... 1
          Forward-Looking Statements.................................... 1
          The Mobile Limited Liability Company Bankruptcy............... 2
          Our Business Plan............................................. 2
          Acquisitions.................................................. 2
           Digital Wireless Systems, Inc................................ 2
           Daybreak Auto Recovery, Inc.................................. 3
          Risks......................................................... 4
           We Have Changed the Focus of Our Business Plan............... 4
           We Need an Infusion of Capital to Continue
            Operations at Current Levels................................ 5
           We Have Made an Assignment of the DWSI Licenses as
            Collateral To Secure Payment of DWSI's Legal Fees........... 5
           We Have a History of Losses and Expect More Losses in the
            Foreseeable Future.......................................... 5
           We Will Need Additional Capital to Continue and
            Expand Operations........................................... 6
           Our Senior Secured Indebtedness is Due and Unpaid............ 7
  Item 2. Description of Property....................................... 7
  Item 3. Legal Proceedings............................................. 7
  Item 4. Submission of Matters to a Vote of Security Holders........... 8

PART II................................................................. 8

  Item 5. Market Price of the Company's Common Stock and Related
           Stockholder Matters.......................................... 8
           Dividend Policy.............................................. 9
  Item 6. Management's Discussion and Analysis of Financial Condition
           and Results of Operations.................................... 9
           New Accounting Pronouncements................................ 9
           Results of Operations........................................10
            Results of Operations for the Year Ended December 31,
             2000, as Compared to the Year Ended December 31, 1999......10
           Liquidity and Capital Resources..............................11
            Operating Activities........................................12
            Investing Activities........................................12
            Financing Activities........................................12
  Item 7. Financial Statements and Supplementary Data...................12
  Item 8. Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure.....................................13
           Dismissal of Brown, Armstrong, Randall, Reyes, Pauldin &
            McCown Accountancy Corporation and Engagement of
            Hurley & Company............................................13
           Dismissal of Hurley & Company and Engagement of
            Merrill L. Mazza, CPA.......................................13

PART III................................................................14

  Item 9. Directors, Executive Officers, Promoters and Control Persons,
           Compliance with Section 16(a) of the Exchange Act............14
          Compliance with Section 16(A) of the Securities Exchange Act..15
  Item 10. Executive Compensation.......................................15
           Employment Agreements........................................15
           Stock Option Grants and Exercises in 2000....................16
           Summary Compensation Table...................................16
           Year End Stock Option Value..................................17
           Directors' Compensation......................................17
  Item 11. Security Ownership of Certain Beneficial Owners and
            Management..................................................18
  Item 12. Certain Relationships and Related Transactions...............19
  Item 13. Exhibits, Lists, and Reports on Form 8-K.....................19

SIGNATURES..............................................................21

FINANCIAL STATEMENTS...................................................F-1

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<PAGE>

                      ADVANCED WIRELESS SYSTEMS, INC.


PART I


ITEM 1.   Description of Business

We provide high speed Internet service in the Mobile, Alabama, area to
approximately 875 customers.  We own or lease eleven wireless signal
frequencies in Mobile that are licenses by the Federal Communications
Commission ("FCC").  In 2000, we acquired similar businesses with FCC
licenses in Baton Rouge and Shreveport, Louisiana; Clarksville, Tennessee,
and Reading, Pennsylvania, as a result of our acquisition of Digital
Wireless Systems, Inc.  These acquired operations which provided wireless
television services in their respective locations, had historically and
were, at the time of acquisition, operating at a loss.   In line with our
present business strategy for our wireless assets, we have withdrawn from
the wireless television market and focused our efforts on providing high-
speed wireless broadband services through our existing infrastructure.  We
have aggressively reduced costs associated with maintaining our licenses.
In acquiring Daybreak Auto Recovery, Inc., we sought financial stability
for the Company.

We were incorporated in Alabama in December 1997 to take over the assets
and continue the business of Mobile Limited Liability Company, as part of
the confirmation by the U.S. Bankruptcy Court for the Northern District of
Texas of a Plan of Reorganization of Mobile Limited Liability Company.{1}
Since confirmation of the Mobile Limited Liability Company Plan of
Reorganization on January 8, 1998, we have implemented the business plan
laid out therein.  We have refocused the emphasis on our wireless
infrastructure to high-speed broadband services.


Forward-Looking Statements


This report contains forward-looking statements.  The words, "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "could,"
"may," "foresee," and similar expressions are intended to identify forward-
looking statements.  These statements include information regarding
expected development of the Company's business, lending activities,
relationship with clients, and development of the industry in which the
Company will focus its marketing efforts.  Such statements reflect the
Company's current views with respect to future events and financial
performance and involve risks and uncertainties, including without
limitation the risks described in "Risks" on page .  Should one or more of
these risks or uncertainties occur, or should underlying assumptions prove
incorrect, actual results may vary materially and adversely from those
anticipated, believed, estimated or otherwise indicated.

-------------------------
1  In Re: Mobile Limited Liability Company, d/b/a Mobile Wireless TV, Case
No. 397-37735-HCA-11, United States District Court, Northern District of
Texas, Dallas Division.

<PAGE>
The Mobile Limited Liability Company Bankruptcy


Mobile LLC was formed in 1994 to acquire and operate FCC licenses in the
Mobile, Alabama area.  It was one of many such ventures created in the
early 1990s to acquire wireless cable TV licenses that the FCC granted in
lotteries and auctions at that time.  The promoters of Mobile LLC raised
about $11,500,000 by selling partnership interests to approximately 1,130
investors.  The promoters then contributed the FCC licenses that our
Company now owns to the partnership, and Mobile LLC was formed to operate
the enterprise.

Mobile LLC turned out to be one of several fraudulent wireless cable TV
promotions that were sold to investors in the early 1990s.  The enterprise
was unsuccessful, and in 1996, Mobile LLC was placed in receivership in an
injunctive lawsuit filed by the Federal Trade Commission and Securities and
Exchange Commission.

In 1997, Mobile LLC instituted bankruptcy proceedings.  In the resulting
bankruptcy reorganization, our Company, Advanced Wireless Systems, Inc.,
was created to take over the assets and operate the business of Mobile LLC.
The original promoters retained no interests in the business after the
bankruptcy, and in the 1998 Mobile LLC Plan of Reorganization, the
partnership investors received all of the equity interest in our Company.

A more detailed description of the history of the Mobile LLC bankruptcy is
contained in our Form 10-SB/A-4, filed with the SEC on March 10, 2000.

Our Business Plan

Historically, the business of our predecessor, Mobile LLC, was to provide
subscription television service.  Competition in the television broadcast
and cable business is intense.  We have chosen to discontinue broadcasting
services to the general public but to continue to broadcast for educational
institutions in the Mobile area.  We plan to institute a new system
offering Wireless Internet services to businesses in the Mobile area with
the intent of utilizing our MMDS dedicated frequency spectrum as an
eventual backup.  Overall, our plan is to stabilize and preserve our MMDS
assets at minimal cost.  At the same time, we have begun a program of
diversification by acquiring existing businesses that are either at break
even or profitable in an effort to stabilize the Company's cash flows and
mitigate or eliminate future losses.


Acquisitions

DIGITAL WIRELESS SYSTEMS, INC.

We acquired all of the assets of DWSI on August 6, 2000, as part of the
consummation of DWSI's confirmed Plan of Reorganization under Chapter 11 of
the U.S. Bankruptcy Code.  Prior to the purchase, DWSI operated as debtor-

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<PAGE>
in-possession under Chapter 11 of the U.S. Bankruptcy Code (Case No.  398-
10899, U.S. Bankruptcy Court, Middle District of Tennessee).  DWSI was
created in 1997 to take over the businesses of two partnerships, one
limited liability company and one corporation that were created in 1993 and
1994 in the same sort of promotion as Mobile LLC, AWSS's predecessor.  It
operates wireless cable and direct broadcast satellite TV services in Baton
Rouge Louisiana, Clarksville Tennessee, Reading Pennsylvania, and
Shreveport Louisiana.  We purchased the assets for 10,381,103 equity units
consisting of a total of 10,381,103 shares of our common stock and warrants
to purchase 41,524,412 shares of our common stock, and we assumed the
outstanding liabilities of DWSI as of the closing date.

Prior to the DWSI acquisition we had about 5.44 million shares of stock
issued and outstanding.  Upon completion of the DWSI acquisition, the
claimants and interest holders under the DWSI bankruptcy owned more than
10.38 million shares of our stock and had the right to purchase more than
an additional 41.52 million shares, out of a total of nearly 57.34 million
shares (fully diluted).  Thus, the recipients of the shares from the DWSI
purchase (which will be distributed to DWSI interest holders under its Plan
of Reorganization) owned a majority of the shares of our outstanding stock
and are able to control future shareholder votes, including election of all
directors.

DWSI had more than 4,000 creditors and equity security holders who received
our shares and warrants as a result of this purchase.  We believe that no
individual creditor, security holder, or group of creditors and security
holders, received more than 1,892,680 shares (3.30%) of our stock, fully
diluted, including shares issuable on exercise of all warrants issued in
the DWSI acquisition.  No group of DWSI shareholders has gotten together
for the purpose of exercising control over us or electing members to our
board of directors.

Because the DWSI claimants and interest holders, like our own shareholders
prior to the DWSI acquisition, are mainly small investors, we believe that
the issuance of shares amounting to more than 65.6% of our outstanding
common stock (90.5%, if all outstanding warrants are exercised) does not
effectively cause a change of control of our company or our board
directors, because no person or group will own enough shares to exercise
control over AWSS or elect members of the board of directors.

As part of the acquisition, in August 2000, we hired David D. Schlueter,
Ph.D., DWSI's chief executive officer, and the remaining directors elected
him chairman of our board of directors to fill a vacancy on the board,
because of his familiarity with the assets and businesses we acquired.  On
January 30, 2001, Dr. Schlueter resigned from our board.


Daybreak Auto Recovery, Inc.

On September 8, 2000, Advanced Wireless Systems, Inc. (the "Company" or
"AWSS") purchased all of the stock of Daybreak Auto Recovery, Inc.
("Daybreak"), pursuant to the Plan and Agreement of Reorganization (the
"Agreement") between AWSS and Daybreak.

                                      3
<PAGE>
Prior to the Daybreak acquisition we had 15,797,160 shares of stock issued
and outstanding.  We issued 2,613,660 shares of our stock to the Daybreak
shareholders in the acquisition, out of a total of almost 18.5 million
shares (fully diluted).  Thus, the recipients of the shares from the
Daybreak purchase will not own a majority of the shares of our outstanding
stock and will not be able to control future shareholder votes, including
elections of directors.  We acquired all 1,000,000 issued and outstanding
shares of Daybreak pursuant to the Agreement.

Two of Daybreak's shareholders, as a result of the reorganization and
purchase, acquired more than five percent (5%) of our shares.  In the
exchange, Heidi Doyle relinquished 375,000 shares of Daybreak and received
980,123 shares (5.04%) of our stock, fully diluted.  Brent Doyle also
relinquished 375,000 shares of Daybreak and received 980,123 shares (5.04%)
of our stock, fully diluted.  Brent and Heidi Doyle are husband and wife,
and they are both active in Daybreak's management. Mr. Doyle is the founder
and president of Daybreak and will remain as its president and chief
executive officer.  As part of the acquisition, Mr. Doyle was also
appointed to our board of directors by the remaining directors, to fill a
vacancy.

Risks

Because of our poor financial condition, substantial risks are involved in
these acquisitions and in any investment in our company.  The following
discussion summarizes the most important of those risks.  Because of the
high risks involved, investors should not invest in our securities unless
they can afford a complete loss of their investment.

We Have Changed the Focus of Our Business Plan

Beginning with the acquisition of Daybreak and the addition of Brent Doyle
to the board of directors, we have begun to change our business focus away
from solely operation of wireless systems and Internet services and to
redirect our business toward businesses associated with the automotive
industry.  We have acquired Daybreak, an auto repossession firm, and we
have also recently acquired RAP Group, Inc., which is in the business of
selling repossessed autos for lending institutions.  We believe that these
two acquisitions will increase our chances to operate profitably in the
near future, but we cannot know yet, how they will affect our business.
The president of RAP Group has also been recently added to our board.

We believe that the FCC licenses we own are a valuable asset, but our
experience tells us we are unable to operate them successfully. We have
temporarily restricted operating some of our wireless systems and are
continuing to maintain our FCC licenses while we decide how they can best
be utilized.  We are considering a new technology for using these licenses.
We cannot be sure that we will be able to operate successfully in our new
endeavor or that we can raise substantial cash from selling the FCC
licenses.

                                      4
<PAGE>
We Need an Infusion of Capital to Continue Operations at Current Levels

Both DWSI's and our own businesses are operating at a loss.  We have a
critical need for operating capital in order to continue operating our
business and the newly acquired DWSI businesses at current levels.  When we
acquired DWSI, it had unpaid bills and no funds with which to pay them. We
do not have enough cash to pay off these debts and we continue to operate
our existing business at a loss.  We must have an infusion of capital in
the immediate future or we will be forced to curtail or close some
operations.

We have issued more than 41 million warrants to purchase our common stock
in the DWSI acquisition, as part of DWSI's confirmed plan of
reorganization.  We hope that the DWSI equity holders will exercise
warrants for our stock, to provide operating capital.  All of the warrants
are exercisable at prices (from $1 to $6 higher than the current price of
our stock ($0.44 on May 17,  2001).  We cannot be sure that any DWSI equity
holders will exercise any warrants, and we do not have other funding
sources ready to generate revenue to sustain our operations.

In December of 2000, we entered into negotiations to sell one of the assets
we acquired from DWSI.  We believe that sale of the DWSI license assets can
provide working capital while we continue to reorganize and redirect our
business plan.   However, in May of 2001, we were advised by the
prospective buyer that they were terminating their offer to purchase one of
our wireless systems.  We intend to continue to attempt to sell one or more
of the systems we acquired from DWSI.

We are seeking alternate sources of capital to temporarily fund our
operations.  We have entered into discussions with one financing group but,
at this time, there can be no assurances that the necessary capital will be
forthcoming.  Therefore, we risk being forced to close at least some of the
operations we are buying because of lack of funds to continue.  We then
risk the permanent loss of these assets and any revenue we could get from
operating or selling them.

We Have Made an Assignment of the DWSI Licenses as Collateral to Secure
Payment of DWSI's Legal Fees

Prior to closing, we executed promissory notes to cover fees owed to four
law firms that represented DWSI in its bankruptcy proceedings, to cover
their outstanding bills through May 25, 2000, totaling approximately
$134,000.  Both notes are secured by an assignment of the FCC licenses,
which are the main asset we acquired in the purchase.  Both notes bear
interest at 9% per annum and require monthly payments, with the entire
amounts becoming due December 31, 2000.  As of March 14, 2001, these notes
are overdue and unpaid.  If we are unable to pay off these notes as they
become due, we could lose the FCC licenses that we have just purchased.

We Have a History of Losses and Expect More Losses in the Foreseeable
Future

Our predecessor, Mobile LLC, filed for Chapter 11 bankruptcy proceedings in
1997 because it was unable to operate profitably.  Its situation and

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<PAGE>
history were very similar to that of DWSI.  Since we emerged from
bankruptcy in early 1998, we have continued to experience losses from
operations.  We have determined to suspend installations for new customers
in our only business line with an operating history, the wireless cable TV
business, because we believed our limited channel capacity made it
impossible to compete with the hard-wire cable and direct broadcast
satellite television providers.  We can expect losses in our Internet
business line until we build a large enough customer base to generate
revenue in excess of start-up and operating costs. In all likelihood, we
will end up selling all or almost all of our FCC license assets.

We believe that, to make a profit from our current business in Mobile, we
would have to dramatically expand our Internet customer base.  We do not
have estimates, as yet, of the number of customers it will take to become
profitable at the newly acquired locations in Shreveport, Baton Rouge,
Reading, and Clarksville.  Accordingly, we cannot expect to operate at a
profit in the foreseeable future.  In February of 2001, we implemented a
new system in Mobile featuring what has become know in the industry as
"Wireless Internet Service Provider."  There are no assurances that this
new feature will result in profitable operations.

We will Need Additional Capital to Continue and Expand Operations

Since we began operations we have depended on capital provided by financing
during the bankruptcy proceedings as well as on equity provided by exercise
of warrants for our common stock, which were issued as part of the
reorganization.  Assuming we can successfully grow our high speed Internet
access business, we likely must find additional capital, either in the form
of loans or sale of more equity, to invest in equipment necessary for that
business and to provide operating capital until the Internet business
generates positive cash flow.  Given our history of losses and lack of
operating history, we cannot be sure that we will be able to raise
sufficient capital to continue in business until we become profitable.

Since confirmation of the Mobile LLC Plan of Reorganization, our
stockholders who acquired stock as part of the Plan and who were investors
in the earlier partnership have exercised warrants that were distributed to
those stockholders as part of the Plan.  We have depended on the funds from
exercise of these warrants for operating capital during the past year, all
of which warrants have either been exercised or have expired.  We issued
more than 41 million more warrants to DWSI claimants and equity security
holders as part of the acquisition, and we expect to use proceeds from
exercise of these warrants to finance our operations for the foreseeable
future.  During the last quarter of 2000, sufficient DWSI claimant warrants
were exercised to continue operations.  If the DWSI claimants do not
continue to exercise warrants, we may have insufficient capital to continue
operations at their current levels for the newly acquired businesses in
Shreveport, Baton Rouge, Clarksville and Reading, or to continue our
present operations in Mobile.

                                      6
<PAGE>
Our Senior Secured Indebtedness is Due and Unpaid

At December 31, 2000, $271,810 in principal amount plus accrued interest
was due and unpaid on a loan made to us by two directors who assisted in
financing our operations while we were still in bankruptcy. This loan is
now due and payable in full, together with accrued, unpaid interest. These
lenders have not demanded payment nor declared the loans in default, but
they also have not waived any provisions of the loan agreement.  We are not
in a position to repay these loans from current working capital or
reserves.


ITEM 2.   DESCRIPTION OF PROPERTY

We rent approximately 7,000 square feet of office and warehouse space at
4123 Government Blvd., Mobile, Alabama, under a one year commitment at $975
per month.  The subsidiary lease office and yard space in Santa Rosa and
San Jose, California is under a verbal and month-to-month agreement which
requires payments of $3,250 monthly.  Transmitters and tower leases in the
five state locales of wireless service total $8,333 monthly.  Rent and
lease payments totaled $132,795 and $28,400 in the years ended December 31,
2000 and 1999 respectively.

We lease the site for our transmitter, located at 7100 Lenardo Drive,
Mobile, Alabama, subject to a five-year lease for $15,000 annually,
expiring March 31, 2005.

All of our FCC frequency leases and licenses are located in the Mobile,
Alabama, market.  We lease the E Group (E-1, E-2, E-3, and E-4) frequencies
from TV Communications Network, Inc., (TVCN), of Denver.  We are currently
leasing the E Group from TVCN on a month to month basis for $1,200 per
month.  We believe that we would be offered an equal opportunity to bid on
the E Group, should TVCN decide to sell them, but we cannot be sure that we
would succeed in purchasing them.  We own the licenses for three MDS
frequencies in the H Group (H-1, H-2, and H-3).  We acquired the H Group
frequencies in 1997, using funds raised from the Mobile Wireless partners.

The remaining four MDS frequencies in Mobile are owned by an unaffiliated
third party, and we do not have rights to use them.

We also lease the Mobile, Alabama, G Group of ITSF frequencies from the
North American Catholic Educational Programming foundation, Inc. (NACEPH)
for $1,000 per month.  We are in our second five year term for this lease,
which expires in August of 2002.  SEE Note 5 to our Financial Statements.

ITEM 3.   LEGAL PROCEEDINGS

On October 28, 1999, Digital Wireless Systems Inc. filed a complaint
against Decathlon Communications, Inc. ("Decathlon") alleging that
Decathlon owed it $210,745 for digital compression equipment that was paid

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<PAGE>
for but not delivered and asserting damages in the amount of $582,280.  On
February 23, 2000, the U.S. Bankruptcy Court heard Decathlon's motion for a
change of venue and ruled that Colorado was the proper venue.  DWSI
subsequently filed its lawsuit in Denver, Colorado and, under the terms of
the asset purchase agreement, we have asserted our rights as plaintiff.

Decathlon subsequently filed lawsuits against the Baton Rouge Wireless
Cable Television LLC and the Shreveport Wireless Cable Television
Partnership alleging that each entity failed to make final payments on
digital compression equipment ordered from DWSI.  In January of 2001, all
of the parties agreed to a settlement wherein Decathlon paid $37,500 to us
(as successor of DWSI) and further agreed to remit the balance due on the
$210,000 upon sale of certain equipment owned by DWSI, the sale of which is
to be completed by Decathlon.

In 2000, Virginia Communications, Inc. filed an objection with the United
States Bankruptcy Court for the Middle District of Tennessee in the Chapter
11 case of DWSI.  Under DWSI's plan of reorganization, its assets were sold
to us and by a subsequent motion, DWSI sought to assign all of its
unexpired leases and executory contract to us.  Virginia Communications
objected to the assignment of the license agreement to us that it had
entered into with DWSI for use of certain frequencies in the Clarksville,
Tennessee market.  This matter is currently scheduled for hearing on June
20, 2001 in the Bankruptcy Court.

Other than the matters discussed above, we are unaware of any pending or
threatened material litigation.

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

During the fourth quarter of fiscal 2000, we submitted no matters to a vote
of our security holders.


PART II

ITEM 5.   MARKET PRICE OF THE COMPANY'S COMMON STOCK AND RELATED
          STOCKHOLDER MATTERS

The Company s Common Stock commenced trading in May 2000.  Quotations are
published on the OTC Bulletin Board under the symbol  AWSS.   Quotations on
the Company s Common Stock set forth below do not constitute a reliable
indication of the price that a holder of the Common Stock could expect to
receive upon a sale of any particular quantity thereof.

The following table sets forth the range of high and low bid prices of the
Common Stock for each calendar quarterly period since the stock began
trading in the second quarter of 2000, as reported by the OTC Bulletin
Board.  Prices reported represent prices between dealers, do not include
retail markups, markdowns or commissions and do not necessarily represent
actual transactions.

                                      8
<PAGE>

                     2ND QUARTER         3RD QUARTER           4TH QUARTER
                     HIGH    LOW         HIGH    LOW           HIGH    LOW
                     ----   ----         ----   ----           ----   ----
            2000      1.5    .75         .875  .3125          .8125  .2969

As of December 31, 2000 the Company had issued and outstanding 19,431,509
shares of Common Stock and there were approximately 5,152 shareholders of
record, which figure does not take into account those shareholders whose
certificates are held in the name of broker-dealers.

Dividend Policy

The Company has not declared or paid any cash dividends to its common
shareholders and does not presently intend to do so.  The future
determination as to the payment of dividends will depend on the Company's
financial condition and other factors deemed relevant by the Company's
board of directors.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

The following information should be read in conjunction with our financial
statements and notes appearing elsewhere in this report.  This report
contains forward-looking statements.  The words, "anticipate," "believe,"
"expect," "plan," "intend," "estimate," "project," "could," "may,"
"foresee," and similar expressions are intended to identify forward-looking
statements.  These statements include information regarding expected
development of our Internet access service business where we will focus our
marketing efforts.  These statements reflect our current views about future
events and financial performance and involve risks and uncertainties,
including without limitation the risks described in "Risk Factors."  Should
one or more of these risks or uncertainties occur, or should underlying
assumptions prove incorrect, actual results may vary materially and
adversely from those anticipated, believed, estimated or otherwise
indicated.

New Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") has issued SFAS No 132.
"Employers' Disclosures about Pensions and other Postretirement Benefits,"
which standardizes the disclosure requirements for pensions and other
Postretirement benefits and requires additional information on changes in
the benefit obligations and fair values of plan assets that will facilitate
financial analysis. SFAS No. 132 is effective for years beginning after
December 15, 1997 and requires comparative information for earlier years to
be restated, unless such information is not readily available. Management
believes the adoption of this statement will have no material impact on the
Company's financial statements.

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<PAGE>
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value.  Gains
or losses resulting from changes in the values of those derivatives would
be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting.  The key criterion for hedge accounting is
that the hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows.  SFAS No. 133 is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999.
Management believes the adoption of this statement will have no material
impact on the Company's financial statements.

Results of Operations

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000, AS COMPARED TO
THE YEAR ENDED DECEMBER 31, 1999

In the second half of the year ended December 31, 2000, we consummated two
major acquisitions: Daybreak Auto Recovery, Inc. and Digital Wireless
Systems, Inc.(DWSI) .  Each acquisition had a major impact on our assets,
liabilities and operations.  Our net loss in fiscal 2000 was $2,912,581 an
increase of $1,736,594 (148%) from our loss of $1,175,987 in 1999. Our
basic loss per share was $0.28 in 2000, an increased loss of $0.03 (12%)
per share from a loss of $0.25 per share in 1999.

Because DWSI and Daybreak had larger operations than did we before the
acquisitions, our 2000 revenues increased by $930,387 (573%) to $1,092,637,
up from $162,250 in 1999.  Almost all of the revenue increase occurred in
the second half, after the acquisitions.

Operating expenses increased by $35,378 (19%) to $221,682, up from $186,303
in 1999.  After the acquisition, management severely curtailed operations
in the wireless cable franchises in all of our markets.  Our operating
expenses have historically consisted of wireless TV cable and Internet
installation, channel fees, Internet telephone costs, maintenance and
supplies.

The largest components of our operating loss in 2000 were increased general
and administrative expenses and loss on impairment of assets.  We wrote
down material telecommunications assets, mainly assets acquired from DWSI,
amounting to $1,792,774, compared to an impairment loss of $303,797 in
1999.  Our 2000 general and administrative expenses increased by $1,151,534
(179%) to $1,794,774, from $643,240 in 1999. We attribute the increase
mainly to a significant short term increase in operating expenses relating
to operations at four new satellite operations acquired through the DWSI
acquisition.  In addition, extraordinary legal and accounting costs were
incurred, as a result of the DWSI and Daybreak acquisitions.  And a
turnover of management and officers which involved one time severence
packages.

                                     10
<PAGE>
Depreciation and amortization expenses increased by $41,292 (22%) to
$227,064 in 2000, from $185,772 in 1999, primarily because the depreciation
in the current year did not include the impairment of certain
telecommunications fixed assets which was shown as an impairment loss of an
additional $128,133.  We depreciate substantially all of our capitalized
assets using the straight-line method.

Interest expense was $33,122 in 2000 and $19,125 in 1999.  The interest
charges are $23,162 from capitalized leases and loans to finance truck
acquisitions of the subsidiary and $9,980  from loans made to us by two of
our directors during 1997 and 1998 to fund our continued operations.  On
July 1, 1999, we repaid the principal amount of a $75,000 loan from one of
the directors.  The remaining loan from a director has matured, and the
interest and principal is due and payable in full.  The lender has neither
demanded repayment nor declared a default in the loan, but he also have not
waived his right to do so.  The loan is secured by nearly all of our
assets, including our wireless frequency licenses.  If we are unable to
renegotiate or settle this debt, the lender could demand repayment of the
loan and foreclose on our property, in which case we would be unable to
continue operations.

Liquidity and Capital Resources

Our financial statements for the years ended December 31, 2000, 1999, and
1998, contain a "going concern" qualification from our auditors.  We
emerged from bankruptcy in early 1998 and since then have continued to
sustain operating losses.  During the past two years, both during and after
the Chapter 11 case, we have satisfied our working capital needs primarily
through our financing activities including raising capital through sale of
certificates of indebtedness, loans from our directors, and the exercise of
warrants that were issued as part of the Plan.  In order to continue as a
going concern we must develop a profitable Internet access service.  We
probably must also raise additional equity capital for development and
expansion, possibly in a public offering of securities.

Since confirmation of the Mobile LLC Plan of Reorganization, our
stockholders who acquired stock as part of the Plan and who were investors
in the earlier partnership have exercised warrants that were distributed to
those stockholders as part of the Plan.   In addition, claimants from the
DWSI acquisition have also exercised warrants that were distributed to DWSI
creditors and shareholders as part of DWSI's Plan of Reorganization. We
have depended on the funds from exercise of these warrants to purchase our
common stock for operating capital during the past year, and we expect that
we will continue to depend on additional stock sales pursuant to exercise
of warrants, for additional operating capital in the next year.  In
addition, we are exploring possible acquisitions of similar businesses with
positive cash flow to improve our financial position.  Failure to make
successful and profitable acquisitions or to raise more capital from
warrant exercises or may jeopardize our continued operations.

We have a secured loan from one of our directors in the principal amount of
$175,000, which remains due and unpaid.  The director has not demanded
repayment of the outstanding principal and interest, but neither has he

                                     11
<PAGE>
waived his right to demand payment or declare a default.  We are attempting
to settle or renegotiate the outstanding loan, but if we are unable to
settle or renegotiate, we could not repay it from our cash reserves without
jeopardizing our capital reserves.

We had total assets of $928,344 at December 31, 2000, and $585,988 at
December 31, 1999.

Operating Activities

For the year ended December 31, 2000, cash provided in operating activities
was $58,454, compared to cash used in 1999 operating activities of
$608,123. Our operating loss rose in 2000 compared to 1999 because of the
impairment losses associated with the write down of telecommunications
assets connected with the DWSI acquisition.

Investing Activities

Cash used in investing activities was $139,965 in 2000.  This was primarily
due to the acquisition of trucks by Daybreak for its auto repossession
business.

Financing Activities

In 2000, we received loans of $217,995, primarily to finance new truck
acquisitions by Daybreak.  We received $503,513 from the exercise of
warrants to purchase common stock in 2000, compared to proceeds from
warrant exercises of $1,026,425 in 1999.  All warrants that were issued in
connection with the Advanced Wireless bankruptcy plan have been exercised
or expired, but in 2000 we issued another 41 million warrants when we
acquired DWSI as part of that company's bankruptcy reorganization.  In
1999, we also repaid notes totaling $150,000, but in 2000 we recorded only
$20,072 for repayment of notes.  As a result, cash provided by financing
activities in 2000 was $63,278, compared to $927,992 in 1999.

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SEE, pages F-1, ET SEQ., included herein.

                                     12
<PAGE>
ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

DISMISSAL OF BROWN, ARMSTRONG, RANDALL, REYES, PAULDIN & MCCOWN ACCOUNTANCY
CORPORATION AND ENGAGEMENT OF HURLEY & COMPANY

By letter dated August 16, 2000, we dismissed Brown, Armstrong, Randall,
Reyes, Paulden & McCown Accountancy Corporation ("Brown Armstrong") as our
independent public accountants. Our board of directors approved the
decision to dismiss Brown Armstrong on July 17, 2000. Brown Armstrong
audited and reported on our financial condition for the fiscal years ended
December 31, 1999, and 1998. Their reports for each of fiscal years 1999
and 1998 contained a qualification regarding our ability to continue as a
going concern, in light of our history of recurring losses from operations.
There were no disagreements between our company and Brown Armstrong on any
matters of accounting principles or practices, financial statement
disclosure or auditing scope and procedures, which, if not reached 13 to
the satisfaction of Brown Armstrong, would have caused Brown Armstrong to
make reference to the matter in their reports.

Effective August 1, 2000, we engaged Hurley & Company as our principal
accountant to audit the Company's financial statements.


DISMISSAL OF HURLEY & COMPANY AND ENGAGEMENT OF MERRILL L. MAZZA, CPA

Effective April 10, 2001, our board of directors dismissed Hurley & Company
of Granada Hills, California, as our independent public accountants.  The
board of directors approved the action on April 4, 2001.

We retained Hurley & Company in the third quarter of 2000 to review the
company's financial statements for the period ended September 30, 2000.
Hurley & Company audited certain subsidiaries of the company as of December
31, 1999.  During our most recent fiscal year and the interim period
through April 4, 2001, there were no disagreements between our company and
Hurley & Company on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.

Hurley & Company did not audit the company or report on our financial
statements for either of the past two years.  During each of those two
years, the reports of our auditors contained a qualification regarding our
ability to continue as a going concern, in light of our history of
recurring losses from operations.  Hurley & Company did audit certain
subsidiaries of the company and these reports also contained statements of
doubt as to the ability of those entities to continue as a going concern.

Effective April 4, 2001, we engaged Merrill L. Mazza, CPA, as our
independent public accountant to audit our financial statements.

                                     13
<PAGE>
PART III

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

The directors are divided into three classes; each serving staggered terms
of up to three years.  Three of our directors became directors upon the
confirmation of the Plan of Mobile Limited Liability Company which
capitalized our Company in January 1998.  The two directors in the class of
2000 joined the board during 2000 as part of the DWSI and Daybreak
acquisitions. The directors in the Class of 2000 were appointed by the
remaining directors to fill vacancies on the board.  At the annual meeting
in 2001, we will elect four directors, to fill the positions for both the
class of 2000 and 2001.

                                     Class of 2002

Name              Position   Biographic Information
----------------  --------   ----------------------
Terry L. Hopkins  Director   Ms. Hopkins, 53, has managed her private
                             investments since 1991.  She also serves on
                             the Board of Directors of Pacific Diagnostic
                             Technologies, Inc., an OTC-Bulletin Board
                             company.

                                     Class of 2001

Name              Position   Biographic Information
----------------  --------   ----------------------
Monte Julius      Director   Mr. Julius, who is 66, became involved with
                             our Company as a Director investor in Mobile
                             Wireless Partners in 1994.  He was semi-
                             retired prior to joining us, and since 1981
                             he has owned and managed residential
                             properties and operated a plastic tools
                             manufacturer.

Demetrios         Director   Mr. Tsoutsas, 66, is owner and President of
Tsoutsas                     Melstrom Manufacturing Corporation, engaged
                             in military procurements as a prime
                             contractor to the U.S. Department of Defense
                             and various airframe manufacturers.  He is
                             founder, President, and C.E.O. of Super-
                             Tech, L.L.C., a maker of machine parts under
                             subcontracts with the U. S. Department of
                             Defense and for private industry, since
                             1996.  From 1975 to 1996, he founded and
                             operated several companies in the military
                             procurement industry, including D&A
                             Electronics Manufacturing Company, Inc, and
                             Ulysses, Inc.  He also founded Pluto
                             Industries, Inc., an electro- mechanical
                             product manufacturer, in 1975.  He received
                             a degree in electrical engineering from the
                             Greek Air Force Academy in 1954.  He became
                             involved with our Company as an investor in
                             Mobile Wireless Partners and member of their
                             management committee in 1994, and was also a
                             director of Mobile LLC.

                                     14
<PAGE>

                                     Class of 2000

Name              Position   Biographic Information
----------------  --------   ----------------------

David D.          Chairman   Dr. Schlueter, 53, joined the board of directors
Schlueter         of the     of in August 2000, upon the acquisition of DWSI.
                  Board of   He has more than 25 years of technical,
                  Directors  supervisory, managerial and business experience
                             with E. I. Du Pont de Nemours and Company, Inc.,
                             and currently serves as a science advisor in Du
                             Pont's legal department.  He is a co-founder of
                             DWSI and served as its chief executive officer
                             and chairman of the board since its creation in
                             January 1997.  Prior to DWSI's founding, he held
                             executive positions with the predecessor cable
                             businesses that made up DWSI.  Dr. Schlueter
                             holds a Bachelor of Science degree in Chemistry
                             from Rensselaer Polytechnic Institute and a Ph.D.
                             in analytical chemistry from the University of
                             Massachusetts.

Brent Doyle       Director   Mr. Doyle is president of our subsidiary,
                             Daybreak Auto Recovery, Inc.  He became a
                             director when we acquired Daybreak in late 2000.

After the close of the 2000 fiscal year, on January 30, 2001, Monte Julius,
Demetrios Tsoutsas and David Schlueter resigned from the board of
directors.  In their place, Stanley F. Wilson and Thomas M. Howard were
appointed Directors.  Jeffrey Schneider was appointed Director as part of
the RAP Group, Inc. acquisition.

We do not have committees of the Board of Directors, and all Directors
participate in decisions regarding compensation of management.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 and Securities and
Exchange Commission regulations require that the Company's directors,
certain officers, and greater than 10 percent shareholders file reports of
ownership and changes in ownership with the SEC and the NASD and furnish
the Company with copies of all such reports they file.  Based solely upon a
review of the copies of the form furnished to the Company, or
representations from certain reporting persons that no reports were
required, we believe that no persons failed to file required reports on a
timely basis during or in respect of 2000.

ITEM 10.  EXECUTIVE COMPENSATION

EMPLOYMENT AGREEMENTS

Commencing December 21, 2000, we entered into an Employment Agreement with
Stanley F. Wilson as President until the date of the our annual
shareholder's meeting in 2002, unless he terminates it prior to this date,

                                     15
<PAGE>
with a minimum 90 days notice.  We shall compensate Mr. Wilson a salary of
$85,000 per annum and 350,000 shares of common stock, dispensed in
increments.  We shall provide all benefits including, paid vacation, health
insurance, life insurance, pension, etc., as well as reimburse Mr. Wilson
for all reasonable expenses.

Commencing February 8, 2001, we entered into an Employment Agreement with
Thomas Howard as Chief Financial Officer and Treasurer until February 7,
2002, unless he terminates it prior to this date, with a minimum 90 days
notice.  We shall compensate Mr. Howard a salary of $85,000 per annum and
350,000 shares of common stock, dispensed in increments.  We shall provide
all benefits including, paid vacation, health insurance, life insurance,
pension, etc., as well as reimburse Mr. Howard for all reasonable expenses.

Pursuant to our acquisition of Daybreak Auto Recovery, Inc., on September
8, 2000, Daybreak Auto Recovery, Inc. entered into an Employment Agreement
with Brent Doyle as President of Daybreak, our subsidiary.  Mr. Doyle's
employment with Daybreak will continue until September 7, 2002, unless he
terminates it prior to this date, with a minimum 90 days notice.  Daybreak
shall compensate Mr. Doyle a salary of $70,000 per annum.  Daybreak shall
provide all benefits including, paid vacation, health insurance, life
insurance, pension, etc., as well as reimburse Mr. Doyle for all reasonable
expenses.

STOCK OPTION GRANTS AND EXERCISES IN 2000

The Company did not grant any stock options, stock appreciation rights or
Long-Term Incentive Plan Awards to its officers or employees during 2000.
None of the executive officers exercised any stock options or stock
appreciation rights in 2000, 1999, or 1998.

SUMMARY COMPENSATION TABLE

During 2000, Monte Julius served as president and chief executive officer
until July 6, 2000.  At that time, Mr. Julius resigned as president and
Thomas W. Howard was appointed president, chief executive officer and chief
financial officer.  In December of 2000, Mr. Howard resigned as president
and Stanley Wilson was appointed president and chief executive officer.
Mr. Howard retains his position as chief financial officer. No executive
officer earned more than $100,000 in salary and bonus during 2000.  The
following table summarizes the compensation of Mr. Howard, Mr. Julius and
Mr. Wilson for 2000, 1999 and 1998.

<TABLE>
<CAPTION>
               ANNUAL COMPENSATION                   LONG TERM COMPENSATION
<S>        <C>  <C>       <C>     <C>                 <C>
(a)        (b)  (c)       (d)             (e)                   (i)
Name       Year Salary    Bonus   Other Annual        All Other Compensation {(1),(2)}
                                 Compensation {(1)}

Stanley F. 2000      -0-      -0-         -0-                           -0-
Wilson

                                     16
<PAGE>
Thomas W.  2000      -0-      -0-         -0-                           -0-
Howard

Monte      2000      -0-      -0-         -0-                           -0-
Julius
           1999  $16,000      -0-         -0-                           -0-
           1998  $12,000      -0-         -0-                       $10,400
</TABLE>

(1) On December 18, 1998, Mr. Julius was awarded 14,532 restricted shares
of common stock for his services.  No market existed for our common stock
during 1998.  The Board of Directors valued these shares at $10,400, or
$0.72 per share, on the date of the award.

(2)  As part of the Company's Employee Incentive Plan, we agreed to award
Mr. Julius options to purchase 115,600 shares of common stock at $0.25 per
share pursuant to our stock award and long term incentive plan, which was
adopted in December 1997, prior to confirmation of the Plan.  In addition,
on December 18, 1998, the Board of Directors awarded Mr. Julius 14,532
Class B Warrants with an exercise price of $1.00 per share, as compensation
for his services.

YEAR END STOCK OPTION VALUE

Neither Mr. Howard nor Mr. Julius exercised any stock options in 2000.  We
have not granted Mr. Julius any stock appreciation rights.  At December 31,
2000, all of Mr. Julius' options to purchase our stock listed above were
exercisable, including his warrants to purchase 18,492 shares of common
stock. The following table describes the options and warrants held by Mr.
Howard and Mr. Julius at year end, 2000.

<TABLE>
<CAPTION>
   (a)       (b)     (c)              (d)                    (e)
                            Number of Securities      Value of Unexercised In-
                            Underlying Unexercised    the-Money Options/SARs
                            Options/SARs at FY-End          at FY-End(1)
           SHARES
          ACQUIRED  VALUE
  NAME       ON   REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
          EXERCISE
<S>       <C>      <C>     <C>         <C>           <C>          <C>

Stanley         0     $0         0              0           $0           $0
Wilson

Thomas W.       0     $0         0              0           $0           $0
Howard

Monte Julius    0     $0    18,492              0    $9,534.48(1)        $0

</TABLE>

(1) Based on the price of shares on Friday, December 28, 2000.

DIRECTORS  COMPENSATION

Directors are reimbursed for their travel and related expenses to attend
Board meetings. The directors received no other compensation for their
services during 2000.

                                     17
<PAGE>
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table contains information about the ownership our common
stock, as of December 31, 2000, by our directors or executive officers.
This information was given to us by the stockholders, and the numbers are
based on definitions found in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934.  On December 31, 2000, there were 19,431,509 shares
of our common stock outstanding.

                                                    Shares Owned(1)
SHAREHOLDER(2)                                STOCK               PERCENT
--------------                               -------              -------

Brent Doyle(3)                                 980,123              5.04%
Director, President of Daybreak Auto
  Recovery, Inc.

Heidi Doyle(3)                                 980,123              5.04%
Manager, Wife of Brent Doyle

Terry Hopkins(3)                                50,000              0.26%
Director

Monte Julius(3)                                234,092              1.20%
President and Director

Demetrios Tsoutsas(3)                           83,290              0.43%
Chairman and Director

Dave Schlueter(3)                            2,460,900             12.66%
Chairman and Director

Thomas Howard                                        0                 0%
Chief Financial Officer

Stan Wilson                                          0                 0%
President

All directors and executive officers
 as a group (5 persons)                      3,808,405             19.60%

(1)  Includes shares which the listed director has the right to acquire
within 60 days after December 31, 2000, from options or warrants.  Each
director received the options listed as compensation for their service as
director in 1998.  Each of them also received the warrants listed in
exchange for their claims against Mobile LLC as part of the plan of
reorganization.  The options and warrants are all currently exerciseable.
Under SEC rules, we calculate the percentage ownership of each person who
owns exercisable options by adding (1) the number of exercisable options
for that person to (2) the number of total shares outstanding, and dividing
that result into (3) the total number of shares and exercisable options
outstanding.

(2)  After the close of the 2000 fiscal year, on January 30, 2001, Monte
Julius, Demetrios Tsoutsas and David Schlueter resigned from the board of
directors.  In their place, Stanley F. Wilson was appointed President and

                                     18
<PAGE>
Director, Thomas M. Howard was appointed Chief Financial Officer and
Director.  Jeffrey Schneider was appointed Director as part of the RAP
Group, Inc. acquisition.

(3)  The address for each shareholder unless otherwise listed is 6711 E.
Camelback Rd, #17, Scottsdale, AZ  85251.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On May 21, 1997, Directors Oscar Hayes loaned $75,000 and Demetrios
Tsoutsas loaned $100,000 to Mobile LLC, with interest at 9% and secured by
a lien on all license agreements including our FCC licenses, contracts,
accounts receivable, equipment leases and other choses in action and all of
its equipment at its principal place of business in Mobile, Alabama.   The
Plan provided that these two debts were to be paid in full, in cash plus
interest at the rate of 9% per annum, one month after confirmation of the
plan.  Mr. Hayes and Mr. Tsoutsas agreed to extend the loans for one year,
to May 21, 1999, on the same terms.  In addition, on March 31, 1998, Mr.
Tsoutsas loaned us an additional $75,000 on the same terms, for one year,
again secured by all of the Company's assets.

These loans became due and payable on March 31 and May 21, 1999.  On July
1, 1999, we repaid the $75,000 principal of Mr. Hayes' loan, though the
interest on that loan remains unpaid.   At December 31, 1999, $271,810 in
principal and accrued interest remains due and unpaid on the two loans.
Mr. Tsoutsas has not demanded repayment of the amount owed, but neither has
he waived his rights to demand payment or declare a default.  We expect to
settle or renegotiate the loan, but if we are unable to settle or
renegotiate, we could not repay them from our cash reserves without
jeopardizing our capital reserves.  The loan is secured by all of our
property including our FCC licenses, which are essential to our continued
operations.  SEE, NOTE 6 TO OUR FINANCIAL STATEMENTS.

ITEM 13.  EXHIBITS, LISTS, AND REPORTS ON FORM 8-K

(a)  Certain of the exhibits set forth in the following index are
     incorporated by reference.

2.1* Plan of Reorganization, In Re: Digital Wireless Systems, Inc., Debtor,
     Case No.  398-10899, U.S. Bankruptcy Court, Middle District of
     Tennessee, dated March 7, 2000.


2.2* Debtor's Modification to Plan of Reorganization, In Re: Digital
     Wireless Systems, Inc., Debtor, Case No.  398-10899, U.S. Bankruptcy
     Court, Middle District of Tennessee, filed May 23,2000.

2.3* Amended Disclosure Statement, In Re: Digital Wireless Systems, Inc.,
     Debtor, Case No.  398-10899, U.S. Bankruptcy Court, Middle District of
     Tennessee, dated April 14, 2000.

                                     19
<PAGE>
2.4* Asset Purchase Agreement by and between Digital Wireless Systems,
     Inc., as Debtor and Advanced Wireless Systems, Inc., as Purchaser,
     February 15, 2000.

2.6* Closing Agreement between Digital Wireless Systems, Inc., and Advanced
     Wireless Systems, Inc., entered on August 6, 2000.

2.7* Escrow Agreement with respect to 284,410 units of equity of Advanced
     Wireless Systems, Inc.

2.8* Plan and Agreement of Reorganization, by and between Daybreak Auto
     Recovery, Inc., and Advanced Wireless Systems, Inc., September 8,
     2000.

4.1* Form of Warrant Agreement.

4.2* Form of Series C Warrant Certificate.

4.3* Form of Series D Warrant Certificate.

4.4* Form of Series E Warrant Certificate.

4.5* Form of Series F Warrant Certificate.

10.1* Spectrum Lease Agreement between Digital Wireless Systems, Inc., and
      Advanced Wireless Systems, Inc., entered on August 6, 2000.

16.1* Letter of Brown, Armstrong, Randall, Reyes, Pauldin & McCown
      Accounting Corporation regarding change in certifying accountant.

16.2** Letter of Hurley & Company regarding change in certifying
       accountant.

27.1 Financial Data Schedule (filed herewith).

*    Incorporated by reference to the Company's Form 8-K dated August 6,
     2000.

**   Incorporated by reference to the Company's Form 8-K dated April 10,
     2001.

(b)  Reports on Form 8-K

No reports on Form 8-K were filed in the quarter ended December 31, 2000.

On April 10, 2001, we filed a Form 8-K reporting the dismissal of Hurley &
Company and appointment of Merrill L. Mazza, CPA, as our independent public
accountants.

                                     20
<PAGE>
On April 27, 2001, we filed a Form 8-K dated August 6, 2000, to report our
purchase of Digital Wireless Systems, Inc. and Daybreak Auto Daybreak Auto
Recovery, Inc.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

ADVANCED WIRELESS SYSTEMS, INC.


Date: May 21, 2001                        /S/ STANLEY WILSON
                                 Stanley Wilson, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated.

Date: May 21, 2001                        /S/ STANLEY WILSON
                                 Stanley Wilson, President (Chief Executive
                                 Officer) and Director

Date: May 21, 2001                        /S/ THOMAS HOWARD
                                 Thomas Howard, Chief Financial Officer and
                                 Director

Date: May 21, 2001                        /S/ JEFF SCHNEIDER
                                 Director

Date: May 21, 2001                        /S/ TERRY HOPKINS
                                 Director

Date: May 21, 2001                        /S/ BRENT DOYLE
                                 Director


                                     21
<PAGE>








                     ADVANCED WIRELESS SYSTEMS, INC.

                          FINANCIAL STATEMENTS
                                  WITH
                     REPORT  OF INDEPENDENT AUDITOR

                    AS OF DECEMBER 31, 2000 AND 1999


<PAGE>
                     ADVANCED WIRELESS SYSTEMS, INC.




                            TABLE OF CONTENTS

                                                       PAGE

Report of Independent Auditor...........................F-1

FINANCIAL STATEMENTS

   Balance Sheets.......................................F-2

   Statements of Operations.............................F-4

   Statements of Capital................................F-5

   Statements of Cash Flows.............................F-6

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


<PAGE>
                      REPORT OF INDEPENDENT AUDITOR

To the Board of Directors and Shareholders
Advanced Wireless Systems, Inc. and Subsidiary

I have audited the accompanying consolidated balance sheet of Advanced
Wireless Systems, Inc. and Subsidiary (the "Company") as of December 31,
2000, and the related consolidated statement of operations, changes in
shareholders' deficit  and cash flows for the year then ended.  These
consolidated financial statements are the responsibility of the Company's
management.  My responsibility is to express an opinion on these
consolidated financial statements based on my audit. The financial
statements of Advanced Wireless Systems, Inc. as of December 31, 1999
were audited by other auditors whose report dated March 3, 2000,
expressed an opinion with the qualification that there is substantial
doubt about the Company continuing as a going concern.

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

In my opinion, the consolidated financial statements referred to above
present fairly in all material respects, the consolidated financial
position of Advanced Wireless Systems, Inc. and Subsidiary as of December
31, 2000, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As discussed
in Note 11 to the consolidated financial statements, the Company has
suffered recurring losses from operations at December 31, 2000 that raise
substantial doubt about the Company's ability to continue as a going
concern.  Management's plans in regard to these matters are also
described in Note 11.  The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.



Merrill L. Mazza, Certified Public Accountant
Guerneville, California
May 14, 2001


                                      F-1
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSICIARY
                          CONSOLIDATED BALANCE SHEET
                          December 31, 2000 and 1999


                                               2000            1999
                                            -----------     ----------
ASSETS

Current Assets
     Cash                                   $    94,995     $  113,228
     Accounts receivable, net
       of allowance for doubtful accounts
       of $45,159 and $2,196 at December
       31, 2000 and 1999, respectively           98,896          8,784
     Notes receivable, related parties           15,000         15,200
     Prepaid expenses                            22,324         13,500
     Inventories                                  5,000         13,056
                                            -----------     ----------
     Total current assets                       236,215        163,768
                                            -----------     ----------
Fixed assets, net of depreciation               247,314        102,222


Other assets
     Deposits                                    11,781            300
     License acquisition costs, net               5,000        138,603
       other intangibles, net of
       amortization of $132,630 and $97,336
       at December 31, 2000 and 1999,
       respectively                             428,034        181,095
                                            -----------     ----------
Total other assets                              444,815        319,998
                                            -----------     ----------
TOTAL ASSETS                                $   928,344     $  585,988
                                            ===========     ==========














 The accompanying notes are an integral part of these consolidated financial
                                  statements

                                      F-2
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                    CONSOLIDATED BALANCE SHEET (continued)
                          December 31, 2000 and 1999

                                               2000            1999
                                            -----------     ----------

     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
     Accounts payable                       $   484,753     $   20,796
     Debtor certificates                         11,000          6,000
     Notes payable                               90,500              -
     Notes payable, related parties             326,793        175,000
     Warrants subscribed                              -         21,267
     Accrued payroll and payroll taxes           23,175          4,402
     Accrued interest payable                   101,377         57,972
     Other accrued expenses                      52,566              -
     Current portion of obligations under
       capital leases                            20,072              -
                                            -----------     ----------
               Total current liabilities      1,110,236        285,437

     Obligations under capital
       leases, net of current portion            61,448              -
     Notes payable                              140,000              -
     Commitments and contingencies                    -              -
                                            -----------     ----------
               Total Liabilities              1,311,684        285,437

Stockholders' Equity (Deficit)
     Common stock, $.01 par value,
       150,000,000 shares authorized;
       19,431,509 and 4,989,342 shares
       issued and outstanding at December
       31, 2000 and 1999 respectively           194,315         49,893
     Additional paid-in capital               4,257,194      2,139,176
     Subscriptions receivable                   (33,750)             -
     Accumulated deficit                     (4,801,099)    (1,888,518)
                                            -----------     ----------

      Total stockholders'equity (deficit)      (383,340)       300,551
                                            -----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)                          $   928,344     $  585,988
                                            ===========     ==========

The accompanying notes are an integral part of these consolidated financial
                                 statements.

                                      F-3
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC.AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                For the Years Ended December 31, 2000 and 1999




                                                   2000         1999
                                               -----------   ----------
REVENUES
     Service and other                         $ 1,092,637   $  162,250
                                               -----------   ----------

COSTS AND EXPENSES
     Operating                                     221,682      186,303
     General and administrative                  1,792,774      643,240
     Depreciation and amortization                 227,064      185,772
     Loss on impairment of assets                1,730,906      303,797
                                               -----------   ----------
          Total costs and expenses               3,972,426    1,319,112
                                               -----------   ----------
          Net loss from operations              (2,879,789)  (1,156,862)

OTHER INCOME (EXPENSE)
     Interest expense, net                         (33,122)     (19,125)
     Gain on asset disposition                         330            -
                                               -----------   ----------
          Total other income (expense)             (32,792)     (19,125)
                                               -----------   ----------
NET LOSS                                       $(2,912,581) $(1,175,987)
                                               ===========  ===========

Net loss per share - basic and diluted         $      (.28)  $     (.25)
                                               ===========   ==========

Weighted average number of
   shares outstanding - basic and diluted       10,491,443    4,665,480
                                               ===========   ==========


The accompanying notes are an integral part of these consolidated financial
                                 statements.

                                      F-4
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                For the Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                        Common               Additional
                        Stock       Par       Paid-in    Escrowed     Accumulated
                        Shares     Value      Capital      Stock         Deficit      Total
                      ----------- ---------  ----------  ----------   ------------   -----------
<S>                   <C>         <C>        <C>         <C>          <C>             <C>
Balance
December 31, 1989        3,832,009 $  38,320  $1,169,024        --    $  (712,531)    $ 494,813
                      ----------- ---------  ----------  ----------   ------------   -----------
Exercise of Warrants
 for Common Stock
 Class A Warrants          243,632     2,436     180,288        --            --        182,724
 Class B Warrants          843,701     8,437     835,264        --            --        843,701
Shares issued as cost
 of Capital                 70,000       700        (700)       --            --            --
Cost of Capital                --        --      (44,700)       --            --        (44,700)
Net Loss                       --        --          --         --     (1,175,987)   (1,175,987)
                      ----------- ---------  ----------  ----------   ------------   -----------

Balance
December 31, 1999       4,989,342 $  49,893  $2,139,176         --    $(1,888,518)    $ 300,551
                      ----------- ---------  ----------  ----------   ------------   -----------

Exercise of Warrants
 for Common Stock
 Class A Warrants          44,600       446      33,004         --            --         33,450
 Class B Warrants         257,386     2,574     254,812         --            --        257,386
 Class C Warrants          83,378       834      81,635         --            --         82,469
 C, D, E, F Package
  Warrants                  3,636        36       7,236         --            --          7,272
 Class G Warrants         779,315     7,793     342,899         --            --        350,692
                      ----------- ---------  ----------  ----------   ------------   -----------

Total Warrants
 Exercised              1,168,315    11,683     719,586         --            --        731,269
                      ----------- ---------  ----------  ----------   ------------   -----------
Adjust shares per
 transfer agent            21,310       213       8,072         --            --          8,285
Stock issued for
 services                 250,264     2,503      85,091         --            --         87,594
Stock issued for net
 asset acquisition     11,763,102   117,631   1,176,311    (152,020)          --      1,141,922
Stock issued for
 acquisition of
 subsidiary             2,667,000    26,670     266,700         --            --        293,370
Price adjustment-
 stock issued for
 Aquisition of
 Subsidiary            (1,427,824)  (14,278)   (137,742)    152,020           --              0
Subscribed Stock              --        --          --      (33,750)          --        (33,750)
Net Loss                      --        --          --          --      (2,912,581)  (2,912,581)
                      ----------- ---------  ----------  ----------   ------------   -----------
Balance,
December 31, 2000      19,431,509 $ 194,315  $4,257,194  $  (33,750)  $ (4,801,099)  $ (383,340)
                      =========== =========  ==========  ===========  ============   ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
                                 statements.

                                      F-5
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Years Ended December 31, 2000 and 1999


                                                          Year Ended
                                                         December 31,
                                                      2000         1999
                                                  -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                        $(2,912,581) $(1,175,987)
  Adjustments of reconcile net loss to
   net cash from operating activities:
    Noncash items included in net loss:
     Depreciation and amortization                    227,064      185,772
     Impairment of license acquisition cost         1,602,773        8,586
     Impairment of fixed assets                       128,133      303,797
     Bad debts                                          3,391           -
     Gain on disposition of cable TV premises
      and other equipment                                (329)          -
   Notes issued for services                          242,253           -
   Stock issued for services                          107,595           -
   Changes in operating assets and liabilities:
     Accounts receivable                               93,503       (6,176)
     Notes receivable, related parties                    200      (15,200)
     Inventories                                        8,056       31,893
     Prepaid expenses                                  (8,824)       4,500
     Deposits                                         (11,481)      15,600
     Accounts payable                                 463,957       20,796
     Accrued interest                                  43,405       19,125
     Accrued payroll and taxes                         18,773         (829)
     Other accrued expenses                            52,566           -
                                                  -----------  -----------
   Net cash provided by (used in)
     operating activities                              58,454     (608,123)
                                                  -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from disposition of equipment               6,787           -
   Purchase of property and equipment                (146,752)     (37,809)
   Purchase of Dibbs Internet Service                      -      (225,000)
                                                  -----------  -----------
   Net cash used in investing activities             (139,965)    (262,809)
                                                  -----------  -----------


The accompanying notes are an integral part of these consolidated financial
                                 statements.

                                      F-6
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                For the Years Ended December 31, 2000 and 1999

                                                          Year Ended
                                                         December 31,
                                                      2000         1999
                                                  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from notes payable                    $   217,995   $       -
   Principal payment on notes payable                 (20,072)     (75,000)
   Proceeds from issuance of common stock
     For warrants                                     503,513    1,026,425
   Asset and subsidiary acquisitions                 (583,141)      21,267
   Subscription receivable                            (33,750)          -
   Warrants subscribed                                (21,267)          -
   Cost of capital                                         -       (44,700)
   Repayment of related party notes                        -       (75,000)
                                                  -----------  -----------
   Net cash provided by financing activities           63,278      927,992
                                                  -----------  -----------
Net increase (decrease)
  in cash and cash equivalents                        (18,233)      57,060

Cash and cash equivalents, beginning of period        113,228       56,168

Cash and cash equivalents, end of period          $    94,959  $   113,228

NON-CASH TRANSACTIONS

In  August  2000, the Company purchased the assets (primarily certain MMDS and
ITFS licenses)  of  an  unrelated  entity  in  a  stock  transaction valued at
$1,293,942.  As part of the agreement, the Company received  cash  of  $23,093
and agreed to assume liabilities totaling $610,900.

In  September 2000, the Company acquired the shares of Daybreak Auto Recovery,
Inc.  (now a wholly-owned subsidiary) through a stock swap valued at $293,370.
The transaction  resulted  in  the  recognition  of  goodwill in the amount of
$233,586.  The Company also effectively assumed a bank overdraft of $5,476.

During  the  year  ended  December 31, 2000, the Company reduced  its  accrued
liabilities by transferring $8,285 to paid-in capital.



The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-7
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Mobile Limited Liability Company,  LLC  (the  "Debtor")  was  a Nevada limited
liability company formed on April 25, 1994 for the purposes of  acquiring  and
operating  certain  FCC  licenses  in  the Mobile, Alabama area.  The majority
interest member of the LLC was a similarly  named  general partnership, Mobile
Wireless  Partners  ("Partners")  comprised of 1,094 partners,  with  a  94.5%
interest in the Debtor.  Pursuant to  the  Plan  of  Reorganization  filed  by
Mobile  Wireless, LLC, Advanced Wireless Systems, Inc. was created and emerged
from Bankruptcy  on  January  8,  1998 as the Reorganized Debtor (collectively
called the "Company").  Additionally, the Plan included the acquisition by the
Company of the Partners' FCC License  in  exchange for 3,192,518 shares of the
Company's common stock, 3,068,066 "B" Warrants  exercisable on a 1 for 1 basis
for  the Company's common stock, and the extinguishment  of  an  inter-company
loan from  the  Partners  totaling  $100,000,  which  was  accounted  for as a
conversion  to common stock.  The License has been recorded by the Company  at
the Partners'  historical  cost  basis  which was $225,000.  In substance, the
reorganization and asset transfer and resulting  combination  between Partners
and the Company is a change in legal organization, but not a change in entity.

The transfer of the license and elimination of inter-company receivable,
representing all assets of the Partners, in exchange for all outstanding
shares in the newly formed corporation is deemed a transfer of assets under
common control.  Accordingly, the assets transferred have been accounted for
at historical cost in a manner similar to that in a pooling of interestS.  The
Partnership had no prior results of operations.  As such, results of
operations on a combined basis represent the activities of Mobile LLC during
those periods.

The  Company  was  originally  an  established  provider  of  direct-broadcast
satellite  television  service  in the Mobile area.  In January of  2000,  the
Company decided to discontinue broadcasting services to the general public but
continues to broadcast for educational  institutions  in  the Mobile area.  At
approximately  the same time, the Company began offering High  Speed  Internet
Services utilizing its MMDS licensed spectrum.  In August of 1999, the Company
acquired an existing  Internet Service Provider completing a shifting of focus
to providing Internet service  connections  to  the  Mobile area. Beginning in
April of 2001 the Company instituted a new system offering  Wireless  Internet
Services  to  businesses  in the Mobile area with the intent of utilizing  its
MMDS dedicated frequency spectrum as an eventual backup.

On August 6, 2000, the Company  purchased  certain  MMDS  and ITFS licenses in
Baton  Rouge  Louisiana,  Clarksville  Tennessee,  Reading  Pennsylvania,  and
Shreveport Louisiana (along with other assets) for 11,763,102  shares  of  the
Company's common stock (see Note 3 below).


                                     F-8
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Nature of Operations (CONTINUED)

On  September  8,  2000,  the  Company  purchased  100% of the common stock of
Daybreak Auto Recovery, Inc. (an automobile repossession  company)  through  a
stock  swap involving the issuance of 2,667,000 shares of the Company's common
stock (see  Note 13 below).  Daybreak Auto Recovery, Inc. is now a fully-owned
subsidiary of the Company.

Basis of Consolidation

The consolidated  financial statements include the accounts of the Company and
its  wholly  owned Subsidiary,  Daybreak  Auto  Recovery,  Inc.  All  material
intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The  preparation   of  the  Company's  consolidated  financial  statements  in
conformity with generally  accepted accounting principles necessarily requires
management to make estimates  and assumptions that affect the reported amounts
of assets and liabilities and disclosure  of contingent assets and liabilities
at  the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting  period.   Actual  results could
differ from those estimates.

Reclassifications

Certain   prior  year  amounts  in  the  accompanying  consolidated  financial
statements   have   been   reclassified  to  conform  to  the  current  year's
presentation.

Revenue Recognition

Revenues  from wireless subscription  services  are  recognized  monthly  upon
billing.  Initial hookup revenue is recognized to the extent of direct selling
costs incurred.   To  date,  direct  selling  costs have exceeded installation
revenues.   Revenues  from  Internet  services  are  recognized  monthly  upon
billing.

Inventory

Inventories  consist  of high speed modems held for  resale  and  installation
materials, including antennas,  cabling, and various other hardware and parts.
Inventory is stated at the lower  of  cost  (first  in,  first out) or market.
Provision has been made for overstocked, slow moving, and obsolete inventory.


                                     F-9
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property and equipment are carried at cost and depreciated  on a straight-line
basis  over  their  estimated  useful  lives,  ranging from 2.5 to  15  years.
Maintenance  and  repair  costs  are  charged to expense  as  incurred;  major
renewals and betterments are capitalized.   Subscriber  installation costs are
capitalized  and  amortized  over  a 2.5 year period, the approximate  average
subscription term of a subscriber.   The  costs  of subsequently disconnecting
and reconnecting are charged to expense in the period incurred.

License Acquisition Costs

License  acquisition  costs  include  costs  incurred to  develop  or  acquire
wireless cable licenses.  These costs had been  deferred  and amortized on the
straight-line basis over 5 years.  See IMPAIRMENT OF LONG-LIVED ASSETS below.

Marketing and Direct Selling Costs

Marketing  and  direct  selling costs are expensed as incurred.   These  costs
totaled $36,553 and $26,042 at December 31, 2000 and 1999, respectively.

Fair Value of Financial Instruments

The carrying value of cash,  receivables,  and  accounts  payable approximates
fair value due to the short maturity of these instruments.

In management's opinion, the carrying value of notes payable  and other short-
term debt also approximates fair value.

The  fair  value of the Company's notes payable and other short-term  debt  is
estimated based  on  the  rate  of  return,  adjusted  for  risk,  received by
purchasers   of   the  Company's  debtor  certificates,  as  the  certificates
represented the best  estimate  of  the  Company's  cost to borrow on an arms-
length,  unsecured  basis.   The  adjustment to the rate  of  return  for  the
secured, related notes payable, as  derived by comparing secured and unsecured
US government obligations, was not material.


                                     F-10
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company records its taxes in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes".  Under this
method, deferred income taxes, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amount of existing assets and liabilities and
their respective tax bases, including operating loss and tax credit
carryforwards.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.

Impairment of Long-Lived Assets (SFAS 121)

In March 1995, the FASB issued SFAS No. 121 `Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of,' which requires
that long-lived assets and certain identifiable intangibles held and used by
an  entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  The new standard is effective for fiscal years beginning after
December 15, 1995.

After considering the Company's history of operating losses and the
uncertainty of a continuation of future operating losses, changes in the
Company's strategic direction, and certain industry factors, the Company
evaluated the ongoing value of its FCC license acquisition costs.  Based on
this valuation, the Company determined that assets with a carrying value of
$465,500 were impaired according to the provisions of SFAS No. 121, and wrote
down the carrying value of such assets by $303,797 as of June 30, 1999 to
their estimated fair value.  Fair value was based on recent transactions in
the wireless cable industry, including changes in the Company's use of these
assets, and estimates of the future earnings from alternative uses for these
assets.


                                     F-11
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets (SFAS 121) (Continued)

In  the second quarter of 1999, the Company  determined  that  assets  with  a
carrying  value  of $465,000 were impaired according to the provisions of SFAS
No. 121, `Accounting  for  the  Impairment  of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of'.  Fair value  was  determined  based on recent
transactions  in  the  wireless  cable  industry,  including  changes  in  the
Company's use of these assets as indicated by the decision to discontinue  new
installations for wireless cable television services in early 1999, as well as
estimates  made  subsequently of the future earnings from alternative uses for
these assets such as high speed Internet access.

At December 31, 2000, the Company determined that assets acquired in the
Digital Wireless Systems assets acquired with a carrying value of $1,652,773
were impaired according to the provision SFAS No 121 `Accounting for the
Impairment of Long-lived Assets and for Long-lived assets to be Disposed of.'
Fair value has been reduced to $50,000 for licenses which have not been sold
in spite of the Company's plan and desire to do so.   Certain property,  plant
and equipment with a carrying value of $173,133 has been reduced to $50,000
based on technological obsolescence and the Company's decision to discontinue
new installation for wireless service in 1999 and paid programming in March
2001.

Earnings Per Share (SFAS 128)

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), `Earnings Per
Share', which was adopted by the Company for the year ended December 31, 1997.
SFAS 128 replaces the presentation of primary earnings per share with a
presentation of basic earnings per share based upon the weighted average
number of common shares for the period.  It also requires dual presentation of
basic and diluted earnings per share for companies with complex capital
structures.  Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity.  Warrants to purchase
shares of common stock were not included in the computation of loss per share
as the effect would be antidilutive.

Stock-based Compensation (SFAS 123)

In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
`Accounting for Stock-Based Compensation.'  This statement applies to the
financial statements for fiscal years beginning after December 15, 1995.  It
defines a fair value based method of accounting for an employee stock option
or similar equity instrument.


                                     F-12
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-based Compensation (SFAS 123) (Continued)

However, it also allows an entity to continue to measure compensation costs
for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees.
Under the fair value based method, compensation costs is measured at the grant
date based on the value of the award and is recognized over the service
period, which is usually the vesting period.  Under the intrinsic value based
method, compensation costs are the excess, if any, of the quoted market price
of the stock at grant date or other measurement date over the amount an
employee must pay to acquire the stock.

The Company has elected to account for stock-based compensation under AFB
Opinion No. 25.  The provisions of this statement have been implemented for
the year ended December 31, 2000.

New Accounting Pronouncements

Management has determined that no recent accounting pronouncements will affect
the accounting and  presentation of the financial statements of the Company.

NOTE 2 - INVENTORIES

Inventories of modems, installation materials, etc at December 31, 2000 are
stated at estimated market as sale in the normal course of business is
unlikely.

     Inventory                               $  98,480
     Reserve for obsolescence                  (93,480)
                                             ---------
     Property and equipment                  $   5,000
                                             =========

NOTE 3 - PROPERTY AND EQUIPMENT

Fixed assets at December 31, are summarized as follows:

                                                    2000           1999
                                                ------------   ------------

     Machinery and equipment                    $   722,872    $   618,789
     Furniture and fixtures                          37,377         21,801
     Auto and trucks                                247,635          5,325
     Subscriber installation costs                       -          12,720
     Accumulated depreciation                      (760,570)      (556,413)
                                                ------------   ------------
                                                $   247,314    $   102,222
                                                ============   ============


                                     F-13
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000


NOTE 3 - PROPERTY AND EQUIPMENT (Continued)

Depreciation expense totaled $58,168 and $72,494 at December 31, 2000 and 1999
respectively.

NOTE 4 - INTANGIBLES

Intangibles consist of the following:
                                                    2000           1999
                                                ------------   ------------

Purchased goodwill                              $   490,238    $   208,005
Non-compete agreement                                 2,500          2,500
Accumulated amortization                            (64,704)       (29,410)
                                                ------------   ------------
                                                $   428,034    $   181,095
                                                ============   ============


NOTE 5 - OPERATING LEASES AND COMMITMENTS

The Company leases office and warehouse space in Mobile, Alabama, under a one
year commitment at $975 monthly.  The Subsidiary lease office and yard space
in Santa Rosa and San Jose,  California under verbal and month-to-month
agreements which require payments of $3,250 monthly.  Transmitters and tower
leases in the five state locales of wireless service total $8,333 monthly.
Monthly lease payments totaled $108,212 and $28,400 in the years ended
December 31, 2000 and 1999 respectively.

The Company leases four Instructional Television Fixed Service (ITFS)
programming channels, referred to as the `E Block' subject to a five-year
lease term expiring May 9, 1999.  The base provides for monthly base payments
of $2,000 and extends the option to renew the lease for successive five-year
terms.  In May 1999, the Company renewed the lease at a reduced lease rate of
$1,200 per month for an additional five years. Additionally the Company leases
four Multipoint Multichannel Distribution Service (MMDS) programming channels
referred to as the `G Block' subject to an initial five year term, with an
automatic five year renewal term, having been renewed on March 31, 1996 and
expiring on March 22, 2001.  The base provides for monthly lease payments of
$1,000.  At lease expiration, the Company has the first right of refusal to
negotiate a new lease agreement for the channels.



                                     F-14
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 5 - OPERATING LEASES AND COMMITMENTS (CONTINUED)

As a result of the DWSI acquisition, the Company acquired six additional MMDS
leases. (1) In Baton Rouge, Louisiana the Company acquired three leases, one
for the H1, H2 and H3 Block. The lease for the H1 block is for 5 years
commencing July 25, 1994 with three additional five year renewals.  The
monthly payment is $450 per month.  The lease for the H2 block is for 5 years
commencing October 11, 1993 with a five year renewal.  Currently the Company
is paying $450 per month for the block.  The lease for the H3 block is for 5
years commencing October 11, 1993 with three additional five year renewals.
The monthly cost is $450.  (2) In August 27, 1998 DWSI entered into a five
year agreement with three additional 5 year terms which lease was assumed by
the Company.  The lease covers the E1 through E4 block, the F1 through F4
block and the H2 block.  The monthly fee is a minimum of $1,500 or 90 cents
per subscriber.  The lease is subject to a Cost of Living adjustment upward or
downward commencing January 1, 1999 according to the Consumer Price Index.
Currently the Company is paying $1,500 per month.  (3) In Shreveport,
Louisiana the Company assumed three leases  (i) The E1 block through the E4
block lease agreement was executed on October 13, 1993 and has a five year
term with 3 additional five year renewals.  The monthly fee was $1,500 for the
first five years and then escalated to $1,779 per month for the current five
year term. (ii) The H1 block was leased September 12, 1993 for five years with
an additional three five year terms.  The monthly fee is $200 per month. (iii)
The H2 block lease agreement commenced August 26{, }1993 for five years with
an additional three five year terms.

As discussed in Note 1, amounts paid by the Company to acquire the channel
leases were capitalized.  Management has determined that the value of the
channel leases and license acquisition costs were impaired.  A write down of
$1,602,773 has been reflected in the current year.  Amortization expense
related to these assets totaled $122,052 and $89,600 for the years ended
December 31, 2000 and 1999 respectively.  The monthly lease payments are
expensed, and totaled $144,072 and $82,869 at December 31, 2000 and 1999
respectively.

Future minimum lease payments under the leases (including Subsidiary) are as
follows:


                    2001              $173,228
                    2002               164,228
                    2003               133,981
                    2004                58,391
                    2005                14,000


                                     F-15
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 5 - OPERATING LEASES AND COMMITMENTS (CONTINUED)

Capital Leases
Capitalized vehicle leases commitments of the Subsidiary          $102,017
     Less amounts representing interest                             20,497
                                                                  --------

     Present value of capital lease obligation                      81,520
     Current portion of lease commitments                           20,072
                                                                  --------

     Capital lease obligations,
           Net of current portion                                 $ 61,448
                                                                  ========


NOTE 6 - NOTES PAYABLE LONG-TERM

Notes payable consists of three notes payable of the subsidiary due in 2002,
$1,050 interest only, payable monthly at 9%. No portion of the notes are due
currently.  The notes were for the purpose of acquiring three tow vehicles but
are not secured.

Note payable, unsecured, payable in monthly installments
    of $337.50, interest only at 9% per annum.  Matures 2002       $  45,000

Note payable, unsecured, payable in monthly installments
    of $337.50, interest only at 9% per annum.  Matures 2002          45,000

Note payable, unsecured, payable in monthly installments
   of $375.00, interest only at 9% per annum.  Matures in 2002        50,000
                                                                   ---------
                                                                     140,000
Less current portion                                                      -
                                                                   ---------
                                                                   $ 140,000
                                                                   =========

NOTE 7 - NOTES PAYABLE, RELATED PARTIES

Notes payable consists of a note payable in the principal amount of $175,000
from an individual who is an officer and director of the Company.  The note is
secured by liens on all license agreements, channel leases, contracts,
accounts receivable, equipment leases, and all additions replacements,
machinery, parts and goods used by the Company in the operations of its
business.  The original note bore interest at 12%, however, the Plan of
Reorganization subsequently amended the terms of repayment providing for
interest to accrue at 9%.


                                     F-16
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 7 - NOTES PAYABLE, RELATED PARTIES (CONTINUED)

On July 31, 1999, a $75,000 note payable to a former Director which was
reflected in the December 31, 1998 financial statements was repaid,
representing full payment of the outstanding principal portion of the note
payable.  The Company did not pay the accrued, unpaid interest on the debt  to
the former Director, and the accrued interest remains due and unpaid, secured
by the lien previously discussed.  The former Director has not demanded
payment of the unpaid interest, but neither has he waived his right to demand
payment or declare a default.  The Company is negotiating with the former
Director about the terms of the interest payment.

On September 15, 2000, as a part of the acquisition of the assets and
liabilities of Digital Wireless Systems,Inc. (DWSI), a $140,000 note payable
bearing interest at 12% to the former Chairman of the Board of the Company was
confirmed under the DWSI plan of reorganization, in addition the Company has
agreed to reimburse the former chairman $7,000 for out-of-pocket expenses. The
note is due upon the sale of one or more assets of the Company, or upon the
voluntary or involuntary liquidation, dissolution or reorganization of the
Company.

NOTE 8 - DEBTOR CERTIFICATES

As discussed in Note  1,  on October 18, 1997, the Bankruptcy Court authorized
the issuance and sales of up  to $1 million in Certificates of Indebtedness to
raise new capital for the reorganized  debtor  pursuant  to Section 364 of the
Code.   The  Certificates were due two years from the Effective  Date  of  the
Plan, and bore  interest  at  10%  annually.   On May 27, 1998, the Bankruptcy
Court  Clerk  disbursed  $242,043, representing proceeds  from  sales  of  the
Certificates of $239,000,  and  interest income of $3,043 to Sid Diamond, Esq.
(the disbursing agent) who in turn wired the funds to the Company.  A total of
120  individuals participated in the  program.   The  Plan  of  Reorganization
provided that the Debtor Certificate holders could, at their exclusive option,
convert  their  debt  at  a  conversion rate of one unit of equity for each $1
lent.  A unit of equity consists  of  two shares of Common Stock and two Class
`A' Warrants allowing the holder to purchase  additional shares at $0.75 each.
118 holders opted to convert their certificates  and two opted not to convert.
On July 31, 1998, 466,000 shares of Common Stock and 466,000 "A" Warrants were
issued  to the 118 Certificate holders.  Stock and  Warrants  issued  to  this
group have no restrictions.

As discussed  in  Note  1,  the  Plan of Reorganization also provided that the
Debtor would purchase from Mobile  Wireless  Partners  certain  MMDS  licenses
issued  by  the  FDD  and  owned  by  the  Partnership.  The Company agreed to
purchase these licenses, referred to as the  `H  Block'  for  $225,000.   This
transaction   was   effective   the   date   of  confirmation.   The  Plan  of
Reorganization also provided that the Company would issue a Debtor Certificate
to Mobile Partners in a like amount of the purchase  price pursuant to Section
364  of  the  Bankruptcy  Code.  The  plan further provided  that  the  Debtor
Certificate could be converted into 3,192,518  shares  of  Common  shares at a

                                     F-17
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 8 - DEBTOR CERTIFICATES (CONTINUED)

stated value of $1 each, and 3,068,066 Class `B' Warrants allowing the holder
to purchase additional shares  at $1.00 each  for  a  period  of  1  year.
In  the event of conversion of the Debtor Certificate into the stock and
warrants, the  Partnership  agreed  by contract not  to assign, pledge,
transfer or otherwise dispose of the 3,192,518  shares of Common  Stock  and
3,068,066  warrants  for  one  year  from  the  date of conversion.
126,000 shares of Common Stock held no such restriction.  Further
the shares and warrants to be issued could only be issued to the partners upon
dissolution  of  the  Partnership.   The Partnership was dissolved on July 15,
1998  and  pursuant  to the winding up of  the  partnership,  the  shares  and
warrants were issued and distributed to the Partners.

On November 17, 1998,  the  Digital  Wireless  Systems,  Inc.  Company filed a
Voluntary  Petition  with  the  United  States Bankruptcy Court in the  Middle
District of Tennessee (the "Court"), for  relief  under Chapter 11 of the U.S.
Bankruptcy  Code,  case number 398-10899.  Under Chapter  11,  certain  claims
against the Company  in  existence  prior  to  the  filing of the petition for
relief  under  the  Federal  bankruptcy  laws were stayed  while  the  Company
continued operations as Debtor-in-Possession.   On  March  17, 1999, the Court
authorized  the  issuance  and  sales  of  up  to $500,000 in Certificates  of
Indebtedness to raise new capital for the Company.

A balance of $6,000 in certificates remains from  the  first  program,  $5,000
from the second..

NOTE 9 - STOCK OPTION PLANS

On  December  11, 1997, the Company's Board of Directors approved an incentive
Stock Option Plan  for  employees, officers, and directors.  The plan provides
for the issuance of a maximum  of  1,000,000  shares  of  the Company's common
stock, issuable at the discretion of the Board of Directors,  as  indicated in
the Plan.  As of December 31, 2000, no common stock had been issued  under the
Company's stock option plan.

Also on December 11, 1997, the Board of Directors authorized the issuance  of
365,000  options to officers and directors of the Company, exercisable at $.25
per share  for an option term of two years.  The Board of Directors elected to
extend the option  term  until January 8, 2002.  At December 31, 2000, none of
these options had been issued or exercised.

The Plan further reserved  350,000 shares of common stock to be granted in the
future at an exercise price of $.25 per share.


                                     F-18
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000


NOTE 10 - EXPIRATION OF WARRANTS

In  1998,  the  Company issued 466,000 Series A Warrants exercisable at  $0.75
each and 3,068,066 Series B Warrants exercisable at $1.00 each, in conjunction
with the conversion of debt and the acquisition of FCC licenses, respectively,
occurring  upon  emergence   of   the   Company  from  Chapter  11  Bankruptcy
Reorganization. In the current year, a total  of 44,600 Series A Warrants were
exercised  and  257,386  Series  B Warrants were exercised  for  cash  in  the
aggregate  amount  of  $290,836.  Cumulative  exercises  from  inception  were
367,254 for the Series A  Warrants  and  1,211,788  for the Series B Warrants.
The remaining unexercised balance of 98,746 Series A  Warrants  and  1,860,298
Series B Warrants expired on July 15, 2000.

On  September 11, 2000, a financial advisor, as part of the effort to  raise
additional  capital  for  the Company, contributed back to the Company 203,551
each of Series C, Series D,  Series E, and Series F Warrants (814,204 warrants
in aggregate) received in the  asset  purchase  agreement  described in Note 3
below.   The exercise price on these warrants was adjusted downward  to  $0.45
through the  issuance of 814,204 new Series G Warrants for a 60-day period.  A
total of 759,315  Series  G  Warrants were exercised for cash in the aggregate
amount $341,692.  54,889 Series G Warrants expired on November 10, 2000.

NOTE 11 - GOING CONCERN

As discussed in Note 1, the Company has emerged from Chapter 11 Bankruptcy.
The Company's ability to continue as a going concern depends, in part, on its
ability to develop new markets for its MMDS frequencies including, but not
limited to, high speed Internet access, profitable operations of its
subsidiary, and its ability to raise new capital through public offerings of
the Company's stock.  There can be no assurance that the Company will
successfully develop new markets for its services, or that sales of the
Company's stock will generate sufficient working capital to offset operating
losses.

It is not possible to predict the success of management's subsequent efforts
to achieve profitability.  If management is unable to achieve its goals, the
Company may find it necessary to undertake other actions as may be appropriate
to continue operations and meet its commitments.

The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of the recorded
asset amounts or the amounts and classification of liabilities that might be
necessary should the Company be unable to continue in existence.


                                     F-19
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000


NOTE 12 - INCOME TAXES

At December 31, 2000, the Company had federal and state net operating loss
carry-forwards available of approximately $5,162,054, which will expire in
full by 2015.

The approximate tax effect of temporary differences which gave rise to
significant deferred tax assets at December 31, 2000, are as follows:

Net operating losses                          $  1,872,429
Deferred tax assets valuation allowance         (1,872,429)
                                              -------------

Net deferred tax assets                       $         --
                                              =============

A deferred asset of $1,872,429 has been provided for the $4,801,099 loss
carryforward that expires in full by 2015.  A valuation allowance of
$1,872,429 has been provided to reduce the asset to the amount of tax benefit
management believes the Company will realize.  As time passes, management will
be able to better assess the amount of tax benefit it will realize from using
the carryforward.

The reconciliation of income tax computed at the U. S. Federal statutory tax
rates to income tax benefit for the year ended December 31, 2000, is as
follows:

Tax at U. S. Statutory rates                       (34)%
State income taxes, net of federal tax benefits     (5)%
                                                  -------
                                                    39%
Income tax benefit not recognized                   39%

NOTE 13 - BUSINESS ACQUISITIONS

On August 25, 1999, the Company purchased all of the assets of Dibbs Internet
Services, Inc. (`Dibbs'), an Alabama corporation, for a purchase price of
$225,000.  Dibbs is an Internet service provider in Mobile, Alabama.  Dibbs
provided Internet services to approximately 730 Internet customers in the
Mobile metropolitan area via dial-in telephone line access.  The Company will
continue offering Dibbs customers the telephonic Internet service that they
have now, and will also offer them the opportunity to convert to use of high
speed wireless Internet service.  The statement of operations at December 31,
1999, includes the results of operations of Dibbs after August 25, 1999.


                                     F-20
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 13 - BUSINESS ACQUISITIONS (CONTINUED)

The Company acquired the Dibbs assets used in the operation of its Internet
service, including its equipment, software, and the right to use the Dibbs
trade name, for $225,000, paid in full on August 25, 1999, to Dibbs and its
sole shareholder and president, Diane Summers.  The Company did not assume any
liabilities of Dibbs in the transaction.  The purchase price has been
allocated as follows:

Property and equipment                   $    14,495
Non-compete agreement                          2,500
Goodwill                                     208,005
                                         -----------
Total                                    $   225,000
                                         ===========

(a) On February 15, 2000, the Company executed an asset purchase agreement
with an unrelated entity (the "Seller") owning the rights to certain MMDS and
ITFS licenses in Baton Rouge Louisiana, Clarksville Tennessee, Reading
Pennsylvania, and Shreveport Louisiana.  The Seller was operating as a Debtor-
in-Possession under Chapter 11 of the US Bankruptcy Code.  The agreement
called for the Company to acquire all of the assets of the Seller and to
assume and agree to pay substantially all of the Seller's indebtedness to
others, all as part of the Seller's plan of reorganization under the
Bankruptcy Code.  In addition, the Purchase Agreement provided for a purchase
price adjustment of additional shares of the Company's common stock if certain
conditions relative to the trading of the Company's stock were not met.  Upon
completion of the audit of the financial statements of DWSI, with report of
the auditors dated November 13, 2000, the Company determined that the
additional liabilities not originally disclosed were of a magnitude that the
additional escrowed shares should not be released to the sellers.

The Seller's plan of reorganization was confirmed by the U.S. Bankruptcy Court
on May 23, 2000, and the asset purchase transaction was consummated on August
6, 2000.  The stock trading purchase price adjustment, plus other price
adjustments agreed at closing, resulted in a purchase price to the Seller
(after purchase price adjustments of 3,763,102 as to shares and to all classes
of warrants, respectively) of 11,763,102 shares of the Company's $0.01 par
value common stock, plus 11,763,102 Series C One-Year Warrants, 11,763,102
Series D Eighteen-Month Warrants, 11,763,102 Series E Two-Year Warrants, and
11,763,102 Series F Three-Year Warrants.  The exercise prices range from $1 to
$6.  As described in   Note 2 above, 203,551 each of the Series C-F Warrants
were subsequently transferred to 814,204 Series G Warrants at an exercise
price of $0.45 each, expiring November 9, 2000.  The entire purchase
transaction was valued at $1,293,942, representing acquired licenses of
$1,749,995, other assets of $154,847, and the assumption of $610,900 in
liabilities.


                                     F-21
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000

NOTE 13 - BUSINESS ACQUISITIONS (CONTINUED)

A total of 1,381,999 units of  equity (each unit representing 1 share of $0.01
par value common  stock  plus  1  each  of  Series C-F Warrants, respectively)
issued to officers  and directors of the Seller,  were  placed  in  an  escrow
account, pending the  completion  of  certain  guarantees pertaining to the
transfer of ownership  rights  to  the  licenses and the  issuance  of  audited
financial statements.  The Company has  recognized  an escrow obligation
(presented as a contra asset against license acquisition costs)  and a
corresponding charge to equity on the September 30, 2000 balance sheet in  the
amount of $152,020 for these  escrowed  shares  at  the time of purchase.
All of the  aforementioned 1,381,999 units of equity were  transferred  back to
the  corporation as the guarantees were not met.

(b) On September 8, 2000, the Company acquired all 1,000,000 shares (no par
value) of the issued and outstanding common stock of Daybreak Auto Recovery,
Inc., an automobile repossession company located in northern California,  in
exchange for 2,667,000 shares of the Company's $0.01 par value common stock
(of which 53,440 shares were issued to a financial advisor as a finder's fee).
The transaction was valued at $293,370, consisting of $568,384 in assets
(including the recognition of $233,586 in goodwill) and $275,014 in
liabilities.

The following unaudited pro forma information presents a summary of results of
operations of the Company and Dibbs as if the acquisition occurred at the
beginning of the fiscal year of the acquisition.

                                                   (Unaudited)
                                               DECEMBER 31, 2000
                                               -----------------

Total revenues                                 $    293,690
Net loss                                       $ (1,208,698)
Basic earnings per share                       $       (.27)

In  management's  opinion,  the  unaudited  pro  forma  information  is  not
necessarily  indicative  of  actual results that would have occurred  had  the
acquisition been consummated at  the  beginning  of  the  fiscal periods or of
future operations of the combined activities.


                                     F-22
<PAGE>
                ADVANCED WIRELESS SYSTEMS, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             December 31, 2000


NOTE 14 - BUSINESS SEGMENTS

The  principal  business  of  the Company has been Wireless Broadcasting.   On
September 8, 2000 the company entered the field of automotive related business
with  the  purchase  of Daybreak Auto  Recovery,  Inc.,  a  Corporation  which
commenced business January 1, 2000.

<TABLE>
<CAPTION>

Year ended                                                    CAPITAL        DEPRECIATION
December 31, 2000       REVENUES     NET LOSS    ASSETS     EXPENDITURES     AMORTIZATION
-----------------       ----------   --------    --------   ------------     ------------
<S>                     <C>          <C>         <C>        <C>              <C>
Wireless  Broadcasting  $  322,350   $2,911,359  $593,120     $ 27,753          $189,520
Auto Recovery              770,287        1,222   335,224      118,999            37,544
                        ----------   ----------  --------   ------------     ------------
                        $1,092,637   $2,912,581  $928,344     $146,752          $227,064
                        ==========   ==========  ========   ============     ============

</TABLE>
NOTE 15 - SUBSEQUENT EVENTS

On February 6, 2001, the Company acquired all 25,000 shares of the issued  and
outstanding shares of RAP Group, Inc., in exchange for 5,000,000 shares of the
Company's  $0.01 per value common stock of which 150,000 shares will be issued
to a financial advisor as a finder's fee.  The shares are being held in escrow
and the valuation  of  the  transaction  is  subject  to audit of the acquired
company.

The  transaction  also  involved  the  issuance of an additional  2,000,000  H
Warrant Certificates entitling the holder  thereof to purchase up to 2,000,000
additional shares of the Company's Common Stock at fifty cents per share for a
period of time which will expire on January 1, 2003.

As of March 31, 2001, shareholders had exercised a total of  1,336,980 C, D,
E, and F  warrants.

The  Company  previously  impaired or recorded  valuation  allowances  against
identifiable cable television fixed assets, inventory, and subscriber premises
equipment.   The carrying value  of  remaining  cable  televisions  assets  at
December 31, 2000, is considered immaterial.

                                     F-23