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

                                   FORM 10-KSB
(Mark One)
|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended SEPTEMBER 30, 2002 OR

| |      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

            For the transition period from __________ to ___________

                         Commission File Number: 0-28213
                            ________________________

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

           NEVADA                                         86-0888532
(State or Other Jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                         Identification No.)

            1280 BISON, SUITE B9-597, NEWPORT BEACH, CALIFORNIA 92660
                    (Address of Principal Executive Offices)

                                 (949) 760-5470
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:
Title of each class                    Name of each exchange on which registered
      NONE                                               NONE

         Securities registered under Section 12(g) of the Exchange Act:
                     COMMON STOCK, $.001 PAR VALUE PER SHARE
                                (Title of Class)
                              _____________________

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

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

The registrant's revenues for the twelve months ended September 30, 2002 were
$413,946.

As of January 6, 2003, the aggregate market value of the common equity held by
nonaffiliates of the registrant was approximately $283,000. The number of shares
outstanding of the registrant's only class of common stock was 32,401,971 on
January 6, 2003.

Transitional Small Business Disclosure Format (check one):  YES | |  NO |X|

DOCUMENTS INCORPORATED BY REFERENCE: NONE.

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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

COMPANY HISTORY

         We are the surviving company in a series of transactions involving Fast
Forward Marketing, Inc., a California corporation, that was incorporated on
March 15, 2002, Kanakaris InternetWorks, Inc., a Delaware corporation that was
incorporated on February 25, 1997, Desience Corporation, a California
corporation that was incorporated on April 17, 1984, and Big Tex Enterprises, a
Nevada corporation that was incorporated on November 1, 1991. On October 10,
1997, Kanakaris InternetWorks, Inc. purchased all of the outstanding shares of
common stock of Desience Corporation, on November 25, 1997, Big Tex Enterprises
purchased all of the outstanding shares of common stock of Kanakaris
InternetWorks, Inc. and on November 26, 1997, Big Tex Enterprises changed its
name to Kanakaris Communications, Inc. On June 2, 2000, Kanakaris
Communications, Inc. changed its name to Kanakaris Wireless. Consequently, we
are a Nevada corporation that was incorporated on November 1, 1991 and we are
the sole stockholder of Kanakaris InternetWorks, Inc. Kanakaris InternetWorks,
Inc. is the sole stockholder of Desience Corporation; however, as discussed in
further detail below, in March 2002, we sold Desience Corporation's business
and, in April 2002, our wholly-owned subsidiary, FFM Acquisition Corp. purchased
substantially all of the assets of Fast Forward Marketing, Inc., a California
corporation, or FFM, which was a wholly-owned subsidiary of Intervisual Books,
Inc., a California corporation. FFM Acquisition Corp. subsequently changed its
name to Fast Forward Marketing, Inc.

         On March 9, 2002, we completed the sale of the business of Desience
Corporation. Prior to the sale, Desience was in the business of procuring and
installing customized computer command consoles used to house computer monitors
and other hardware. The aggregate purchase price was $250,000, with $50,000 paid
to us at closing and the balance paid to us in eight equal monthly installments
of $25,000. The purchase price for the business of Desience Corporation was
determined through arms-length negotiations. Other than existing contracts, none
of the liabilities of Desience Corporation were assumed by the purchaser.

         Prior to the sale of our Desience division, that division contributed
30% ($513,136) of our revenues for the year ended September 30, 2001 and
contributed 96% ($591,244) of our revenues for the year ended September 30,
2000. Our Desience division also generated $193,408 and $274,117 in gross profit
for the years ended September 30, 2001 and 2000, respectively. From January 1,
2002 to the date of the sale of its business, our Desience division generated
approximately $216,139 in revenues which amount would have been added to our
revenues for the fiscal year ended September 30, 2002 had it not been sold and
reported in our financial statements for the fiscal year ended September 30,
2002 as a discontinued operation. From January 1, 2002 to the date of the sale
of its business, our Desience division also generated approximately $76,835 in
gross profit which amount would have been added to our gross profit for the
fiscal year ended September 30, 2002 had it not been sold and reported in our
financial statements for the fiscal year ended September 30, 2002 as a
discontinued operation.

         On April 8, 2002, FFM Acquisition Corp. completed the acquisition of
substantially all of the assets of FFM. Prior to the acquisition, FFM was in the
business of distributing VHS video cassettes and DVDs through retail, mail order
and other channels. The aggregate purchase price, including acquisition costs,
was approximately $566,000 of which $255,000 was paid to the seller in cash at
closing with up to $261,000 to be paid to the seller as a result of collections
on accounts receivable of FFM existing at the time of closing. As of January 6,
2003, approximately $160,000 had been paid to the seller under this arrangement.

                                      -2-


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The acquisition was funded with financing obtained in a March 2002 convertible
debenture financing transaction discussed in more detail elsewhere in this
document and also was funded through the promise of future payment to the seller
of certain amounts resulting from collections on accounts receivable of FFM
existing at the time of closing. In connection with the acquisition of FFM, FFM
Acquisition Corp. (now called Fast Forward Marketing, Inc.) assumed and promised
to pay approximately $850,000 of FFM's liabilities.

         In determining the purchase price for FFM, we took into account the
value of companies of similar industry and size to FFM, comparable transactions
and the market for such companies generally. We did not, however, receive a
fairness opinion from an independent advisor, and while we believe that the
purchase price for the acquisition of FFM was fair and in the best interests of
our stockholders, there may be a risk that we overpaid for the acquisition of
FFM, especially in light of the substantial amount of accounts payable of FFM
that we assumed in connection with the acquisition. The risks associated with
this substantial amount of accounts payable are described in more detail below
and in the "Risk Factors" section elsewhere in this document.

         Prior to the acquisition of FFM, Bristol Capital, LLC had a binding and
assignable letter of intent for the acquisition of FFM. Bristol Capital, LLC
assigned the letter of intent to us and we proceeded to negotiate and consummate
the acquisition of FFM through our subsidiary, FFM Acquisition Corp. As
consideration for providing the opportunity for the acquisition of FFM and
assigning the letter of intent to us, FFM Acquisition Corp. issued to Bristol
Capital, LLC shares of its capital stock such that following that issuance,
Kanakaris Wireless and Bristol Capital, LLC each owned 50% of the capital stock
of FFM Acquisition Corp.

         In addition, we agreed to enter into the exchange agreement described
below to exchange shares of our Series B Convertible Preferred Stock for all
shares of capital stock of FFM Acquisition Corp. held by Bristol Capital, LLC.
Subsequent to the acquisition of FFM, FFM Acquisition Corp. changed its name to
Fast Forward Marketing, Inc. under which it currently operates our video
distribution business.

         At the time of their issuance to Bristol Capital, LLC, the shares of
capital stock of FFM Acquisition Corp. had no ascertainable value as they
represented merely an ownership interest in a company with no assets or
operations that was formed solely for the purpose of acquiring the business of
FFM. The transactions whereby FFM Acquisition Corp. issued capital stock to
Bristol Capital, LLC and agreed to exchange such capital stock for our Series B
Convertible Preferred Stock were part of one and the same transaction.
Simultaneous with the issuance of the capital stock of FFM Acquisition Corp., we
agreed to issue to Bristol Capital, LLC in exchange for such capital stock, the
Series B Convertible Preferred Stock. However, the consummation of the exchange
agreement described in more detail below was delayed until after the
consummation of the acquisition of FFM because the issuance of the Series B
Convertible Preferred Stock was contingent upon the consummation of that
acquisition and for practical reasons, the acquisition of FFM and the issuance
of the Series B Convertible Preferred Stock could not be completed at the same
time.

         Because Bristol Capital, LLC would not be issued the Series B
Convertible Preferred Stock at the time of the closing of the acquisition of
FFM, the capital stock of FFM Acquisition Corp. was issued to Bristol Capital,
LLC solely to provide Bristol Capital, LLC with some measure of comfort arising
from its ownership in the subsidiary that was to be used to acquire FFM. In
short, the capital stock of FFM Acquisition Corp. provided some security to
Bristol Capital, LLC, ensuring that we would satisfy our obligation to issue the
Series B Convertible Preferred Stock following the acquisition of FFM.

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         As discussed in more detail below, at the time of its issuance, the
face value of the Series B Convertible Preferred Stock was $900,000. Because the
issuance of the capital stock of FFM Acquisition Corp. and the issuance of the
Series B Convertible Preferred Stock to Bristol Capital, LLC were part of the
same transaction, the total consideration paid to Bristol Capital, LLC for
providing the opportunity to acquire FFM is based on the $900,000 face value of
the Series B Convertible Preferred Stock.

         Bristol Capital, LLC is affiliated with Bristol Investment Fund, Ltd.
and the principals of those two entities represent Bank Insinger de Beaufort in
its investments and dealings with Kanakaris Wireless. Shares of our common stock
underlying certain convertible securities are offered for resale under a
registration statement by Bristol Capital, LLC, Bristol Investment Fund, Ltd and
Bank Insinger de Beaufort.

         Effective April 10, 2002, we entered into an Exchange Agreement with
Bristol Capital, LLC pursuant to which we issued 900 shares of our Series B
Convertible Preferred Stock and acquired from Bristol Capital its 50% interest
in FFM Acquisition Corp. Each share of our Series B Convertible Preferred Stock
has a stated value of $1,000 and is initially convertible into shares of our
common stock at the lesser of (i) $0.086, and (ii) 82% of the average of the
three lowest intraday trading prices of a share of our common stock during the
twenty trading days preceding the conversion date. The Series B Convertible
Preferred Stock accrues dividends at a rate of 8% per annum, which is payable on
a quarterly basis in arrears, at the option of the holder, in cash or shares of
our common stock based on the then applicable conversion price.

         We believe that the acquisition of FFM will enable us to increase our
revenues and provide funds to develop and grow our content delivery and
e-commerce activities. In addition, we believe that FFM is a viable strategic
fit for our existing business activities and have partially integrated FFM with
our existing business activities to the extent currently practicable. We
currently offer for purchase directly over the internet to visitors to our
various websites videos that FFM distributes.

         Fast Forward Marketing, Inc., the company from which we purchased our
video distribution business, achieved net sales of $5,106,013 for the year ended
September 30, 2001 and $9,212,732 for the year ended September 30, 2000. That
company also generated $374,435 and $1,876,759 in gross profit for the years
ended September 30, 2001 and 2000, respectively. However, as more particularly
disclosed in our financial statements and notes to our financial statements for
the fiscal year ended September 30, 2002 included elsewhere in this document,
the annualized net sales and gross profit of our FFM video distribution
subsidiary are significantly lower than the net sales and gross profit recorded
for the years ended September 30, 2001 and 2000 of the predecessor FFM business,
and we do not expect to achieve in the foreseeable future results similar in
magnitude to historic results. We are presently experiencing severe difficulties
in operating our FFM video distribution business largely resulting from our lack
of available financial resources and debt assumed in connection with the
acquisition of that video distribution business.

         Although we believe that FFM provides a viable strategic fit with our
other business activities and represents an important business opportunity, our
successful operation of our video distribution business, especially over the
next twelve months, will likely require substantial financial resources. We
acquired the business of FFM along with a significant amount of liabilities,
including approximately $850,000 in accounts payable, a substantial portion of
which is owed to suppliers of the videos that FFM distributes. As of September
30, 2002, FFM had approximately $1,442,000 in accounts payable. We have been
unable to timely pay FFM's suppliers and we believe that, as a result, the
business of FFM has been significantly harmed. We believe that we are not
achieving the level of revenues we would be able to achieve if we were able to
timely pay our suppliers. If we continue to fail to timely pay FFM's suppliers,

                                      -4-


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the business of FFM may be further disrupted and important supplier
relationships may be jeopardized and irreparably harmed. The failure to timely
pay FFM's suppliers could therefore have a material adverse impact on our video
distribution business and our business as a whole, particularly in light of the
fact that our video distribution business in currently our principal source of
revenues and in light of the possibility that the creditors of FFM may pursue an
action against Kanakaris Wireless directly.

         We have a significant accumulated deficit and negative working capital.
As a result of our financial condition, our independent auditors have issued an
opinion questioning our ability to continue as a going concern.

         Our common stock trades on the OTC Bulletin Board(R) under the ticker
symbol "KKRW."

COMPANY OVERVIEW

         We are engaged in three principal business activities:

              o    Internet content delivery;
              o    Internet commerce; and
              o    video distribution.

         Our Internet content activities involve the online delivery of movies
and books. Our movies are accessible to Internet users at access rates from 56
kilobits per second, or 56 kbps, to broadband at www.Kanakaris.com. We have
approximately 510 movies of television quality that are available on-demand with
full-screen scalability.

         Kanakaris.com is the principal website operated by Kanakaris Wireless
and serves as the portal for all of our websites and includes an interactive
television-style web channel that is available for viewing on a variety of
Internet-enabled devices, including Pocket PCs and laptop and desktop computers
and that, through an imbedded video player, shows regularly scheduled and
on-demand programming. We believe that we have been an innovator in electronic
book delivery through our next generation e-book website WordPop.com which is
accessible through Kanakaris.com. There are approximately 245 books available
on-demand at the WordPop section of Kanakaris.com.

         As part of our Internet commerce activities, we offer devices that will
easily make the content provided through Kanakaris.com viewable through the use
of a standard television set by connecting the set to an Internet-enabled
computer. We also offer various products of the pop culture genre as well as VHS
and DVD videos through an area of our websites dedicated to shopping. In
addition, we solicit sponsorships from businesses for advertising content to be
displayed with the programming provided through our AK.TV web channel at
Kanakaris.com and at the other sections of our websites. We have also developed
an interactive meeting place called Video Meeting Place(TM), through which we
offer various video messaging services.

         We have registered over 325,000 free and paid users to our websites and
have streamed approximately four million movies from our websites. In July 2002,
we ceased offering free movies. Instead, we offer free five minute previews of
any of our movies to our registered users. Subscribers to our $4.95 per month
membership program have unlimited access to watch any of our movies and view
AK.TV, our television-style web channel. In addition, we allow subscribers
unlimited access to Video Meeting Place(TM), our interactive online meeting
place.

         In addition to operating our Internet content and Internet commerce
businesses, through the acquisition of the assets of FFM, we are also engaged in
the business of independently distributing video products for major motion
picture studios such as Buena Vista Home Video (Walt Disney), Warner Home Video,
Universal Pictures, Paramount Pictures and 20th Century Fox as well as
independent producers to traditional video retailers, gift shops, museum stores
and other specialty retailers as well as educational distributors and direct
mail catalogs.

                                      -5-


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         We also offer business services such as digital encoding services using
our proprietary CinemaWEAR(TM) Encoding technology, web hosting and content
delivery designed to enable businesses to deliver video, audio and text to
Internet enabled devices, including Pocket PCs, laptop and desktop computers and
televisions. These services, collectively comprising our KANWIN(TM) initiative,
remain partially in the development phase and we have not generated any
significant revenues from providing these services.

         Although Kanakaris.com is currently operational and incorporates AK.TV,
our television-style web channel, and is the portal to all of our websites, we
have not generated any significant revenues from our subscription or
pay-per-view offerings through Kanakaris.com, through AK.TV or through any of
our other websites offering movie and book content to users. In addition, we
have not generated any significant revenues from our Internet commerce
activities, which include the sale of videos over the Internet as part of our
efforts to integrate our video distribution business with our Internet
operations.

         Our Internet operations, which include both our content delivery and
Internet commerce initiatives, have previously derived a significant portion of
our revenue through advertising services, which have declined significantly over
the past twelve months. We plan to derive future revenue from our Internet
operations through the sale of products on our websites, the sale of
subscriptions to view content available on our websites and pay-per-view fees.
We believe that the decline in the revenues generated through our advertising
services will continue. We anticipate that, over the next twelve months, our
principal source of revenue will come from our video distribution business. We
expect to continue to place significant emphasis upon the further development
and expansion of our Internet content delivery and Internet commerce activities
and also upon the expansion of our video distribution business.

         As of September 30, 2002, our current assets amounted to approximately
$313,000 and our current liabilities amounted to approximately $6,800,000. We
are experiencing significant financial difficulties as a result of this
imbalance between our current assets and current liabilities and have been, and
will likely continue to be, unable to repay when due many of our current
liabilities. Our financial difficulties in all likelihood will limit our ability
to invest sufficient funds in the growth and development of our online content
delivery initiative and in all likelihood will result in our inability to fully
fund our video distribution business. Since we are unable to invest sufficiently
in the growth and development of our content delivery initiative, we may lose
subscribers to our websites or lose pay-per-view customers and may also fail to

attract prospective subscribers and pay-per-view customers, which will have a
substantial negative impact on our business, prospects, financial condition and
results of operations.

         Our successful operation of our FFM video distribution business,
especially over the next twelve months, will require substantial financial
resources. We acquired the business of FFM along with a significant amount of
liabilities, including approximately $850,000 in accounts payable, a substantial
portion of which is owed to suppliers of the videos that FFM distributes. As of
September 30, 2002, FFM had approximately $1,442,000 in accounts payable. We
have been unable to timely pay FFM's suppliers and, as a result, the business of
FFM has been significantly harmed. We believe that we are not achieving the
level of revenues we would be able to achieve if we were able to timely pay our
suppliers. If we continue to fail to timely pay FFM's suppliers, the business of
FFM will be further disrupted and important supplier relationships will be
jeopardized and irreparably harmed, which will have a substantial negative
impact on our business, prospects, financial condition and results of
operations.

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         All of our obligations under our secured convertible debentures and
related agreements are secured by all of our assets. As of January 6, 2003, we
were indebted in the aggregate principal amount of $3,954,395 plus accrued
interest on our secured convertible debentures. Our obligations to the holders
of our secured convertible debentures include the obligations to make quarterly
interest payments and to repay the principal amounts of the debentures when due.
In addition, our obligations under our secured convertible debentures include
the obligation to register for resale shares of our common stock underlying
those debentures, the obligation to keep the registration statement covering
those shares effective and the obligation to maintain the status of Kanakaris
Wireless as a public company in compliance with all of the reporting
requirements under the Securities and Exchange Act of 1934. Defaults under our
obligations to the holders of our secured convertible debentures may enable the
holders of those debentures to foreclose on the collateral securing our
obligations to those holders which may cause us to cease operations and
liquidate all or part of our assets. Because the relative size of our assets is
so disproportionately small compared to the amount of debt represented by our
secured convertible debentures, we believe that a default, especially a default
resulting from our failure to pay accrued interest or principal when due, under
our obligations to the holders of our secured convertible debentures could
result in a foreclosure upon, and complete liquidation of, all of our assets,
resulting in a total cessation of our operations with no assets or proceeds from
liquidation left over for any holders of our common stock. In the past, we have
successfully been able to negotiate certain waivers of defaults under, and
extend the maturity dates of, our convertible debentures, but there can be no
assurance that we will be able to do so in the future.

         Historically, we have relied upon cash from financing activities and,
to a much lesser extent, revenues generated from operations, to fund all of the
cash requirements of our activities. We have never generated revenues
substantial enough to allow us to fully finance our business or our growth. The
imbalance between our current assets and current liabilities may make obtaining
additional funding impossible. Our substantial indebtedness represented by our
convertible debentures is secured by all of our assets, which also may cause us
to be unable to raise additional funding because any prospective lenders or
investors may be unwilling to lend or invest funds due to their inability to
obtain a satisfactory security interest in our assets. In the past, our existing
investors have provided us funding despite our ongoing financial difficulties,
but they may refuse to do so in the future. We believe that our existing
investors may be our only source of available financing. Our failure to secure
additional funding will have a material adverse effect on our business,
prospects, financial condition and results of operations.

         Our currently available and planned Internet content delivery and
Internet commerce activities are designed to provide the following key benefits
to individual consumers and businesses:

     INTERNET CONTENT DELIVERY

         ONLINE MOVIES

              o    Wired and wireless delivery of full-length movies
              o    Works with any device that has an Internet connection
              o    Compatible with any browser or on any platform
              o    Full-screen viewing of movies
              o    Monthly subscriptions for unlimited viewing of movies
              o    Pay-per-view option for single viewing of movies

         ONLINE BOOKS

              o    Free online preview chapters
              o    Direct delivery through a secured server
              o    Dynamic updates
              o    Wireless delivery to handheld devices, including Pocket PCs
                   and Palm(TM)computers
              o    Print-on-demand availability

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         ONLINE MESSAGING

              o    Interactive one-on-one personal video meetings
              o    Video messaging and quick chat features

     INTERNET COMMERCE

         PRODUCTS

              o    Quick purchases of products of the pop culture genre
              o    Availability for purchase of select VHS and DVD videos over
                   the Internet
              o    Set-top devices for viewing of Internet content on television
                   sets and other viewing devices

         ADVERTISING

              o    Advertisements that permit consumers to purchase and
                   businesses to sell products

         We currently offer or plan to offer the services described above
through Kanakaris.com, which includes our interactive television-style web
channel and is the portal to all of our movie and book websites.

         Our currently available and planned business services and video
distribution activities are designed to provide the following key benefits to
individual consumers and businesses:

     BUSINESS SERVICES

         KANWIN(TM)/CINEMAWEAR(TM)

              o    Video encoding for high-quality video transmission and
                   viewing
              o    Licensing of CinemaWEAR(TM) Encoding technology
              o    Web hosting services
              o    Wired and wireless delivery of video, audio and text content

     VIDEO DISTRIBUTION

              o    Availability for purchase of select videos over the Internet
              o    Single source for numerous motion pictures from major
                   producers and independent producers
              o    Experience in serving the video distribution market

         We currently offer or plan to offer the services described above
through our KANWIN(TM) initiative to provide business services and through Fast
Forward Marketing, Inc., our video distribution business.

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INTERNET INDUSTRY BACKGROUND

         The Internet began in the late 1960s as an experiment in the design of
robust computer networks. The Internet is a collection of computer networks - a
network of networks - that allows anyone to connect with their computer to the
Internet and immediately communicate with other computers and users across the
world. Its users for decades were primarily limited to defense contractors and
academic institutions. With the advent of high-speed modems for digital
communication over common telephone lines, individuals and organizations began
connecting to and taking advantage of the Internet's advanced global
communications ability.

         Although there were several factors responsible for the growth of the
Internet, the factors that are most often attributed to its success are the
advent of HTML, the World Wide Web and Internet browsers. With the expansion in
the number of Internet users and websites, we believe development of two
phenomena, growth in the amount of commerce that is being transacted over the
Internet and willingness of businesses to spend money to be a part of the
Internet, will continue for the foreseeable future.

         Because the Internet has experienced rapid growth, it has developed
into a significant tool for global communications, commerce and media, enabling
millions of people to share information and transact business electronically.
Internet-based businesses have emerged to offer a variety of products and
services over the Internet. Advances in online security and payment mechanisms
have also prompted more businesses and consumers to engage in electronic
commerce.

OUR STRATEGY

     INTERNET ACTIVITIES AND BUSINESS SERVICES

         It is our strategy to deliver content, including movies and books,
directly over the Internet to computer devices available in schools, offices,
homes and cars on a worldwide, around-the-clock basis. Our objective is to
maintain our position as a competitive provider of viewable and downloadable
content. We also desire to become a leading provider of proprietary encoding
technology and Internet business services. To achieve this objective, we have
developed a strategy with the following key elements:

         o    CULTIVATE KANAKARIS.COM SUBSCRIPTIONS. In July 2002 we redesigned
              and consolidated our websites as part of a single Internet
              offering at Kanakaris.com. The new home page introduces easy
              access to hundreds of click-and-view movies and our
              television-style web channel. We are now soliciting our free
              registered user base for upgrades to paid membership status. We
              intend to cultivate user subscriptions to increase our revenues by
              soliciting our over 317,000 registered free users and working with
              our Internet partners to provide links to our websites where
              visitors will be offered subscriptions to Kanakaris.com.

         o    CONTINUE DEVELOPMENT OF OUR MOVIE PARTNER PROGRAM. We intend to
              further develop our movie partner program to allow mainstream
              websites to host a virtual theater. Eligible websites may join our
              program free of charge and share in our revenues generated through
              their participation in our program. In addition, we are working
              with Commission Junction, a company that promotes partner
              programs, in order to gain more Internet partners.

         o    FURTHER DEVELOP DIRECT-OVER-THE-INTERNET DELIVERY OF BOOKS. We
              have implemented a program allowing users to read a chapter of a
              book online for free, after which users have an option to buy a
              print-on-demand version of the book. We have implemented
              direct-over-the-Internet delivery of books to Pocket PCs and
              Palm(TM) handhelds. We have introduced an interactive digital
              books posting program that allows website visitors to directly
              post books for online delivery at the WordPop section of
              Kanakaris.com and allows authors to access information on how many
              of their books have been ordered online.

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         o    CONTINUE DEVELOPMENT OF VIDEO MEETING PLACE(TM). We intend to
              continue development of the online video messaging section of our
              websites with the goal of making the user experience more robust
              and entertaining.

         o    DEVELOP AND CULTIVATE STRATEGIC ALLIANCES. We intend to cultivate
              existing strategic alliances and to develop new strategic
              alliances that will aid us in building brand awareness for our
              Internet content and commerce websites and aid us in enhancing the
              content, products and services that we provide.

         o    LEVERAGE OUR CUSTOMER BASE AND INTENSIFY OUR MARKETING ACTIVITIES.
              We have built a database of viewers of our online movies by
              requesting information from those viewers and plan to continue to
              supplement the database with new information and additional
              viewers. We are using the database to market our Internet services
              and plan to use the database to market our Kanakaris.com
              subscription and product offerings.

         o    CONTINUE DEVELOPMENT AND DEPLOYMENT OF KANWIN(TM) AND
              CINEMAWEAR(TM). We are pursuing the continued development and
              marketing of our KANWIN(TM) encoding, web hosting and content
              delivery business services. We are also pursuing the continued
              development and marketing of our proprietary CinemaWEAR(TM)
              Encoding technology as a stand-alone consumer product, bundled
              consumer product and as a business service.

     VIDEO DISTRIBUTION ACTIVITIES

         It is also our strategy to distribute video products of major motion
picture studios and independent producers to a wide variety of retail outlets
and through various distribution channels such as mail order catalogs and over
the Internet. Our objective in our video distribution business is to become the
leading distributor of videos to a broad customer base of retailers and through
mail order catalogs and to integrate at least part of our video distribution
business with our content delivery and Internet commerce activities in order to
enhance the efficiency of our distribution services and to generate additional
revenues. To achieve this objective, we have developed a strategy with the
following key elements:

         o    DEVELOP BROAD RETAIL CUSTOMER BASE. Our personnel have experience
              in the video distribution business and have the know-how to
              effectively solicit and engage potential customers of our
              distribution services. We intend to aggressively pursue additional
              customers of our distribution services.

         o    CULTIVATE MAIL ORDER CATALOG BUSINESS. We intend to cultivate our
              mail order catalog business by increasing the number of catalogs
              that carry video products that we distribute and by increasing the
              number of video products in the catalogs in which we currently
              offer products.

         o    INTEGRATE DISTRIBUTION SERVICES WITH OUR INTERNET ACTIVITIES. We
              intend to integrate our distribution services with our Internet
              activities in order to streamline our distribution operations and
              expand our potential customer base by offering videos for sale
              directly over the Internet.

                                      -10-


<PAGE>

OUR INTERNET AND VIDEO DISTRIBUTION PRODUCTS AND SERVICES

     ONLINE MOVIES

         Kanakaris.com serves as the portal to all of our websites and online
content. Through our websites, Internet users may view full-length motion
pictures with no download time and no plug-in required by utilizing Microsoft(R)
Windows Media(TM) technology. Approximately 510 movies are currently available
for online viewing. We offer pay-per-view movies and also charge a monthly
subscription fee for those customers who desire unlimited viewing access to our
movie website. We have implemented a merchant service system that enables us to
charge and collect subscription fees for our websites. In July 2002, we made
available VHS versions of every on-demand movie available through our websites
and also introduced DVD versions of select movies. We also offer advertising
space for sale on our websites.

         We have developed a movie partner program aimed at attracting websites
to use our innovative technology. Over 6,600 websites have applied to set up
clickable links to our movie content and to receive a commission for
subscription and pay-per-view fees generated by visitors to their websites.

         In July 2002, we fully integrated our various websites to allow
one-password membership access. Online visitors to our websites will be able to
see a free preview of the content then showing on AK.TV and free previews of all
available movies. For $4.95 per month, subscribers receive unlimited access to
Kanakaris.com, including our television-style web channel and all available
movies. Non-subscribers may view individual movies on a pay-per-view basis.

     ONLINE BOOKS

         Excerpts of the books and articles available at Kanakaris.com through
the WordPop section of the website, like our movies, are viewable in real-time,
which means that there is not a significant delay in the display of text or
images. We believe that our site is secure to the extent that it preserves the
book or article authors' rights to ownership. We also believe that, at the time
of launch in August 2000, WordPop.com was the only online Internet publisher
that provided real-time secure fulfillment from one source file.

         Books and articles are available through high-speed access for viewing
on desktops, laptops, personal data assistants, Pocket PCs, Palm(TM) handhelds
and other innovative end user hardware. Most importantly, there is no end user
software needed.

         The WordPop section of Kanakaris.com is operated in conjunction with
Ricoh Business Systems. Each book is available in whole or in part for
electronic viewing and for print-on-demand delivery, which is made possible
through our relationship with Ricoh Business Systems. Excerpts of the electronic
versions are free-of-charge, and the print-on-demand versions are sold at
various prices. The free excerpts of the electronic versions promote exposure
for authors, have hyperlinks to promote the sale of print copies, and may
contain advertising sponsorship. The WordPop section of Kanakaris.com has over
500 book titles available for preview and print-on-demand delivery. All users
may preview a short excerpt of the books available at the WordPop section of
Kanakaris.com and may utilize print-on-demand delivery offered in conjunction
with Ricoh Business Systems.

     VIDEO DISTRIBUTION

         In March 2002, we acquired the video distribution business of Fast
Forward Marketing, Inc. and continue to operate the business under that name.
Through FFM, we distribute video titles produced by major motion picture
studios, independent producers and others to specialty retail outlets, direct
mail catalogs, mass merchandisers and other distributors of video products. We

                                      -11-


<PAGE>

plan to diligently seek out new customers as the market for our video products
evolves. We employ a dedicated sales force that has access to a database
containing information on thousands of available titles which is used to provide
our customers with current pricing and product information. Once we receive
confirmed orders from our customers, we place orders with our video product
suppliers. The ordered products are either drop-shipped directly to our
customers or received in an independent warehouse, consolidated and then shipped
to our customers. We do not generally maintain an inventory of video products.

         We provide our video distribution services to major motion picture
studios, independent licensing and releasing companies and independent
producers. Because of our broad base of suppliers, we offer a diverse selection
of video products, in VHS cassette and DVD formats, to a national customer base
servicing a variety of clients in the retail business. Because we distribute
video products for many of the motion picture industry's top producers, we are
able to offer retailers and end-users the latest releases in a wide variety of
genres, which include the educational, science, nature, music, performing arts
and theatrical genres. With our extensive availability of titles and our
knowledgeable sales force, we are able to distribute videos in many markets
throughout the United States and Canada.

         We seek to provide numerous video titles, but focus also on the nature
and quality of the titles that we distribute. Many titles that we distribute
have won prestigious awards from entities such as Parents Choice, Kids First!,
the Television Academy of Arts and Sciences, and the Academy of Motion Picture
Arts and Sciences.

         We are able to provide our customers with up-to-date information on
numerous video product releases and promotions being offered to the video
product market. We generally pass on to our customers all advertising and
promotional allowances allocated by our suppliers. When ordering, our customers
complete and submit only one purchase order enabling access to thousands of
titles and numerous video product suppliers. By working with us as a single
source, all of our customers' video product needs and the related billing,
payment and customer service issues can be handled efficiently.

         We plan to increase our marketing efforts in order to expand our
customer base and boost sales of our video distribution business. We have
integrated at least part of our distribution business with our Internet
operations to take advantage of the efficiencies that can be achieved through
utilizing the Internet. We offer directly over the Internet the video products
that we distribute in order to take advantage of a new customer base and
leverage the customers that currently are the focus of our content delivery and
Internet commerce efforts.

     INTERNET SERVICES FOR BUSINESSES

         In April 2001, we began offering a series of Internet services for
businesses, none of which has generated any significant revenues. We
collectively call these services KANWIN(TM), which stands for the Kanakaris
Wireless Independent Network. We developed these services using our experience
in creating our own proprietary, media-rich websites. We designed these services
to enable businesses to enhance the quality of video on their corporate
websites, to expand the scope of distribution of corporate websites to all
Internet-enabled devices, and to offer Internet commerce-related services. The
three key elements of KANWIN(TM) are encoding, hosting and content delivery. Our
encoding, hosting and content delivery and other KANWIN(TM) services, which are
available individually or as customized packages, are described in further
detail below. Although we have not generated any significant revenues from these
business services, as funds permit, we plan to continue their development and to
market these services to businesses.

                                      -12-


<PAGE>

         CINEMAWEAR(TM) ENCODING AND EMBEDDED ELECTRONIC COMMERCE(TM)

         Our proprietary CinemaWEAR(TM) Encoding technology is used to prepare
video for delivery to Internet-enabled devices. We believe that our
CinemaWEAR(TM) encoding technology significantly improves the quality of
streaming video delivery over the Internet by capturing the look and feel of
real cinema delivery. CinemaWEAR(TM) encoding facilitates delivery of video to a
wide variety of digital devices at bit rates, such as 56 kbps and 100 kbps, that
result in frames per second that equate to DVD quality. CinemaWEAR(TM) encoding
also enables delivery of video over the Internet to Pocket PCs, personal digital
assistants, or PDAs, desktop computers, satellite systems and systems that can
transmit at SuperBroadband(TM) speed. SuperBroadband(TM) is a Kanakaris Wireless
term that refers to a 700 kbps bit rate, which equates to DVD quality.

         Our proprietary Embedded Electronic Commerce(TM) platform is designed
to work in tandem with our CinemaWEAR(TM) encoding technology. Our Embedded
Electronic Commerce(TM) platform enables businesses to sell products, track
sales and generate leads from within a streaming video and enables viewers to
submit secure orders for advertised products through clickable links appearing
within the streaming video. Embedded Electronic Commerce(TM) technology works
with wired and wireless video delivery to Internet-enabled devices.

         HOSTING

         Hosting is the storage of files digitally in a format that can be
distributed over the Internet. We provide fully-managed enterprise-class storage
solutions at a co-location facility managed by us or at a client's own data
center. KANWIN(TM) services include 24-hours-a-day, 7-days-a-week remote system
monitoring. KANWIN(TM) services also include storage management, administration
and security through a remote network operations center and data replication
within a local storage system or between remote storage systems.

         NEURALNET(TM) CONTENT DELIVERY

         Content delivery is the delivery over the Internet of encoded and
stored digital material from its originating destination to the end user
destination. Bandwidth is a range of consecutive frequencies. Our NeuralNet(TM)
content delivery provides optimal delivery across the spectrum of bandwidths
through a fiber optic network. Our delivery services are flexible, scalable and
cost-effective because they are designed to provide the amount of bandwidth
needed at any given time. This scalability avoids unnecessary costs to
businesses who, without scalable services, might otherwise purchase unused
bandwidth in order to avoid inconvenience to users and loss of potential
customers that can result from traffic spikes on inflexible systems. We deliver
content, including text, pictures, order forms, audio and video, and live
webcasts, through our NeuralNet(TM) content delivery services. These services
can be bundled with CinemaWEAR(TM) encoding services to provide simultaneous
encoding and streaming, or DVOD (downloadable video on demand), and to allow
storage for online archiving.

         LIVE VIDEO STREAMING PREPARATION

         CinemaWEAR(TM) Wireless Delivery is our proprietary encoding technology
that is used to prepare content for what we believe to be the first ever
full-length streaming video delivery to handheld computing devices such as the
Pocket PC. We believe that CinemaWEAR(TM) Wireless Delivery is ideal for wide
area network, or WAN, and local area network, or LAN, users who are working at
transmission rates from 10 kbps for super low streaming video with marginal
signal strength, to 19.2 kbps for streaming video for standard WANs, to 128 kbps
for streaming video for LANs. We anticipate that CinemaWEAR(TM) Wireless
Delivery will produce revenue for our Internet business by enabling us to assist
businesses in enhancing their corporate websites.

                                      -13-


<PAGE>

         POINT-TO-POINT COMMUNICATIONS

         Peer-to-peer or broad array real-time video conferencing uses
CinemaWEAR(TM) encoding technology to deliver face-to-face communications in
real time at 30 frames per second. Employers can convey corporate messages or
training requirements to remote employee locations through our KANWIN(TM)
services. Print on demand, using Ricoh Business Systems technology, is being
made available for text source materials such as training manuals, owners'
manuals and corporate information.

         MASS MEDIA EXPOSURE SPONSORSHIPS

         We have developed a television-style web channel called AK.TV. This
channel serves as the portal to all of the content offered on our websites. We
intend to allow eligible businesses to place advertisements on AK.TV and on our
other websites which could consist of a combination of recurring video ads,
special corporate promotions, targeted e-mails to AK.TV subscribers and/or
customized promotions.

STRATEGIC RELATIONSHIPS

         In order to expand our Internet and e-commerce businesses, we have
developed strategic relationships with various Internet, technology and software
companies and others. The following is a brief description of our principal
strategic relationships.

     LAIN INTERNATIONAL

         On November 9, 1999, we signed a memorandum of understanding with Lain
International, or Lain. Lain has agreed to make available to us all
Spanish-language, Spanish-dubbed and Spanish-subtitled films to which it has
Internet distribution rights. We have created a website called
CineManiaNetwork.com, which is devoted exclusively to these titles. We have
agreed to collect web visit statistics and perform accounting functions for the
site and will pay Lain royalties based upon advertising, subscription and
pay-per-view fees less expenses.

SALES AND MARKETING

         Sales and marketing activities with respect to our Internet content and
commerce businesses currently include headline links provided by Microsoft
Corporation from its website to our CinemaPop.com website and clickable links to
others' websites. We also promote our websites through an affiliate program with
Commission Junction, which operates an advertising network of thousands of
websites. We are also soliciting monthly subscriptions, pay-per-view sales and
advertising sales for our CinemaPop.com website.

         In January 2002, we conducted an extensive review of our registered
user database for AK.TV and CinemaPop.com. After purging duplicate and invalid
e-mail addresses, we had over 240,000 registered users, and the ability to send
e-mail messages to these users. We plan to increase our marketing efforts
associated with our video distribution business in order to increase our
revenues and we now offer some of our video products to our currently over
325,000 registered users.

                                      -14-


<PAGE>

ADVERTISING AND PROMOTION

         We have placed advertisements for our CinemaPop.com website in
influential trade publications catering to the entertainment industry, such as
the national and international editions of The Hollywood Reporter. Since 1997,
we have created Internet web events in order to drive traffic to our websites.
We intend to continue to create high profile Internet events as a means to
further promote our business.

         Alex Kanakaris, our Chairman of the Board, President and Chief
Executive Officer, is the author of the book "Signs of Intelligent Life on the
Internet" that highlights the impact of the Internet on our society. From
December 2000 through September 2002, approximately 5,000 copies of the book
were downloaded from WordPop.com. Mr. Kanakaris is currently working on his
latest book, with an anticipated release date in the first six months of 2003.
His latest book focuses on business in what he describes as the "post-Internet
world" and follows up on his earlier book, "Signs of Intelligent Life on the
Internet." We believe that ongoing exposure of "Signs of Intelligent Life on the
Internet" and future exposure of Mr. Kanakaris' latest book will bring further
attention to our websites and Kanakaris Wireless.

COMPETITION

         The Internet content, Internet commerce and video distribution
businesses are extremely competitive and can be significantly affected by many
factors, including changes in local, regional or national economic conditions,
changes in consumer preferences, brand name recognition and marketing and the
development of new and competing technologies. We expect that existing
businesses that compete with us and which have greater resources than us will be
able to undertake more extensive marketing campaigns and adopt more aggressive
advertising sales policies than us, thereby generating more traffic to their
websites.

         We believe that we are the only company that currently offers both
Internet business services such as encoding, hosting and content delivery and
direct-over-the-Internet delivery of movies and books using proprietary
technology. Although other companies offer some services that are similar to
those we offer, we believe that our combination of services is unique and that
we have a competitive edge in the online content delivery industry because,
among other things:

         o    We have introduced subscription, pay-per-view, advertising and web
              partner programs to our Kanakaris.com website. We have introduced
              advertising and web partner programs through our AK.TV web channel
              and various products, including print-on-demand books, products of
              the pop culture genre and videos through our websites in order to
              provide a variety of revenue streams.

         o    We believe that Kanakaris.com currently offers the largest number
              of full-length, mainstream Hollywood movies with Internet access
              at multiple access speeds.

         o    Most of our full-length movies start to stream and can begin to be
              viewed in approximately one minute rather than having a
              downloading process of a few hours before the movie can be viewed,
              as required on many other websites.

         o    We currently have approximately 510 full-length films online,
              which are viewable in streams from 56 kbps to broadband. Because
              of the significant time involved in translating film into
              streaming media technology, we believe that our film library gives
              us a significant lead over others in the online movie industry.

                                      -15-


<PAGE>

         o    Our content can be viewed on multiple platforms, including through
              CinemaWEAR(TM) Wireless Delivery to Pocket PCs and Palm(TM)
              handheld devices.

         o    Our Embedded Electronic Commerce(TM) technology allows us to
              enable viewers to place secure online orders for products offered
              by businesses through clickable links within streaming video.

         Although there are numerous book sites on the Internet, we believe that
the WordPop section of our Kanakaris.com website is one of the few websites that
provides real-time secure fulfillment from one source file. In addition, we
believe that our WordPop.com website was, at the time of introduction, the only
website that offered simultaneous paid print-on-demand delivery and free
electronic delivery of excerpts of over 300 book titles.

         We believe that our video distribution business is operated by
experienced personnel who will enable us to compete effectively with other
distributors. We also believe that we offer a unique combination of expertise
and distribution infrastructure that provides substantial benefit to major
motion picture studios and independent producers and that will deter them from
terminating our relationship with them or utilizing other distributors. However,
larger distribution companies and even major motion picture studios and
independent producers present a substantial threat to the success of our video
distribution business. We believe that we have substantially less resources than
other distribution companies, and our suppliers of video products may enter the
distribution business and prevent us from distributing certain video products,
especially those products that have higher margins and that are most profitable.

PATENTS AND PROPRIETARY RIGHTS

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

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

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

                                      -16-


<PAGE>

GOVERNMENT REGULATION

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

         We are dependent on our Internet operations and our ability to utilize
the efficiencies of the Internet plays a major role in our business strategy.
Our subscription- and pay-per-view-based websites are dependent on utilizing the
Internet for delivery of content to our subscribers and our pay-per-view
customers. In addition our ability to sell products on our websites is dependent
on a regulatory environment that is conducive to Internet commerce. Moreover, an
important aspect of our business strategy relating to the integration of our FFM
video distribution business involves the sale over the Internet of videos that
we distribute through traditional distribution channels. Additional regulation
of the Internet, the enactment of new laws or the interpretation of existing
laws relating to the Internet could have a significant impact on our ability to
conduct our business activities and to pursue our business strategy. As a
company with a substantial amount of its business activities and business
strategy dependent on the Internet, regulation of the Internet, the enactment of
new laws or the interpretation of existing laws relating to the Internet could
therefore have a material adverse effect on our business, prospects, financial
condition, results of operations and cash flows.

EMPLOYEES

         As of January 6, 2003, we employed or contracted a total of five
employees, all of which employees were employed on a full-time basis. We also
employ several part-time employees and have outside accounting and legal counsel
and consultants. Our future success will depend, in part, on our ability to
continue to attract, retain and motivate highly qualified technical, marketing
and management personnel. Our employees are not represented by any collective
bargaining unit. We have never experienced a work stoppage. We believe our
relationship with our employees is good.

ITEM 2. DESCRIPTION OF PROPERTY.

         We currently conduct our operations out of the homes of two of our
employees in Van Nuys, California and in Newport Beach, California at no expense
to us. The Van Nuys location houses our video distribution headquarters and the
Newport Beach location houses our corporate and other business headquarters. Our
Fast Forward Marketing mailing address is 13659 Victory Blvd., Suite 441, Van
Nuys, California 91401. Our corporate and other business mailing address is 1280
Bison, Suite B9-597, Newport Beach, California 92660.

                                      -17-


<PAGE>

ITEM 3. LEGAL PROCEEDINGS.

         Loudeye Technologies, Inc., or Loudeye, filed a complaint for money due
and owing against us in the Superior Court for the State of Washington (King
County) (Case No. 01-2-07608-6SEA) on March 8, 2001. Loudeye claims we failed to
pay $44,107 owing for encoding services furnished by Loudeye under the parties'
purported contract. The complaint also seeks attorneys' fees, court costs and
late charges. We filed an answer to the Loudeye complaint on October 11, 2001
that includes a general denial of all allegations made by Loudeye. Since the
time that our answer was filed on October 11, 2001, Loudeye's claim against us
has not proceeded and Loudeye has made no additional filings with respect to its
claim. Because of the immaterial amount of the claim, we have not recorded any
loss contingencies as a result of the Loudeye lawsuit.

         In a letter dated November 26, 2002 to Kanakaris Wireless and to Fast
Forward Marketing, Inc., among others, counsel to Warner Home Video and
Warner/Elektra/Atlantic Corporation, or Warner, demanded payment within 10 days
of an aggregate of $566,764.67 allegedly representing the total outstanding
balances owed to Warner. In a letter dated December 4, 2002 to counsel to
Warner, counsel to Kanakaris Wireless and Fast Forward Marketing, Inc. responded
requesting back-up data relating to Warner's $566,764.67 in accounts receivable
allegedly due from the Company and Fast Forward Marketing, Inc. In addition, in
the letter dated December 4, 2002, counsel to Kanakaris Wireless and Fast
Forward Marketing, Inc. asserted that Kanakaris Wireless, as a separate and
distinct entity, is not liable to Warner for any debts of its subsidiary, Fast
Forward Marketing, Inc. In a letter dated December 6, 2002 to counsel to
Kanakaris Wireless and Fast Forward Marketing, Inc., counsel to Warner requested
that, while they prepare the back-up data supporting the alleged accounts
receivable amounts owed, counsel to Kanakaris Wireless and Fast Forward
Marketing, Inc. prepare and send various materials relating to the acquisition
of Fast Forward Marketing, Inc. and accounts payable reports, payment history
and any other documents reflecting the balance currently owed by Fast Forward
Marketing, Inc. to Warner.

         Christel H. Uittenbogaart, an individual, commenced an action against
Kanakaris Wireless, its subsidiary, Kanakaris InternetWorks, Inc., Alex
Kanakaris and David Shomaker, among others, in the Los Angeles Superior Court
(Case No. SC075090) on December 17, 2002. The complaint alleged that Kanakaris
Wireless and Kanakaris InternetWorks owed Ms. Uittenbogaart $113,183.43 as of
March 31, 2002 under the royalty provisions of a Stock Purchase Agreement
entered into between Kanakaris InternetWorks, Inc. and Ms. Uittenbogaart and
alleged other damages in unspecified amounts. Ms. Uittenbogaart's complaint
included allegations of breach of contract, breach of the implied covenant of
good faith, fraud, and negligent misrepresentation. In addition, Ms.
Uittenbogaart alleged the existence of a constructive trust based on unjust
enrichment and sought an equitable lien against property of Kanakaris Wireless
subsidiary Desience Corporation held by the defendants. Lastly, Ms.
Uittenbogaart demanded an accounting of the gross sales, profits and funds
generated as a result of the purchase of Desience Corporation from Ms.
Uittenbogaart in 1997. We have engaged counsel to defend us against all of Ms.
Uittenbogaart's claims but we have not yet filed a response to the complaint
filed by Ms. Uittenbogaart.

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

         During the quarter ended September 30, 2002, no matters were submitted
to a vote of the holders of our securities.

                                      -18-


<PAGE>

                                     PART II

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

         The following table shows the high and low closing bid prices of our
common stock for the periods presented, as obtained from Pink Sheets LLC, a
research service that compiles quote information reported on the National
Association of Securities Dealers composite feed or other qualified interdealer
quotation medium. The quotations listed below reflect interdealer prices,
without retail mark-up, mark-down or commissions, and may not represent actual
transactions. Our common stock trades on the OTC Bulletin Board(R) under the
symbol "KKRW."
                                                                 PRICE RANGE
                                                                 -----------
                                                               HIGH       LOW
                                                               ----       ---
YEAR ENDED SEPTEMBER 30, 2001:
         First Quarter (October 1 - December 31).........   $ 14.00    $   3.90
         Second Quarter (January 1 - March 30)...........      8.60        2.80
         Third Quarter (April 1 - June 30)...............      5.20        2.00
         Fourth Quarter (July 1 - September 30)..........      2.16        0.46

YEAR ENDED SEPTEMBER 30, 2002:
         First Quarter...................................  $   0.80    $   0.11
         Second Quarter..................................      0.145       0.075
         Third Quarter...................................      0.10        0.02
         Fourth Quarter..................................      0.032       0.012

         As of January 6, 2003, we had 32,401,971 shares of common stock
outstanding and held of record by approximately 360 shareholders, and the high
and low sale prices of a share of our common stock on the OTC Bulletin Board(R)
on that date were $.01 and $.01, respectively. Within the holders of record of
our common stock are depositories such as Cede & Co. that hold shares of stock
for brokerage firms which, in turn, hold shares of stock for beneficial owners.

         We have never paid cash dividends on our common stock and do not
currently intend to pay cash dividends on our common stock in the foreseeable
future. We are restricted from paying dividends on our common stock under state
law, and the terms of our secured convertible debentures. We currently
anticipate that we will retain any earnings for use in the continued development
of our business.

         Our authorized capital stock consists of 250,000,000 shares of common
stock, $.001 par value per share, and 5,000,000 shares of preferred stock, $.01
par value per share. Of the 5,000,000 shares of preferred stock, 1,000,000
shares have been designated as Class A Convertible Preferred Stock and 900
shares have been designated as Series B Convertible Preferred Stock. The
remaining 3,999,100 shares of preferred stock are undesignated. As of January 6,
2003, there were 32,401,971 shares of common stock outstanding held by
approximately 360 holders of record, 1,000,000 shares of Class A Convertible
Preferred Stock outstanding held by Alex Kanakaris, a director and the Chairman
of the Board, President and Chief Executive Officer of Kanakaris Wireless and
900 shares of Series B Convertible Preferred Stock held by Bristol Capital, LLC.
Below is a summary description of our capital stock.

                                      -19-


<PAGE>

     COMMON STOCK

         The holders of outstanding shares of our common stock are entitled to
receive dividends out of assets legally available at times and in amounts as the
board of directors may from time to time determine, subordinate to any
preferences that may be granted to the holders of preferred stock. Holders of
common stock are entitled to one vote per share on all matters on which the
holders of common stock are entitled to vote.

         The common stock is not entitled to preemptive rights and may not be
redeemed or converted. Upon liquidation, dissolution or winding-up of Kanakaris
Wireless, the assets legally available for distribution to stockholders are
divided among the holders of the common stock in proportion to the number of
shares of common stock held by each of them, after payment of all of our debts
and liabilities and the rights of any outstanding class or series of preferred
stock to have priority to distributed assets.

         All outstanding shares of common stock are validly issued, fully paid
and nonassessable. The rights, preferences and privileges of holders of common
stock are subordinate to any series of preferred stock that we may issue in the
future.

     PREFERRED STOCK

         Preferred stock may be issued from time to time in one or more series,
and our board of directors, without action by the holders of common stock, may
fix or alter the voting rights, redemption provisions, dividend rights, dividend
rates, claims to our assets superior to those of holders of our common stock,
conversion rights and any other rights, preferences, privileges and restrictions
of any wholly unissued series of preferred stock. The board of directors,
without stockholder approval, can issue shares of preferred stock with rights
that could adversely affect the rights of the holders of common stock. No shares
of preferred stock presently are outstanding other than the shares of our Class
A Convertible Preferred Stock, and we have no present plans to issue any
additional preferred shares. The issuance of shares of preferred stock could
adversely affect the voting power of the holders of common stock and could have
the effect of making it more difficult for a third party to acquire, or could
discourage or delay a third party from acquiring, a majority of our outstanding
stock.

         CLASS A CONVERTIBLE PREFERRED STOCK

         Shares of our Class A Convertible Preferred Stock rank senior to our
common stock as to dividends and distributions. The holders of outstanding
shares of Class A Preferred are entitled to receive dividends out of assets
legally available at times and in amounts as the board of directors may from
time to time determine, before any dividend is paid on common stock, but only if
a majority of the holders of outstanding shares of Series B Preferred consent.

         Holders of Class A Preferred are entitled to 100 non-cumulative votes
per share on all matters presented to our stockholders for action. This right
could adversely affect the voting power of the holders of common stock and could
have the effect of making it more difficult for a third party to acquire, or
could discourage or delay a third party from acquiring, a majority of our
outstanding stock. In addition, the affirmative vote of the holders of a
majority of the Class A Preferred then outstanding, voting as a separate class,
is required for Kanakaris Wireless to do any of the following:

         o    amend, alter or repeal any of the preferences or rights of the
              Class A Preferred;

         o    authorize any reclassification of the Class A Preferred;

         o    increase the authorized number of shares of the Class A Preferred;
              or

         o    create any class or series of shares ranking prior to the Class A
              Preferred as to dividends or upon liquidation.

                                      -20-


<PAGE>

         Shares of Class A Preferred are not entitled to preemptive rights.

         Shares of Class A Preferred have a liquidation preference of $.10 per
share plus accumulated and unpaid dividends. After payment of the full amount of
the liquidating distribution to which they are entitled, holders of Class A
Preferred will not be entitled to any further participation in any distribution
of assets by Kanakaris Wireless.

         The Class A Preferred may be redeemed by Kanakaris Wireless at any time
upon 30 days' prior written notice at a redemption price of $.50 per share.
Holders of Class A Preferred have the right to convert their shares of Class A
Preferred into our common stock until the third business day prior to the end of
the 30-day notice period. The redemption price for Class A Preferred is payable
together with accumulated and unpaid dividends to the date fixed for redemption.
If full cumulative dividends on the Class A Preferred through the most recent
dividend payment date have not been paid, the Class A Preferred may not be
redeemed in part unless approved by the holders of a majority of the outstanding
shares of Class A Preferred, and we may not purchase or acquire any share of
Class A Preferred other than under a purchase or exchange offer made on the same
terms to all holders of Class A Preferred. If less than all outstanding shares
of Class A Preferred are to be redeemed, we will select those to be redeemed by
lot or a substantially equivalent method.

         The shares of Class A Preferred are not subject to any sinking fund or
other similar provision. The redemption by us of all or part of the Class A
Preferred is subject to the availability of cash. Moreover, under Nevada law,
shares of capital stock shall not be redeemed when the capital of a company is
impaired or when the redemption would cause any impairment of capital.

         Holders of Class A Preferred have the right to convert their shares of
Class A Preferred into shares of common stock at any time before the third
business day prior to the end of any 30-day redemption notice period, at a
conversion rate equal to one-twentieth of one share of common stock per share of
Class A Preferred. The conversion rate is subject to anti-dilution adjustments.
If we disappear in a merger or consolidation or we sell substantially all of our
assets, then each share of Class A Preferred will entitle the holder to convert
such share into the kind and amount of consideration that the holder would have
been entitled to receive immediately after the merger, consolidation or sale.

         SERIES B CONVERTIBLE PREFERRED STOCK

         Shares of our Series B Convertible Preferred Stock, or Series B
Preferred, rank senior to our common stock and our Series A Preferred, as to
distribution of assets upon liquidation, dissolution or winding up of our
company, whether voluntary or involuntary. The stated value of the Series B
Preferred is $1,000 per share. Shares of Series B Preferred bear dividends at an
annual rate of 8%, payable on a quarterly basis in cash or, at the option of the
holder of the Series B Preferred, in shares of our common stock at the then
applicable conversion price. So long as any shares of Series B Preferred are
outstanding, no dividends or distribution may be made to the holders of any
other equity securities, nor may any other equity securities be redeemed without
the prior written consent of holders of a majority of the shares of Series B
Preferred, voting together as a single class.

         Holders of Series B Preferred are entitled to no voting rights
whatsoever, except as specifically provided by Nevada law or with respect to the
following matters for which approval of the affirmative vote of the holders of a
majority of the shares of Series B Preferred then outstanding, voting as a
separate class, is required for Kanakaris Wireless to do any of the following:

         o    amend, alter or repeal any of the preferences or rights of the
              Series B Preferred or any capital stock of Kanakaris Wireless so
              as to affect adversely the Series B Preferred;

                                      -21-


<PAGE>

         o    create any class or series of shares ranking prior to or on parity
              with the Series B Preferred as to distribution of assets upon
              liquidation, dissolution or winding up;

         o    increase the authorized number of shares of the Series B
              Preferred;

         o    issue any class or series of shares ranking prior to or on parity
              with the Series B Preferred; o increase the par value of the
              common stock; or

         o    do any act or thing not authorized or contemplated by the
              certificate of designation of preferences and rights of the Series
              B Preferred which would result in taxation of the holders of
              shares of the Series B Preferred under Section 305 of the Internal
              Revenue Code of 1986, or any comparable provision of the Internal
              Revenue Code.

         Shares of Series B Preferred have a liquidation preference of $1,000
per share plus accumulated and unpaid dividends and any penalties that may be
payable as a result of our failure to satisfy our obligations in connection with
one or more conversions of shares of Series B Preferred or any other amount that
may be owed under our agreements with the holders of the shares of Series B
Preferred. After payment of the full amount of the liquidating distribution to
which they are entitled, holders of Series B Preferred will not be entitled to
any further participation in any distribution of assets by Kanakaris Wireless.

         We are required to redeem the shares of Series B Preferred upon the
occurrence of the following events after the election of holders of a majority
of the outstanding shares of Series B Preferred:

         o    we fail to satisfy our obligations upon a conversion of shares of
              Series B Preferred or our obligations under our agreements with
              the holders of the shares of Series B Preferred;

         o    we fail to register for resale with the Securities and Exchange
              Commission shares of our common stock underlying the shares of
              Series B Preferred within certain specified time periods or
              maintain the effectiveness of that registration;

         o    we or any of our subsidiaries makes an assignment for the benefit
              of creditors or apply for or consent to the appointment of a
              receiver or trustee or a receiver or trustee is otherwise
              appointed;

         o    bankruptcy, insolvency, reorganization or liquidation proceedings
              or other proceedings for relief under any bankruptcy law or any
              law for the relief of debtors is instituted by or against us or
              any of our subsidiaries;

         o    we fail to maintain the listing of our common stock on the Nasdaq
              National Market, the Nasdaq SmallCap Market, the New York Stock
              Exchange or the American Stock Exchange, or the OTC Bulletin
              Board(R).

         Upon the occurrence of one of the redemption events set forth above and
upon the consent of the holders of a majority of the shares of Series B
Preferred, we will be required to redeem the shares of Series B Preferred for an
amount per share equal to the greater of (i) $1,000 plus any accrued and unpaid
dividends and any penalties that may be payable as a result of our failure to
satisfy our obligations in connection with one or more conversions of shares of
Series B Preferred or any other amount that may be owed under our agreements
with the holders of the shares of Series B Preferred, multiplied by 120%, and

                                      -22-


<PAGE>

(ii) the highest number of shares of common stock issuable upon conversion of
the shares of Series B Preferred to be redeemed calculated immediately prior to
the redemption payment, multiplied by the highest closing price of a share of
our common stock during the period beginning on the date of the first event that
required redemption and ending one day prior to the redemption payment.

         If the shares of Series B Preferred cease to be convertible as a result
of limitations imposed by the securities market on which our common stock is
listed or traded, then we will be obligated to immediately redeem the shares of
Series B Preferred at the redemption price set forth above.

         We are permitted to redeem the shares of Series B Preferred if (i) we
are not then required to redeem shares of Series B Preferred, (ii) the shares of
common stock underlying the shares of Series B Preferred have been registered
and the registration statement covering those shares has been effective for at
least twenty days prior to our redemption, and (iii) we have sufficient number
of authorized shares of common stock reserved for issuance upon full conversion
of the shares of Series B Preferred. The redemption payment per share for shares
of Series B Preferred that we are permitted to redeem is equal to 120%
multiplied by $1,000 plus any accrued and unpaid dividends and any penalties
that may be payable as a result of our failure to satisfy our obligations in
connection with one or more conversions of shares of Series B Preferred or any
other amount that may be owed under our agreements with the holders of the
shares of Series B Preferred. If we deliver a redemption notice and fail to make
the redemption payment within twelve business days following that notice, we
will forever forfeit our right to redeem shares of Series B Preferred.

         The shares of Series B Preferred are not subject to any sinking fund or
other similar provision. The optional redemption by us of all or part of the
Series B Preferred is subject to the availability of cash. Moreover, under
Nevada law, shares of capital stock shall not be redeemed when the capital of a
company is impaired or when the redemption would cause any impairment of
capital.

         Holders of Series B Preferred have the right to convert their shares of
Series B Preferred into our common stock based on the stated value per share of
$1,000 and an initial conversion price equal to the lesser of (i) $0.086, and
(ii) 82% of the average of the three lowest intraday trading prices of a shares
of our common stock for the twenty day period immediately preceding conversion.
The conversion price during certain specified major announcements is the lesser
of (i) the conversion price as calculated above, and (ii) the conversion price
as calculated on the announcement date, which shall continue until the
consummation, termination or abandonment of the transaction that was the subject
of the announcement. Upon the issuance from time to time of securities with
conversion prices less than the then applicable Series B Preferred conversion
price, the conversion price of the shares of Series B Preferred is automatically
adjusted to be equivalent to the conversion prices of those securities.

         If we make any distribution of assets, including rights to acquire our
assets, to holders of our common stock as a dividend, stock repurchase, by way
of return of capital or otherwise, then holders of shares of Series B Preferred
are entitled, upon conversion of their shares of Series B Preferred after the
date of that distribution, to receive the amount of such assets which would have
been payable to the holder with respect to shares of common stock issuable upon
such conversion had that holder been the holder of the shares of common stock on
the record date for determination of shareholders entitled to that distribution.

                                      -23-


<PAGE>

         If we make any issuance of convertible securities or rights to purchase
stock, warrants, securities or other property pro rata to holders of our common
stock, then the holders of shares of Series B Preferred will be entitled to
acquire the same securities or rights to purchase as if the holder had the
number of shares of common stock into which his shares of Series B Preferred
were the convertible on the date used to determine the holders of common stock
entitled to receive those securities or rights to purchase.

         DESCRIPTION OF OTHER SECURITIES

         In addition to our outstanding capital stock, we have numerous
additional securities outstanding which are convertible or exercisable into
shares of our common stock. Our outstanding convertible and exercisable
securities and the transactions resulting in their issuance are described in
detail below.

         On December 10, 1999, we entered into a Revolving Line of Credit
Agreement with Alliance Equities, Inc., or Alliance Equities. Under the terms of
the agreement, Alliance Equities made available a $7 million revolving line of
credit with interest on the unpaid principal at 10% per annum. Under the terms
of the agreement, we may draw up to $500,000 per month on the total line of
credit upon our written request. Additionally, we have agreed that any portion
of the indebtedness may be paid back either with cash or by the issuance of our
common stock. On September 3, 2002, we jointly agreed with Alliance Equities to
exercise a 30-day cancellation clause under the Revolving Line of Credit
Agreement and as of September 3, 2002, we owed Alliance Equities approximately
$15,000 plus applicable interest under this line of credit arrangement.

         In April 2000, we issued an aggregate of $3,000,000 of 10% convertible
debentures and accompanying warrants to purchase up to 45,000 shares of common
stock in a private offering to four accredited investors. Bank Insinger de
Beaufort purchased $1,500,000 of these debentures and received a proportionate
number of the accompanying warrants. As of September 30, 2002, an aggregate of
$1,436,125 of principal plus related interest was outstanding under these
debentures, including $65,525 of debentures held by Bank Insinger de Beaufort.

         In August 2000, we issued an aggregate of $1,500,000 of 10% convertible
debentures and accompanying warrants to purchase up to 22,500 shares of common
stock in a private offering to three accredited investors. As of September 30,
2002, an aggregate of $1,257,500 of principal plus related interest was
outstanding under these debentures.

         In January 2001, we issued $650,000 of 12% convertible debentures due
January 5, 2002 to four accredited investors, including $400,000 of debentures
to Bristol Investment Fund, Ltd., in the first stage of a two-stage offering.
The debentures were accompanied by warrants to purchase up to an aggregate of
195,001 shares of common stock. The net proceeds of that offering, after payment
of related expenses, were approximately $631,500. In March 2001, we issued
$650,000 of 12% convertible debentures due March 9, 2002 in the second stage of
the offering, including $400,000 of debentures to Bristol Investment Fund, Ltd.
The net proceeds of that offering, after payment of some related expenses, were
approximately $647,500. As of September 30, 2002, an aggregate of $624,000 of
principal plus related interest was outstanding under the January and March 2001
debentures, including $434,000 of debentures held by Bristol Investment Fund,
Ltd.

         As of April 30, 2001, $1,848,500 of the original $4,500,000 principal
balance of 10% Convertible Debentures due May 1, 2001 remained outstanding. As
of April 30, 2001, we entered into an agreement with the holders of these
debentures, including Bank Insinger de Beaufort, to extend the due date of these
debentures to May 1, 2002. In consideration for the extension, we granted to the
holders of these debentures warrants to purchase up to an aggregate of 67,500
shares of common stock, including warrants to Bank Insinger de Beaufort to
purchase up to 22,500 shares of common stock, at an exercise price equal to the
lesser of the average of the lowest three intraday trading prices during the 20
trading days immediately preceding the grant of the warrants, discounted by
37.5%, and the average of the lowest three intraday trading prices of a share of
common stock during the 20 trading days immediately preceding exercise of the
warrants.

                                      -24-


<PAGE>

         On June 29, 2001, we issued an aggregate of $500,000 of 12% convertible
debentures in a private offering to three accredited investors. The debentures
were accompanied by warrants to purchase up to an aggregate of 75,000 shares of
common stock. The debentures initially were convertible into shares of common
stock at the lesser of $2.00 per share and 50% of the average of the lowest
three intraday trading prices of a share of common stock during the 20 trading
days immediately preceding conversion. The net proceeds of that offering, after
payment of related expenses, were approximately $420,000. In May 2002, we
restated our June 2001 debenture issued to one accredited investor to reflect an
additional $125,000 investment, resulting in a June 2001 debenture held by that
investor in the principal amount of $225,000 and an aggregate of $625,000 in
June 2001 debentures outstanding plus related interest as of September 30, 2002.

         As of June 29, 2001, we entered into a letter agreement with some of
our debenture holders, including Bank Insinger de Beaufort and Bristol
Investment Fund, Ltd. The agreement provided various anti-dilution adjustments
to the debentures and warrants issued in April and August 2000 and in January
and March 2001. These adjustments were made partly in lieu of other adjustments
that would have been imposed under the terms of the debenture offering
documents. As a result of these adjustments, the conversion prices for the
debentures issued to these holders in April and August 2000 and in January and
March 2001 were reduced to the lesser of $2.00 per share and 50% of the average
of the three lowest intraday trading prices of a share of our common stock for
the 20 trading days immediately preceding the conversion of the debentures. In
addition, the exercise prices of the warrants issued to the holders in
connection with the offering of the debentures in April and August 2000 and in
January and March 2001 were reduced to the lesser of $1.168 per share and the
average of the three lowest intraday trading prices of a share of our common
stock for the 20 trading days immediately preceding the exercise of the
warrants. Various additional anti-dilution adjustments may be applicable to our
outstanding debentures and warrants based on our capital raising and stock
issuance activities, but except as described above, no other agreements relating
anti-dilution adjustments have been made.

         In January 2002, we issued a 12% convertible debenture due January 9,
2003 in a private offering to Bank Insinger de Beaufort, which was accompanied
by warrants to purchase up to an aggregate of 600,000 shares of common stock.
The net proceeds of that offering, after payment of some related expenses, were
$165,500. In connection with this debenture offering, we executed a security
agreement covering all of our assets and securing our obligations to Bank
Insinger. Bank Insinger may, at its option, purchase an additional $200,000 of
our 12% convertible debentures and warrants to purchase up to 600,000 shares of
common stock within 30 days after the effective date of a registration statement
covering the resale of shares of common stock underlying the convertible
debentures issued in January 2002. However, the investor is not committed to
purchase the additional debentures. As of September 30, 2002, an aggregate of
$200,000 of principal plus related interest was outstanding under these
debentures.

         In January 2002, and in connection with the issuance of our 12%
convertible debenture due January 9, 2003, we entered into an agreement with
Bank Insinger de Beaufort, Bristol Investment Fund, Ltd., Bristol Capital, LLC,
and Paul Kessler, who is a principal of Bristol Capital, LLC. Under the
agreement, the conversion price of the 10% Convertible Debenture due May 1, 2002
that Bank Insinger purchased in the April 2000 offering was amended to be the
lesser of $.055 and 50% of the average of the lowest three intraday trading
prices during the 20 trading days immediately preceding a conversion. In
addition, the exercise prices of the warrants issued to Bank Insinger in the
February 2000, April 2000 and May 2001 offerings, the warrants issued to Bristol
Investment Fund in the January 2001 offering, the warrants issued to Bank
Insinger in the April 2000 offering that were transferred to Bristol Capital,
and the option issued to Paul Kessler pursuant to a consulting agreement dated
as of September 26, 2000 were amended so that the exercise prices are equal to
50% of the lowest three intraday trading prices during the 20 trading days
immediately preceding an exercise. The expiration dates of each of the warrants
and options described in the preceding sentence were extended so that each is
exercisable until the seventh anniversary of its issuance.

                                      -25-


<PAGE>

         In February 2002, we issued a 6% Convertible Promissory Note due
November 30, 2002, or a February 2002 note, in the original principal amount of
$263,800 to Rutan & Tucker, LLP for services rendered which has a per share
conversion price equal to the lesser of $.085 and the average of the three
lowest intraday trading prices of our common stock during the 20 trading days
immediately preceding the conversion date. As of September 30, 2002, an
aggregate of $263,800 of principal plus related interest was outstanding under
this note. We are currently in default under this note as a result of our
failure to repay when due the principal and interest balances of this note.

         In February 2002, we issued a 6% Convertible Promissory Note due
November 30, 2002, or a February 2002 note, in the original principal amount of
$108,750 to Haynie & Company for services rendered which has a per share
conversion price equal to the lesser of $.085 and the average of the three
lowest intraday trading prices of our common stock during the 20 trading days
immediately preceding the conversion date. As of September 30, 2002, an
aggregate of $108,750 of principal plus related interest was outstanding under
this note. We are currently in default under this note as a result of our
failure to repay when due the principal and interest balances of this note.

         In March 2002, we issued an aggregate of $500,000 of our 12%
convertible debentures due March 29, 2003 in a private offering to three
accredited investors, which were accompanied by warrants to purchase up to an
aggregate of 1,500,000 shares of common stock. The net proceeds of that
offering, after payment of related expenses, were $380,000. As of September 30,
2002, an aggregate of $500,000 of principal plus related interest was
outstanding under these debentures.

         In connection with our March 2002 debenture offering, we executed two
security agreements covering all of our assets and securing our obligations to a
total of five of the debenture investors who participated in one or more of the
April 2000, August 2000, January 2001, March 2001, June 2001 and March 2002
debenture offerings.

         Effective April 10, 2002, we entered into an Exchange Agreement with
Bristol Capital, LLC pursuant to which we issued 900 shares of our Series B
Convertible Preferred Stock and acquired from Bristol Capital its 50% interest
in our now wholly-owned FFM subsidiary which was issued to Bristol Capital in
consideration for providing the opportunity to acquire the FFM business. Each
share of our Series B Convertible Preferred Stock has a stated value of $1,000
and is initially convertible into shares of our common stock at the lesser of
(i) $0.086, and (ii) 82% of the average of the three lowest intraday trading
prices of a share of our common stock during the twenty trading preceding the
conversion date. The Series B Convertible Preferred Stock accrues dividends at a
rate of 8% per annum, which is payable on a quarterly basis in arrears, at the
option of the holder, in cash or shares of our common stock based on the then
applicable conversion price.

         On September 11, 2002, we issued an aggregate of $250,000 of 12%
convertible debentures in the first stage of a three-stage private offering to
three accredited investors. The debentures were accompanied by warrants to
purchase up to an aggregate of 750,000 shares of common stock. The net proceeds
of that offering, after payment of related expenses, were approximately
$165,000.

         In connection with our September 2002 debenture offering, we executed a
security agreement covering all of our assets and securing our obligations to
the debenture investors who participated in that offering.

                                      -26-


<PAGE>

         As of September 23, 2002, in addition to the debentures issued in
September 2002 described above:

         o    $1,443,625 of the original $4,500,000 principal balance of 10%
              Convertible Debentures due May 1, 2002 remained outstanding;

         o    $185,181 of the original $650,000 principal balance of 12%
              Convertible Debentures due January 5, 2002 remained outstanding;

         o    $438,819 of the original $650,000 principal balance of 12%
              Convertible Debentures due March 9, 2002 remained outstanding;

         o    $625,000 of the original $625,000 principal balance of 12%
              Convertible Debentures due June 29, 2002 remained outstanding;

         o    $200,000 of the original $200,000 principal balance of 12%
              Convertible Debentures due January 9, 2003 remained outstanding;
              and

         o    $500,000 of the original $500,000 principal balance of 12%
              Convertible Debentures due March 29, 2003 remained outstanding;

         As of September 23, 2002, we entered into an agreement with the holders
of the debentures listed above, including Bank Insinger de Beaufort, to extend
the due date of these debentures to September 23, 2003. In consideration for the
extension, we granted to the holders of these debentures warrants to purchase up
to an aggregate of 5,189,126 shares of common stock, including warrants to Bank
Insinger de Beaufort to purchase up to 1,285,028 shares of common stock, at an
exercise price equal to the average of the lowest three intraday trading prices
during the 20 trading days immediately preceding the exercise of the warrants.

         On October 15, 2002, we issued an aggregate of $175,000 of 12%
convertible debentures in the second stage of a three-stage private offering to
three accredited investors. The debentures were accompanied by warrants to
purchase up to an aggregate of 525,000 shares of common stock. The net proceeds
of that offering, after payment of related expenses, were approximately
$108,000.

         On December 9, 2002, we issued an aggregate of $175,000 of 12%
convertible debentures in the third stage of a three-stage private offering to
three accredited investors. The debentures were accompanied by warrants to
purchase up to an aggregate of 525,000 shares of common stock. The net proceeds
of that offering, after payment of related expenses, were approximately
$121,500.

         Our obligations to the holders of our secured convertible debentures
include the obligations to make quarterly interest payments and to repay the
principal amounts of the debentures when due. In addition, our obligations under
our secured convertible debentures include the obligation to register for resale
shares of common stock underlying those debentures, the obligation to keep the
registration statement covering those shares effective and the obligation to
maintain the status of Kanakaris Wireless as a public company in compliance with
all of the reporting requirements under the Securities and Exchange Act of 1934.
Defaults under our obligations to the holders of our secured convertible
debentures may enable the holders of those debentures to foreclose on the
collateral securing our obligations to those holders which may cause us to cease
operations and liquidate all or part of our assets. Because the relative size of
our assets is so disproportionately small compared to the amount of debt
represented by our secured convertible debentures, we believe that a default,
especially a default resulting from our failure to pay accrued interest or
principal when due, under our obligations to the holders of our secured
convertible debentures could result in a foreclosure upon, and complete
liquidation of, all of our assets, resulting in a total cessation of our
operations with no assets or proceeds from liquidation left over for any holders
of our common stock.

                                      -27-


<PAGE>

         We are currently in default under numerous provisions of our
convertible debentures, including the obligation to make quarterly interest
payments and the obligation to register for resale, by certain deadlines, shares
of common stock underlying our secured convertible debentures. As a result, we
are subject to the rights and remedies of our debenture holders under our
security agreements, under the convertible debentures and under our other
agreements with our debenture holders.

         As of January 6, 2003, we had a total of 32,401,971 shares of common
stock outstanding, the closing sale price of a share of our common stock on the
OTC Bulletin Board(R) was $0.01, and the debentures, notes, warrants and shares
of preferred stock with variable conversion or exercise prices were convertible
or exercisable into approximately 1,130,000,000 shares of common stock. The
applicable conversion price of our debentures issued to certain security holders
is variable and does not have a lower-limit, therefore the dilutive effect to
our existing security holders is theoretically limitless. Conversely, because
the variable conversion price of these debentures has an upper limit, an
increase in the trading price of a share of our common stock will result in a
limited benefit to existing security holders with respect to the conversion of
these debentures.

         Based on the conversion price in effect on January 6, 2003, the
principal portions of our convertible debentures were convertible into an
aggregate of approximately 791,000,000 shares of common stock which, if issued
and assuming the consummation of an increase in our authorized capital or an
adequate reverse stock split, would result in approximately 96% dilution to
existing holders of our common stock leaving them holding only approximately 4%
of our shares of common stock outstanding. If the market price of a share of our
common stock on the OTC Bulletin Board(R) was to fall by 25%, the principal
portions of our convertible debentures would be convertible into an aggregate of
approximately 1,055,000,000 shares of common stock which, if issued and assuming
the consummation of an increase in our authorized capital or an adequate reverse
stock split, would result in approximately 97% dilution to existing holders of
our common stock leaving them holding only approximately 3% of our shares of
common stock outstanding. If the market price of a share of our common stock on
the OTC Bulletin Board(R) was to fall by 50%, the principal portion of our
convertible debentures would be convertible into an aggregate of approximately
1,582,000,000 shares of common stock which, if issued and assuming the
consummation of an increase in our authorized capital or an adequate reverse
stock split, would result in approximately 98% dilution to existing holders of
our common stock leaving them holding only approximately 2% of our shares of
common stock outstanding. If the market price of a share of our common stock on
the OTC Bulletin Board(R) was to fall by 75%, the principal portion of our
convertible debentures would be convertible into an aggregate of approximately
3,164,000,000 shares of common stock which, if issued and assuming the
consummation of an increase in our authorized capital or an adequate reverse
stock split, would result in approximately 99% dilution to existing holders of
our common stock leaving them holding only approximately 1% of our shares of
common stock outstanding. Our current authorized capital authorizes us to issue
a maximum of 250,000,000 shares of common stock.

         The conversion price of our debentures is the lower of (a) 50% of the
average of the three lowest intraday trading prices of a share of our common
stock on the OTC Bulletin Board(R) during the twenty trading days immediately
preceding the conversion date, and (b) as low as $0.01, depending on the
particular debenture. As of January 6, 2003, the applicable conversion price was
$0.005.

         As a result of conversions of the principal or interest portion of our
convertible debentures and related sales of our common stock by the security
holders who hold our convertible debentures, the market price of our common
stock could be depressed, thereby resulting in a significant increase in the
number of shares issuable upon conversion of the principal and interest portions
of these debentures. You could, therefore, experience substantial dilution of
your investment as a result of the conversion of the principal or interest
portions of our convertible debentures and as a result of a decline in the price
of a share of our common stock on the OTC Bulletin Board(R).

                                      -28-


<PAGE>

         Each of the security holders who hold our convertible debentures may
not convert our debentures into more than 4.99% of our then-outstanding common
stock; however, those security holders may waive the 4.99% limitation, thus
allowing the conversion of their debentures into a number of shares of common
stock in excess of 4.99% of our then-outstanding common stock. In addition, each
of the security holders who hold our convertible debentures may not convert our
debentures into more than 9.99% of our then-outstanding common stock, which
limitation is not subject to waiver. As a result of the foregoing limitations,
as of January 6, 2003, each of the security holders who hold our convertible
debentures may not, at any one time and assuming they do not then hold other
shares of our common stock, convert such debentures into in excess of
approximately 1,705,000 shares of our common stock without waiving the 4.99%
limitation and they also may not, at any one time, convert such debentures into
in excess of approximately 3,600,000 shares of our common stock as a result of
the 9.99% limitation. Based on the foregoing figures and assuming a fixed
hypothetical conversion amount of $10,000 of convertible debentures, the 4.99%
limitation is applicable at an approximate market price of $0.012 per share and
the 9.99% limitation is applicable at an approximate market price of $0.006 per
share.

     TRANSFER AGENT AND REGISTRAR

         The transfer agent and registrar for our common stock is STALT, Inc.
Its telephone number is (775) 831-3335.

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

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AND THE INFORMATION
INCLUDED UNDER THE CAPTION "RISK FACTORS" INCLUDED ELSEWHERE IN THIS DOCUMENT.
EXCEPT FOR HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS
STATEMENTS OF OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND OUR CURRENT
BELIEFS REGARDING REVENUES WE MIGHT EARN IF WE ARE SUCCESSFUL IN IMPLEMENTING
OUR BUSINESS STRATEGIES. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS"
FOR FURTHER INFORMATION REGARDING FORWARD-LOOKING STATEMENTS. OUR ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, MANY OF WHICH ARE BEYOND OUR
CONTROL, INCLUDING THOSE FACTORS DISCUSSED UNDER "RISK FACTORS" AND OTHER
HEADINGS IN THIS DOCUMENT, WHICH COULD, AMONG OTHER THINGS, CAUSE THE PRICE OF
OUR COMMON STOCK TO FLUCTUATE SUBSTANTIALLY.

OVERVIEW

         We provide online delivery of films on a subscription- and
pay-per-view-basis and offer for sale on our websites films and features in VHS
and DVD formats, print-on-demand books and products of the pop culture genre. We
also operate a video distribution business through which we distribute films and
features in VHS and DVD formats to retailers through our FFM subsidiary. In
addition, we offer business services, including encoding of video for online
delivery. We also develop and offer software and products for encoding and
delivery of media-rich data, including video, audio and text over the Internet.

         Our revenues are principally derived from our video distribution
business. We expect to continue to place significant emphasis upon the further
development and expansion of our content delivery and e-commerce activities. As
funds become available, we intend to increase our marketing efforts
substantially in order to develop awareness, brand loyalty and sales for our
consolidated www.kanakaris.com online movie and book website. This website

                                      -29-


<PAGE>

includes CinemaPop, which offers online and on-demand films as well as VHS and
DVD titles, WordPop, which offers previews and print-on-demand books, and AK.TV,
an Internet television-style channel with regularly scheduled film programming.
We also intend to increase our marketing efforts in order to develop awareness
of and sales for our video distribution business. We intend to generate revenue
from subscriptions, pay-per-view sales, advertisers and sales of products on our
websites. We also intend to derive revenue from both product sales and service
fees pertaining to our CinemaWEAR(TM) encoding. As funds become available, we
intend to continue to invest in the development of new products and services
that enhance our websites and CinemaWEAR(TM) encoding, and to further develop
our existing products and services.

         In March 2002, we sold our Desience division to obtain additional
funding for, and to strengthen our focus on, our Internet and e-commerce
business activities. Prior to March 2002, our Desience division's business
involved the design, manufacture and installation of ergonomic data control
console systems for high-end computer command centers.

         Prior to the sale of our Desience division, that Division contributed
30% ($513,136) of our revenues for the year ended September 30, 2001 and
contributed 96% ($591,244) of our revenues for the year ended September 30,
2000. Our Desience division also generated $193,408 and $274,117 in gross profit
for the years ended September 30, 2001 and 2000, respectively. From January 1,
2002 to the date of the sale of its business, our Desience division generated
approximately $216,139 which amount would have been added to our revenues for
the fiscal year ended September 30, 2002 had it not been sold and reported in
our financial statements for the fiscal year ended September 30, 2002 as a
discontinued operation. From January 1, 2002 to the date of the sale of its
business, our Desience division also generated approximately $76,835 in gross
profit which amount would have been added to our gross profit for the fiscal
year ended September 30, 2002 had it not been sold and reported in our financial
statements for the fiscal year ended September 30, 2002 as a discontinued
operation.

         The sale of our Desience division provided us with additional capital
to continue the operations of our content delivery business. While the revenues
from our Desience division amounted to a substantial percentage of our overall
revenues, our Desience division has not been the principal focus of our growth
efforts. Our principal focus has been on the development and growth of our
content delivery and e-commerce activities. With the sale of our Desience
division, we are placing additional emphasis on the growth and development of
our content delivery and e-commerce activities, which activities we believe form
a strategic fit with the acquisition of the business of Fast Forward Marketing,
Inc. Because of the sale of our Desience division, we believe that we will be
able to use our limited resources to more effectively develop and grow our
content delivery and e-commerce activities. In addition, we believe that our
efforts to operate and expand our video distribution business, as discussed
below, will be enhanced as a result of not expending resources on the operation
of our Desience division.

         In April 2002, we purchased substantially all of the assets of Fast
Forward Marketing, Inc. from its sole shareholder, Intervisual Books, Inc. We
intend to further expand into the video distribution market and integrate this
new aspect of our business with our existing products and services.

         We believe that the acquisition of FFM will enable us to significantly
increase our revenues and provide funds to develop and grow our content delivery
and e-commerce activities. In addition, we believe that FFM is a viable
strategic fit for our existing business activities and we plan to integrate FFM
with our existing business activities to the extent practicable. We currently
offer for purchase directly over the internet to visitors to our various
websites videos that FFM distributes.

                                      -30-


<PAGE>

         Fast Forward Marketing, Inc., the company from which we purchased our
video distribution business, achieved net sales of $5,106,013 for the year ended
September 30, 2001 and $9,212,732 for the year ended September 30, 2000. That
company also generated $374,435 and $1,876,759 in gross profit for the years
ended September 30, 2001 and 2000, respectively. However, as more particularly
disclosed in our financial statements and notes to our financial statements for
the fiscal year ended September 30, 2002 included elsewhere in this document,
the annualized net sales and gross profit of our FFM video distribution
subsidiary are significantly lower than the net sales and gross profit recorded
for the years ended September 30, 2001 and 2000 of the predecessor FFM business,
and we do not expect to achieve in the foreseeable future results similar in
magnitude to historic results. We are presently experiencing severe difficulties
in operating our FFM video distribution business largely resulting from our lack
of available financial resources and debt assumed in connection with the
acquisition of that video distribution business.

         Although we believe that FFM provides a viable strategic fit with our
other business activities and represents an important business opportunity, our
successful operation of our video distribution business, especially over the
next twelve months, will likely require substantial financial resources. We
acquired the business of FFM along with a significant amount of liabilities,
including approximately $850,000 in accounts payable, a substantial portion of
which is owed to suppliers of the videos that FFM distributes. As of September
30, 2002, FFM had approximately $1,442,000 in accounts payable. We have been
unable to timely pay FFM's suppliers and we believe that, as a result, the
business of FFM has been significantly harmed. We believe that we are not
achieving the level of revenues we would be able to achieve if we were able to
timely pay our suppliers. If we continue to fail to timely pay FFM's suppliers,
the business of FFM may be further disrupted and important supplier
relationships may be jeopardized and irreparably harmed. The failure to timely
pay FFM's suppliers could therefore have a material adverse impact on our video
distribution business.

         Following the sale of our Desience division, we closed our office in
Costa Mesa, California and opened a new office in Santa Monica, California, out
of which we operated our FFM business and conducted other business activities.
We moved out of our Santa Monica, California offices in order to reduce expenses
and currently conduct our operations out of the homes of two of our employees in
Van Nuys, California and in Newport Beach, California.

         We have a significant accumulated deficit and negative working capital.
As a result of our financial condition, our independent auditors have issued an
opinion questioning our ability to continue as a going concern.

COMPARISON OF RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
2002 AND 2001

         NET SALES. Net sales decreased by $773,000 (66%) to approximately
$414,000 for the year ended September 30, 2002 from approximately $1,187,000 for
the year ended September 30, 2001. Net sales derived from our e-commerce
business decreased by approximately $1,128,000 (96%) to approximately $59,000
for the year ended September 30, 2002 from approximately $1,187,000 for the year
ended September 30, 2000. This decrease was primarily due to a decrease in
advertising revenue generated from our web sites and from the discontinuance of
the operations of our Desience Division. Our advertising revenue decreased by
$1,000,000 (100%) from the prior period. The decline in our advertising revenue
was the result of our single source of advertising revenues not placing any
additional advertisements on our websites. We expect that the decline in
advertising revenues will continue for at least the next twelve months given our
present focus on generating revenues through our Internet commerce activities,
our video distribution business and subscription and pay-per-view fees in
connection with our content delivery websites. The decline in our advertising
revenues did not result in any significant reduction in available resources
because the advertising revenues we generated were paid for through the issuance

                                      -31-


<PAGE>

of restricted capital stock of our advertising client, which stock we were
unable to liquidate. Any revenue we may have received from this advertising
client likely also would have been paid for through the issuance of the client's
restricted capital stock.

         GROSS PROFIT (LOSS). Gross profit as a percentage of net sales
decreased to 23% for the year ended September 30, 2002 as compared to 70% for
the year ended September 30, 2001. In dollar terms, gross profit decreased
approximately $726,000 (87%) to a gross profit of approximately $99,000 for the
year ended September 30, 2002 from a gross profit of $825,000 for the year ended
September 30, 2001. This decrease was primarily due to the significant decrease
in our advertising revenue described above and, as described above, because we
believe that the decrease in advertising revenue will continue for at least the
next twelve months, we believe that our gross profit levels will remain
depressed.

         Net loss for our e-commerce business decreased in dollar terms by
approximately $2,992,000 (32%) to a net loss of approximately $6,259,000 for the
year ended September 30, 2002, from a net loss of approximately $9,251,000 for
the year ended September 30, 2001. This decrease in net loss for our e-commerce
business primarily was due to a decrease in various operating and financing
expenses, including a decrease in executive compensation of approximately
$409,000, a decrease in consulting services of $557,000, and a decrease in
financing costs of approximately $1,622,000.

         OPERATING EXPENSES. Total operating expenses increased by approximately
$510,000 (9%) to approximately $6,435,000 for the year ended September 30, 2002
from approximately $5,925,000 for the year ended September 30, 2001.

         Consulting fees decreased by approximately $557,000 (28%) to
approximately $1,236,000 for the year ended September 30, 2002 from
approximately $1,793,000 for the year ended September 30, 2001. The decrease in
consulting fees was the result of cost constraints dictated by management, and
other than the decrease in operating expenses, the decrease in consulting fees
had no noticeable effects.

         Marketing, advertising and investor relations costs decreased by
approximately $523,000 (87%) to approximately $78,000 for the year ended
September 30, 2002 from approximately $601,000 for the year ended September 30,
2001. The decrease in marketing, advertising and investor relations costs was
the result of decreased resources available for these expenditures as well as
cost constraints dictated by management. The decrease in marketing, advertising
and investor relations costs may have had a substantial negative effect on our
operating performance and the performance of our common stock. The decrease in
our advertising revenues described will likely be sustained, at least for the
next twelve months, and our common stock suffered substantial declines during
the year ended September 30, 2002.

         Professional fees decreased by approximately $128,000 (15%) to
approximately $690,000 for the year ended September 30, 2002 from approximately
$818,000 for the year ended September 30, 2001. The decrease in professional
fees was the result of cost constraints dictated by management and efforts to
utilize company executives and employees for non-critical matters formerly
handled by outside legal counsel and accounting professionals. The decrease in
professional fees had a positive impact on our available resources, however, it
is likely that our decreased reliance on professional legal and accounting
services may have increased risks associated with services rendered by company
employees and executives inexperienced in matters such as drafting contracts and
handling financial transactions.

         The decreases in operating expenses described above were partially
offset by an increase in officer expenses of approximately $96,000 (49%) to
approximately $290,000 for the year ended September 30, 2002 from approximately
$193,000 for the year ended September 30, 2001, and an increase of insurance
expenses of approximately $10,000 (14%) to approximately $83,000 for the year
ended September 30, 2002 from approximately $ 73,000 for the year ended
September 30, 2001.

                                      -32-


<PAGE>

         An aggregate of approximately $2,976,000 of the total operating and
financing expenses for the year ended September 30, 2002, as compared to
approximately $5,271,000 of the total operating expenses for the year ended
September 30, 2001, were paid through the issuance of shares of our common stock
to the service provider. In addition, during the year ended September 30, 2002,
900 shares of our Series B Convertible Preferred Stock having a face value of
$900,000 was issued to a service provider. For each of the issuances of our
common stock for services rendered, the per share value of the common stock
issued was the fair market value of the common stock on the grant date, which
equaled the closing price of a share of common stock on the OTC Bulletin
Board(R) on that date.

         INTEREST AND OTHER EXPENSE. Interest and other expense decreased by
approximately $2,410,000 (58%) to approximately $1,742,000 for the year ended
September 30, 2002 from approximately $4,152,000 for the year ended September
30, 2001. The decrease in interest and other expense was primarily due to a
decrease of approximately $1,621,000 (50%) in the financing cost of issuing
stock through convertible debentures to $1,619,000 for the year ended September
30, 2002 from $3,241,000 for the year ended September 30, 2001. The decrease in
interest and other expense was also primarily due to a $980,000 loss on
impairment of investment in marketable securities that were received for
services rendered and recorded as an expense for the year ended September 30,
2001, but that was recorded as a $103,000 loss on impairment of investment in
marketable securities for the year ended September 30, 2002, resulting in a
decrease of approximately $877,000.

         NET LOSS. Net loss decreased by approximately $1,064,000 (11%) to
approximately $8,160,000 for the year ended September 30, 2002 from
approximately $9,224,000 for the year ended September 30, 2001. This decrease in
net loss primarily was due to decreases in interest and other expenses, as
described above.

LIQUIDITY AND CAPITAL RESOURCES

         We currently finance our operations primarily through private
placements of securities and revenue generated from our operations. Our
consolidated financial statements as of and for the years ended September 30,
2002 and 2001 have been prepared on a going concern basis, which contemplates
the realization of assets and satisfaction of liabilities in the normal course
of business.

         We have participated in numerous financing transactions through which
we have issued convertible debentures to various investors. As of January 6,
2003, we had outstanding convertible debentures in the aggregate principal
amount of $3,954,395, $250,000 of which is due September 11, 2003, $3,354,395 of
which is due September 23, 2003, $175,000 of which is due October 15, 2003 and
$175,000 of which is due December 9, 2003. In connection with these financing
transactions, as of January 6, 2003, we have issued warrants that are
outstanding to purchase an aggregate of 4,256,250 shares of our common stock. To
the extent convertible debentures we have issued are converted into shares of
common stock, we will not be obligated to repay the converted amounts.

         Our outstanding convertible debentures have conversion prices
equivalent to the lesser of a fixed conversion price, that is as low as $.01 per
share depending on the particular debenture, and 50% of the average of the three
lowest intraday trading prices of a share of our common stock for the 20 trading
days immediately preceding the conversion of the debentures. In addition, the
exercise prices of the warrants issued to the holders of our convertible
debentures are equivalent to the lesser of a fixed conversion price, that is as
low as $.035 per share depending on the particular warrant, and the average of
the three lowest intraday trading prices of a share of our common stock for the
20 trading days immediately preceding the exercise of the warrants. In some
cases, however, warrants we issued to holders of our convertible debentures have
only a fixed conversion price, that is as low as $.005 per share depending on
the particular warrant, and in other cases warrants we issued to holders of our
convertible debentures have only the variable conversion price described above.
Please see the "Description of Other Securities" section of this document for
additional details regarding our outstanding securities.

                                      -33-


<PAGE>

         As of September 23, 2002, we were in default under our repayment
obligations of our outstanding convertible debentures in the aggregate principal
amount of $3,392,625, including our obligation to make quarterly interest
payments under those debentures. At that time, the holders of our convertible
debentures could have pursued their rights to foreclose upon their security
interest in all of our assets. As of September 23, 2002, we entered into an
agreement with the holders of our outstanding convertible debentures, including
Bank Insinger de Beaufort, to extend the due date of those debentures to
September 23, 2003 and to waive our existing defaults under those debentures.
The waiver of existing defaults is effective only if a registration statement we
have filed is declared effective by the Securities and Exchange Commission by
December 31, 2002; however, the waiver did not cover any then-outstanding
penalties and interest accrued as a result of our defaults under our obligations
under the convertible debentures. In consideration for the extension, we granted
to the holders of these debentures warrants to purchase up to an aggregate of
5,189,126 shares of common stock, including warrants to Bank Insinger de
Beaufort to purchase up to 1,285,028 shares of common stock, at an exercise
price equal to the average of the lowest three intraday trading prices during
the 20 trading days immediately preceding the exercise of the warrants.

         As of September 30, 2002, we had a working capital deficiency of
approximately $6,527,000 and an accumulated deficit of approximately
$38,725,000. As of that date, we had approximately $21,500 in cash, $130,000 in
accounts receivable, $49,000 of interest receivable, $27,500 of inventories and
$51,000 in notes receivable. As of September 30, 2002, we had accounts payable
and accrued expenses of approximately $2,769,000 and outstanding convertible
debentures and convertible promissory notes of approximately $3,957,000
including convertible debentures and notes issued prior to the beginning of
fiscal year 2002. To the extent convertible debentures we have issued are
converted into shares of common stock, we will not be obligated to repay the
converted amounts.

         Cash used in our operating activities totaled approximately $145,000
for the fiscal year ended September 30, 2002 as compared to approximately
$2,569,000 for the fiscal year ended September 30, 2001. Cash used by our
investing activities totaled approximately $992,000 for the fiscal year ended
September 30, 2002 as compared to cash provided by our investing activities of
approximately $231,000 for the fiscal year ended September 30, 2001.

         Cash provided by our financing activities totaled approximately
$1,107,000 for the fiscal year ended September 30, 2002 as compared to
approximately $1,775,000 for the fiscal year ended September 30, 2001. We raised
approximately $791,000 of the cash provided by our financing activities during
the fiscal year ended September 30, 2002 and approximately $1,530,000 of the
cash provided by our financing activities during the fiscal year ended September
30, 2001 from the issuance of convertible debentures.

         For the fiscal year ended September 30, 2002, we had net sales of
approximately $414,000 and a net loss of approximately $8,160,000 of which loss
approximately $5,476,000 (67%) consisted of non-cash expenses. These non-cash
expenses included approximately $777,000 of compensation, approximately $999,000
of consulting expenses, $8,000 of professional services, approximately $52,000
for a settlement agreement, approximately $1,093,000 of convertible debt
financing costs, approximately $47,000 of stock option costs, approximately
$2,113,000 for the impairment of goodwill, approximately $284,000 for the
impairment of the film library, and approximately $103,000 for the impairment of
marketable securities.

                                      -34-


<PAGE>

         As of September 30, 2002, our current assets amounted to approximately
$313,000 and our current liabilities amounted to approximately $6,800,000. We
are experiencing significant financial difficulties as a result of this
imbalance between our current assets and current liabilities and have been, and
will likely continue to be, unable to repay when due many of our current
liabilities. Our financial difficulties may limit our ability to invest
sufficient funds in the growth and development of our online content delivery
initiative and may result in our inability to fully fund our video distribution
business. Since we are unable to invest sufficiently in the growth and
development of our content delivery initiative, we may lose subscribers to our
websites or lose pay-per-view customers and may also fail to attract prospective
subscribers and pay-per-view customers, which may have a substantial negative
impact on our business, prospects, financial condition and results of
operations.

         Our successful operation of our video distribution business, especially
over the next twelve months, will likely require substantial financial
resources. We acquired the business of FFM along with a significant amount of
liabilities, including approximately $850,000 in accounts payable, a substantial
portion of which is owed to suppliers of the videos that FFM distributes. As of
September 30, 2002, FFM had approximately $1,442,000 in accounts payable. We
have been unable to timely pay FFM's suppliers and we believe that, as a result,
the business of FFM has been significantly harmed. We believe that we are not
achieving the level of revenues we would be able to achieve if we were able to
timely pay our suppliers. If we continue to fail to timely pay FFM's suppliers,
the business of FFM may be further disrupted and important supplier
relationships may be further jeopardized and irreparably harmed. The failure to
timely pay FFM's suppliers could therefore have a material negative impact on
our video distribution business.

         Our continued operations are dependent on securing additional sources
of liquidity through debt and/or equity financing.

         As indicated above, our consolidated financial statements as of and for
the years ended September 30, 2002 and 2001 have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. As discussed in this document and
in Note 24 to our consolidated financial statements for the years ended
September 30, 2002 and 2001, we have suffered recurring losses from operations
and at September 30, 2002 had net capital and working capital deficiencies.
These factors, among others, raised substantial doubt about our ability to
continue as a going concern and led our independent certified public accountants
to modify their unqualified opinion to include an explanatory paragraph related
to our ability to continue as a going concern. The consolidated financial
statements included in this document do not include any adjustments that might
result from the outcome of this uncertainty.

         As a result of the threat of substantial dilution to our existing
stockholders due to the below-market conversion price of our convertible
debentures as well as the continued pressure on the market price of our common
stock resulting from the conversion of our convertible debentures and the
related sale of shares of our common stock in the open market by the holders of
our convertible debentures, it may be difficult or impossible for us to secure
additional sources of funding. The limited sources of funding that may be
available to us likely will be additional convertible debentures with conversion
prices at a discount to the market price of shares of our common stock which
would likely result in substantial additional dilution to our stockholders. The
existence of a substantial amount of convertible debentures outstanding, lack of
profitability and lack of available cash flow may cause our attempts at securing
additional sources of funding to be unsuccessful.

         Historically, we have relied upon cash from financing activities and,
to a much lesser extent, revenues generated from operations, to fund all of the
cash requirements of our activities. We have not been able to generate
significant cash from our operating activities in the past and cannot assure you
that we will be able to do so in the future. We require new financing and we
believe that we may be able to fund only six months of operations with currently
available capital resources. In addition, over the next twelve months, we
believe that we will require at least $1,500,000 to conduct our planned business
operations and to service certain debts.

                                      -35-


<PAGE>

         We have been, and currently are, working toward identifying and
obtaining new sources of funding. Deteriorating global economic conditions may
cause prolonged declines in investor confidence in and accessibility to capital
markets. Deteriorating global economic conditions may make it more difficult for
us to secure funding because, during times of deteriorating global economic
conditions, prospective lenders and investors generally have less funds to lend
or invest and are more hesitant to lend to or invest in small, financially
unhealthy companies such as us. Further, our current debenture financing
documents contain notice and right of first refusal provisions and the grant of
a security interest in substantially all of our assets in favor of a debenture
investor, all of which provisions will restrict our ability to obtain debt
and/or equity financing.

         Future financing may not be available on a timely basis, in sufficient
amounts or on terms acceptable to us. This financing may also dilute existing
stockholders' equity. Any future financing that we may obtain may cause
significant dilution to existing stockholders. Any debt financing or other
financing of securities senior to common stock that we are able to obtain will
likely include financial and other covenants that will restrict our flexibility.
At a minimum, we expect these covenants to include restrictions on our ability
to pay dividends on our common stock. Any failure to comply with these covenants
would have a material adverse effect on our business, prospects, financial
condition, results of operations and cash flows.

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

         In an effort to increase sales related to our content delivery
business, we have implemented new subscription- and pay-per-view-based services
for users to view the content available through our websites. We have also
launched an interactive personal meeting place within our websites that allows
users to send and receive video messages and to use online chat features. Also,
we are expanding our e-commerce product offerings to capture more sales of
products of the pop culture genre.

         In addition, we are devoting efforts to expand our customer base for
our video distribution business in order to increase sales related to this
business. We are examining the viability of distributing videos over the
Internet in order to increase sales of our video distribution business and to
reduce our distribution costs as a result of more efficient video distribution
procedures. Our websites also offer some of the videos we distribute for sale
directly over the Internet. We believe that if we are successful in implementing
the above business strategies, we will generate increased revenues from our
Internet, e-commerce and video distribution business activities.

                                      -36-


<PAGE>

RISK FACTORS

         AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION IN THIS DOCUMENT, YOU SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS BEFORE DECIDING TO INVEST IN SHARES OF OUR
COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, IT IS LIKELY THAT
OUR BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS WOULD BE HARMED. AS A
RESULT, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE
PART OR ALL OF YOUR INVESTMENT.

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

         Our consolidated financial statements have been prepared assuming we
will continue as a viable business. We have not been profitable and we may
continue to lose money for the foreseeable future. Historically, we have
incurred losses and experienced negative cash flow. As of September 30, 2002, we
had an accumulated deficit of approximately $38,441,135. We may continue to
incur losses and may never achieve or sustain profitability. An extended period
of losses and negative cash flow may prevent us from operating and expanding our
business. As a result, we may have to curtail or suspend out operations. As a
result of our financial condition, our independent auditors have issued an
opinion questioning our ability to continue as a going concern.

     OUR INDEPENDENT AUDITORS HAVE ISSUED A REPORT QUESTIONING OUR ABILITY TO
     CONTINUE AS A GOING CONCERN. THIS REPORT MAY IMPAIR OUR ABILITY TO RAISE
     ADDITIONAL FINANCING AND ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.

         The report of our independent auditors contained in our financial
statements for the years ended September 30, 2002 and 2001 includes a paragraph
that explains that we have incurred substantial losses and have a working
capital deficit. This report raises substantial doubt about our ability to
continue as a going concern. Reports of independent auditors questioning a
company's ability to continue as a going concern are generally viewed
unfavorably by analysts and investors. This report may make it difficult for us
to raise additional debt or equity financing necessary to continue our
operations and to implement our planned business activities. We urge potential
investors to review this report before making a decision to invest in Kanakaris
Wireless.

     OUR CURRENT LIABILITIES EXCEED OUR CURRENT ASSETS BY A SUBSTANTIAL MARGIN.
     AS A RESULT, WE ARE EXPERIENCING SIGNIFICANT FINANCIAL DIFFICULTIES AND MAY
     BE UNABLE TO OBTAIN ADDITIONAL FUNDING.

         As of September 30, 2002, our current assets amounted to approximately
$313,000 and our current liabilities amounted to approximately $6,800,000. We
are experiencing significant financial difficulties as a result of this
imbalance between our current assets and current liabilities and have been, and
will likely continue to be, unable to repay when due many of our current
liabilities. Our financial difficulties may limit our ability to invest
sufficient funds in the growth and development of our online content delivery
initiative and may result in our inability to fully fund our video distribution
business. Because we are likely unable to invest sufficiently in the growth and
development of our content delivery initiative, we may lose subscribers to our
websites or lose pay-per-view customers and may also fail to attract prospective
subscribers and pay-per-view customers, which may have a substantial negative
impact on our business, prospects, financial condition and results of
operations. We require new financing and we believe that we may be able to fund
three months of operations with currently available capital resources. In
addition, over the next twelve months, we believe that we will require at least
$1,500,000 to conduct our planned business operations and to service certain
debts.

                                      -37-


<PAGE>

         Our successful operation of our FFM video distribution business,
especially over the next twelve months, will likely require substantial
financial resources. We acquired the business of FFM along with a significant
amount of liabilities, including approximately $850,000 in accounts payable, a
substantial portion of which is owed to suppliers of the videos that FFM
distributes. As of September 30, 2002, FFM had approximately $1,442,000 in
accounts payable. We have been unable to timely pay FFM's suppliers and we
believe that, as a result, the business of FFM has been significantly harmed. We
believe that we are not achieving the level of revenues we would be able to
achieve if we were able to timely pay our suppliers. If we continue to fail to
timely pay FFM's suppliers, the business of FFM may be further disrupted and
important supplier relationships may be jeopardized and irreparably harmed,
which may have a substantial adverse impact on our business, prospects,
financial condition and results of operations.

         Historically, we have relied upon cash from financing activities and,
to a much lesser extent, revenues generated from operations, to fund all of the
cash requirements of our activities. We have never generated revenues
substantial enough to allow us to fully finance our business or our growth. The
imbalance between our current assets and current liabilities may make obtaining
additional funding impossible. Our substantial indebtedness represented by our
convertible debentures is secured by all of our assets, which may prevent us
from raising additional funding because any prospective lenders or investors may
be unwilling to lend or invest funds due to their inability to obtain a
satisfactory security interest in our assets. In the past, our existing
investors have provided us funding despite our ongoing financial difficulties
but may refuse to do so in the future. We believe that our existing investors
may be our only source of available financing. Our failure to secure additional
funding may have a material adverse effect on our business, prospects, financial
condition and results of operations.

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

         Our success is highly dependent upon the continued services of key
members of our management, including our Chairman of the Board, President and
Chief Executive Officer, Alex Kanakaris. We have not entered into any employment
agreement with Mr. Kanakaris or any other officer of Kanakaris Wireless. The
loss of Mr. Kanakaris would have a material adverse effect on Kanakaris Wireless
because Mr. Kanakaris has experience, skills and vision upon which we draw
heavily in our day-to-day operations and strategic planning and financing
activities. We are the beneficiary of 80% of the proceeds of a term life
insurance policy in the amount of $10,000,000 covering Mr. Kanakaris, whose
heirs are the beneficiaries of the remaining 20% of the proceeds of that policy.
However, we cannot assure you that receipt of these proceeds would be sufficient
to enable us to continue our business without significant temporary or permanent
disruption following the loss of Mr. Kanakaris.

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

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

                                      -38-


<PAGE>

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

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

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

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

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

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

                                      -39-


<PAGE>

     OUR FAILURE TO MANAGE OUR VIDEO DISTRIBUTION BUSINESS EFFECTIVELY COULD
     IMPAIR OUR BUSINESS.

         Our upper management does not have significant experience involving
video distribution. Because of this lack of significant experience, we may be
unable to effectively manage our video distribution business. Our video
distribution business presents unique challenges to our management because it is
likely that this business will represent our principal source of revenues for at
least the next twelve months and, of all of our business activities, our upper
management has the least experience in operating a video distribution business.
We anticipate that the revenues generated by our video distribution business
will represent a significant increase in our business activities. We may be
unable to handle the increase in our business activities as a result of many
factors, including the relative lack of experience of our upper management in
the video distribution business and our lack of resources, which in turn may
prevent us from growing or maintaining growth. If we are unable to successfully
manage our video distribution business, our business, prospects, financial
condition and results of operations could be adversely affected.

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

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

         We are dependent on our Internet operations and our ability to utilize
the efficiencies of the Internet plays a major role in our business strategy.
Our subscription- and pay-per-view-based websites are dependent on utilizing the
Internet for delivery of content to our subscribers and our pay-per-view
customers. In addition, our ability to sell products on our websites is
dependent on a regulatory environment that is conducive to Internet commerce.
Moreover, an important aspect of our business strategy relating to the
integration of our FFM video distribution business involves the sale over the
Internet of videos that we distribute through traditional distribution channels.
Additional regulation of the Internet, the enactment of new laws or the
interpretation of existing laws relating to the Internet could have a
significant impact on our ability to conduct our business activities and to
pursue our business strategy. As a company with a substantial amount of its
business activities and business strategy dependent on the Internet, regulation
of the Internet, the enactment of new laws or the interpretation of existing
laws relating to the Internet could therefore have a material adverse effect on
our business, prospects, financial condition, results of operations and cash
flows.

                                      -40-


<PAGE>

     COMPETITION AMONG VIDEO DISTRIBUTORS IS INTENSE, AND MANY OF OUR
     COMPETITORS ENJOY AN ADVANTAGE OVER US BECAUSE OF GREATER RESOURCES AND
     MORE SUBSTANTIAL OPERATIONS. INTENSE COMPETITION MAY HAVE A MATERIALLY
     NEGATIVE EFFECT ON OUR BUSINESS, PROSPECTS, FINANCIAL CONDITION, RESULTS OF
     OPERATIONS AND CASH FLOWS.

         Competition among video distributors is intense and many of our
competitors in the video distribution business have greater access to capital,
marketing and advertising resources which gives them a significant competitive
advantage over us. In addition, many of these competitors have a scale of
operations much larger than ours giving them the potential for greater
efficiencies due to economies of scale and a larger capacity for growth which in
turn may make them more attractive than us to prospective video suppliers and
customers. Intense competition may result in our inability to distribute videos
at a profit, especially in light of our relatively small scale of operations
when compared to the large scale of operations of many of our competitors who
enjoy cost-saving economies of scale and who have access to resources sufficient
to conduct intense competition. Much of our business strategy depends on our
ability to effectively compete in the video distribution marketplace and we
intend to commit a substantial amount of our resources to our video distribution
business. If we are unsuccessful, given our poor financial condition, we may be
unable to operate a viable video distribution business in the future and our
failure to garner the anticipated resources from a successful video distribution
business may further jeopardize our business strategy and other business
activities. Intense competition within the video distribution business may
therefore have a materially negative effect on our business, prospects,
financial condition, results of operations and cash flows.

     THE MOVEMENT OF SOME OF OUR PRINCIPLE SUPPLIERS INTO THE VIDEO DISTRIBUTION
     BUSINESS COULD SIGNIFICANTLY REDUCE OUR MARKET SHARE AND COULD HAVE A
     MATERIALLY NEGATIVE EFFECT ON OUR BUSINESS, PROSPECTS, FINANCIAL CONDITION,
     RESULTS OF OPERATIONS AND CASH FLOWS.

         The movement of some of the major motion picture studios, some of whom
are our principal suppliers in that industry, into the video distribution
business has intensified the competition in the video distribution market. The
movement of some of the major motion picture studios into the video distribution
business has threatened some of our larger accounts because those motion picture
studios circumvent our distribution services and contact large retailers
directly. If our smaller accounts grow into larger accounts, there is an
increasing probability that major motion picture studios may try to sell to
these larger accounts directly and circumvent our distribution services. If we
are unable to protect our customer base as it grows, we may be forced to change
our marketing efforts in the video distribution market to target smaller
accounts. This potential change in marketing strategy coupled with the potential
loss of larger accounts may result in a decrease in our revenues and may have a
materially negative effect on our business, prospects, financial condition,
results of operations and cash flows.

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

         Provisions of our articles of incorporation and bylaws may delay or
frustrate the removal of incumbent directors and may prevent or delay a merger,
tender offer or proxy contest involving Kanakaris Wireless that is not approved
by our board of directors, even if those events may be beneficial to the
interest of our stockholders. For example, Alex Kanakaris, our Chairman of the
Board, President and Chief Executive Officer, is the holder of all of the
1,000,000 authorized, issued and outstanding shares of our Class A Convertible
Preferred Stock. Under our articles of incorporation, each share of Class A
Preferred Stock is entitled to 100 non-cumulative votes per share on all matters
presented to our stockholders for action. Consequently, Mr. Kanakaris has
sufficient voting power to control the outcome of all corporate matters
submitted to the vote of our common stockholders. Those matters could include
the election of directors, changes in the size and composition of the board of

                                      -41-


<PAGE>

directors, and mergers and other business combinations involving Kanakaris
Wireless. In addition, through his control of the board of directors and voting
power, he may be able to control certain decisions, including decisions
regarding the qualification and appointment of officers, dividend policy, access
to capital (including borrowing from third-party lenders and the issuance of
additional equity securities), and the acquisition or disposition of assets by
Kanakaris Wireless. In addition, the concentration of voting power in the hands
of Mr. Kanakaris could have the effect of delaying or preventing a change in
control of Kanakaris Wireless, even if the change in control would benefit our
stockholders, and may adversely affect the market price of our common stock.

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

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

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

         We have issued to several security holders debentures, notes, warrants
and shares of preferred stock that are convertible or exercisable at prices that
are equal to the lesser of a fixed price and a variable price that is based upon
a discount on the market price of our common stock. As of January 6, 2003, we
had a total of 32,401,791 shares of common stock outstanding, the closing sale
price of a share of our common stock on the OTC Bulletin Board(R) was $0.01, and
the debentures, notes, warrants and shares of preferred stock with variable
conversion or exercise prices were convertible or exercisable into approximately
1,130,000,000 shares of common stock. The number of shares that those
debentures, notes and warrants ultimately may be converted into or exercised for
could prove to be greater than this estimate if the market price of our common
stock declines. You could, therefore, experience substantial dilution and a
decline in the value of your investment as a result of the conversion of the
debentures and exercise of the warrants.

         The applicable conversion price of our debentures issued to certain of
our security holders is variable and does not have a lower-limit, therefore the
dilutive effect to our existing security holders is theoretically limitless.
Conversely, because the variable conversion price of these debentures has an
upper limit, an increase in the trading price of a share of our common stock
will result in a limited benefit to existing security holders with respect to
the conversion of these debentures. As of January 6, 2003, an aggregate of
approximately 791,000,000 shares were issuable upon conversion of the principal
portion of our convertible debentures. Based on a hypothetical conversion price
equal to 25% of the conversion price in effect on January 6, 2003, an aggregate
of approximately 1,055,000,000 shares would be issuable to cover the conversion
of the principal portion of our convertible debentures, resulting in
approximately 97% dilution to existing holders of our common stock leaving them
holding only approximately 3% of our shares of common stock outstanding.

         As a result of conversions of the principal or interest portion of our
convertible debentures and related sales of our common stock by the security
holders who hold our convertible debentures, the market price of our common
stock could be depressed, thereby resulting in a significant increase in the
number of shares issuable upon conversion of the principal and interest portions
of these debentures. You could, therefore, experience substantial dilution of
your investment as a result of the conversion of the principal or interest
portions of our convertible debentures and as a result of a decline in the price
of a share of our common stock on the OTC Bulletin Board(R). Please see the
"Description of Other Securities" section of this document for additional
details regarding our convertible debentures.

                                      -42-


<PAGE>

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

         Selling short is a technique used by a stockholder to take advantage of
an anticipated decline in the price of a security. A significant number of short
sales or a large number of other sales within a relatively short period of time
can create a downward pressure on the price of the security. The existence of
our outstanding convertible debentures and their variable below-market
conversion prices increases the risk of short sales of our common stock because
holders of our convertible debentures may effect short sales and subsequently
convert their debentures, effectively removing any risk associated with holding
shares of our common stock. In addition, because short sales may have the effect
of causing a decline in the market price of shares of our common stock which
would in turn cause a decline in the conversion prices of our outstanding
convertible debentures resulting in additional shares of common stock issuable
to the holders of our convertible debenture, those holders have an incentive to
engage in short sales of our common stock. These short sales as well as short
sales by persons who are not holders of our convertible debentures may cause a
significant decline in the market price of shares of our common stock. The
decrease in the market price of shares of our common stock would allow holders
of our debentures and warrants that have conversion or exercise prices based
upon a discount on the market price of our common stock to convert their
debentures and exercise their warrants into an increased number of shares of our
common stock which could cause substantial dilution to our existing
stockholders. Further sales of common stock issued upon conversion of debentures
or exercise of warrants could cause even greater declines in the price of our
common stock due to the number of additional shares available in the market,
which could encourage short sales that could further undermine the value of our
common stock and result in substantial additional dilution to our existing
stockholders. You could, therefore, experience a decline in the value of your
investment as a result of short sales of our common stock.

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

         The stock market as a whole and individual stocks historically have
experienced extreme price and volume fluctuations, which often have been
unrelated to the performance of the related corporations. Our common stock
trades on the OTC Bulletin Board(R) under the symbol "KKRW." For the fiscal year
ended September 30, 2002, taking into account the 1-for-20 reverse common stock
split that occurred on December 7, 2001, the high and low closing sale prices
for a share of our common stock were $0.155 and $0.008, respectively. The
trading prices of our common stock could experience wide fluctuations in the
future in response to:

         o    quarter-to-quarter variations in our operating results;
         o    material announcements of technological innovations;
         o    establishment of strategic partnerships by us or our competitors
              or providers of alternative products and services;
         o    general conditions in the Internet, e-commerce and video
              distribution industries; or
         o    other events or factors, many of which are beyond our control.

         If our operating results in future quarters fall below the expectations
of market makers, securities analysts and investors, the price of our common
stock likely will decline, perhaps substantially. In the past, securities class
action litigation often has been brought against a company following periods of
volatility in the market price of its securities. We may in the future be the

                                      -43-


<PAGE>

target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management's attention and resources.
Consequently, the price at which you purchase shares of our common stock may not
be indicative of the price that will prevail in the trading market. You may be
unable to sell your shares of common stock at or above your purchase price,
which may result in substantial losses to you.

     DEFAULTS UNDER OUR OBLIGATIONS TO THE HOLDERS OF OUR SECURED CONVERTIBLE
     DEBENTURES MAY ENABLE THE HOLDERS OF THOSE DEBENTURES TO FORECLOSE ON THE
     COLLATERAL SECURING OUR OBLIGATIONS TO THOSE HOLDERS WHICH MAY CAUSE US TO
     CEASE OPERATIONS AND LIQUIDATE ALL OR PART OF OUR ASSETS.

         All of our obligations under our secured convertible debentures and
related agreements are secured by all of our assets. As of January 6, 2003, we
were indebted in the aggregate principal amount of $3,954,395 plus accrued
interest on our secured convertible debentures. Our obligations to the holders
of our secured convertible debentures include the obligations to make quarterly
interest payments and to repay the principal amounts of the debentures when due.
In addition, our obligations under our secured convertible debentures include
the obligation to register for resale shares of common stock underlying those
debentures, the obligation to keep the registration statement covering those
shares effective and the obligation to maintain the status of Kanakaris Wireless
as a public company in compliance with all of the reporting requirements under
the Securities and Exchange Act of 1934. Defaults under our obligations to the
holders of our secured convertible debentures may enable the holders of those
debentures to foreclose on the collateral securing our obligations to those
holders which may cause us to cease operations and liquidate all or part of our
assets. Because the relative size of our assets is so disproportionately small
compared to the amount of debt represented by our secured convertible
debentures, we believe that a default, especially a default resulting from our
failure to pay accrued interest or principal when due, under our obligations to
the holders of our secured convertible debentures could result in a foreclosure
upon, and complete liquidation of, all of our assets, resulting in a total
cessation of our operations with no assets or proceeds from liquidation left
over for any holders of our common stock.

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

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

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

                                      -44-


<PAGE>

         o    the projected growth in the video distribution, Internet
              and-commerce industries and the markets for our products and
              within these industries;
         o    our business strategy for expanding our presence in the existing
              and proposed markets in which our products and services could be
              used;
         o    anticipated trends in our financial condition and results of
              operations; and
         o    our ability to distinguish ourselves from our current and future
              competitors.

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

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

ITEM 7. FINANCIAL STATEMENTS.

         Our consolidated financial statements are filed with and begin on page
F-1 of this report.

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

         None.

                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS

         The directors and executive officers of Kanakaris Wireless and their
ages, positions, business experience and education as of January 6, 2002 were as
follows:

           Name                    Age          Position
           ----                    ---          --------

Alex Kanakaris (1)(2)........      46      Chairman of the Board, President,
                                            Chief Executive Officer and Director

John Robert McKay (1)........      41      Secretary, Director and Webmaster

Van Holster..................      33      Director

                                      -45-


<PAGE>

Lisa Lawrence................      27      Director

Caroline Michaels............      55      Director

Rose Forbes (2)..............      53      Director

Charles Moore (2)............      33      Director

David T. Shomaker............      46      Acting Chief Financial Officer and
                                            Advisor to the Board
_______________
(1) Member of executive committee and 2000 Stock Option Plan committee.
(2) Member of audit committee.

BUSINESS EXPERIENCE

     DIRECTORS AND EXECUTIVE OFFICERS

         ALEX F. KANAKARIS has served as a director and as our Chairman of the
Board, President and Chief Executive Officer since November 1997. Mr. Kanakaris
served as the President of Kanakaris InternetWorks, Inc. from 1994 until it was
acquired by Kanakaris Wireless in November 1997. Mr. Kanakaris created what is
believed to be the first real-time online delivery of motion pictures, the first
online book web site that allows type resizing, page turning without scrolling,
searching by word or phrase and has security attributes, and the first
entertainment web site for wireless personal digital assistants. Mr. Kanakaris
makes frequent appearances as an Internet expert at trade shows, digital economy
conferences, on radio and television and in print. He is author of the book
"Signs of Intelligent Life on the Internet" published by Dace/Brentwood Media
Group, November 1999, and currently is working on a business motivational book
for the digital age.

         On August 2, 1999, the Securities and Exchange Commission filed suit in
the United States District Court in the District of Nevada against Kanakaris
Wireless, Mr. Kanakaris, David Valenti, a stockholder of Kanakaris Wireless, and
another individual seeking permanent injunctions and civil penalties based on
alleged violations of Sections 5(a), 5(c) and 17(a)(1)-(3) of the Securities Act
of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder in connection with the sale of approximately 300,000 shares of
Kanakaris Wireless common stock in 1996 and 1997 to the former stockholders of
Kanakaris InternetWorks, Inc., a subsidiary of Kanakaris Wireless. On August 9,
1999, a final judgment of permanent injunction and other relief was entered in
connection with the execution by each defendant of a consent to entry of
injunction and the payment by each of Mr. Kanakaris and Mr. Valenti of a $25,000
civil penalty. Without admitting or denying any guilt involving the violations
cited in the decrees, Mr. Kanakaris, Mr. Valenti and Kanakaris Wireless each
agreed under the consents to entry of injunction not to take actions that would
violate federal securities laws in connection with the offer, purchase or sale
of securities.

         JOHN ROBERT MCKAY has served as a director and as our webmaster since
August 1999 and has served as our Secretary since March 2002. Mr. McKay served
as our Vice President-Internet Division from May 1997 through July 1998. Mr.
McKay has been a webmaster since 1995 and has worked both full-time and as a
consultant to our Chairman of the Board, President and Chief Executive Officer,
Alex Kanakaris, since 1994. Mr. McKay was a web site administrator for NNA
Services, a non-profit educational organization, from 1993 to 1994. Prior to
that, he served as Sales Promotion Manager for ORA Electronics/Alliance
Corporation, an international consumer electronics company, from 1991 to 1992.
From 1987 to 1991, Mr. McKay served as the advertising manager for Kelly-Moore
Paint Co. Mr. McKay is a graduate of San Francisco State University with a
Bachelor of Science degree in Marketing.

                                      -46-


<PAGE>

         VAN HOLSTER has served as a director since August 2001 and as our Chief
Operating Officer from August 2001 until March 2002. Mr. Holster served as
Product Manager of our Desience division from May 1996 to August 2001, where his
responsibilities included duties relating to order initiation, product
fulfillment and installation and customer support. Prior to his employment with
our Desience division, Mr. Holster was a student at Pasadena City College, where
he earned an Associate in Arts Degree in Liberal Arts and an Associate in
Science Degree in Marketing.

         LISA LAWRENCE has served as a director since February 2002 and from
September 2000 until December 2001. Ms. Lawrence resigned as a director in
December 2001 to pursue an MBA degree at Temple University, but accepted an
appointment to our board of directors in February 2002 after Ms. Lawrence
decided that her workload in the MBA program at Temple University would allow
her to serve on our board of directors. From July 1999 until December 2001, Ms.
Lawrence held the office of Director of Internet-Business Affairs, and from July
2000 until December 2001, Ms. Lawrence held the office of Vice President of
Internet. From August 1997 until June 1999, Ms. Lawrence worked at Curb
Entertainment, where her responsibilities included sales of international film
rights and representation at major film festivals. Prior to her employment at
Curb Entertainment, Ms. Lawrence was a student at Pepperdine University, where
she earned a Bachelor of Arts degree in Telecommunications.

         CAROLINE MICHAELS has served as a director since November 2001. Ms.
Michaels has been associated with Kanakaris Wireless since our acquisition of
Desience Corporation in October 1997 through her capacity, since September 1988,
as a consultant and independent sales representative of Desience Corporation,
which was sold in March 2002. Prior to that time, Ms. Michaels was General
Manager of Little Bear Organic Foods from February 1986 through December 1987.
Ms. Michaels was born in London, England, and started her career at The Sunday
Times of London. Ms. Michaels moved to New York in 1969 and became a partner and
co-owner of a music publishing, management and production company, where she
worked directly with various artists.

         ROSE FORBES has served as a director since November 2000 and was, until
her appointment as a member of our board of directors, an advisor to our board
of directors commencing in November 1997, during which she provided advice
principally on matters pertaining to the entertainment industry. Ms. Forbes'
background includes work at Sony Pictures Entertainment, MCEG/Virgin Home
Entertainment and Paramount Pictures. Ms. Forbes has been Manager of Music
Clearance at Sony Pictures Entertainment since December 1995 and has been with
Sony since July 1990.

         CHARLES MOORE has served as a director since January 2001. Mr. Moore is
founder and President of the New York Internet Chamber of Commerce, a not-for-
profit agency that provides a forum for political and business leaders in the
State of New York. Mr. Moore was Director of Sales for Plenar Corporation from
November 1999 to July 2000. Mr. Moore was also President of Blue Nile
Consulting, Inc., a technology consulting firm based in New York City, from June
1996 until November 1999. Mr. Moore holds a Bachelor of Science degree in
Computer Science from Drexel University.

         DAVID T. SHOMAKER has served as our acting Chief Financial Officer and
as an advisor to our board of directors since May 1999, during which he provided
advice principally on matters pertaining to financial accounting, business
development, business plan analysis and tax considerations. Mr. Shomaker has
been a partner of Haynie & Company, Certified Public Accountants, based in
Orange County, California and Salt Lake City, Utah since 1990. Mr. Shomaker is a
Certified Public Accountant in the States of California and Utah and is a
Certified Fraud Examiner and a Certified Valuation Analyst. Mr. Shomaker holds a
Bachelor of Science degree in Accounting from Brigham Young University, Provo,
Utah.

                                      -47-


<PAGE>

         All directors hold office until the next annual stockholders' meeting
or until their respective successors are elected or until their earlier death,
resignation or removal. Each officer serves at the discretion of the board of
directors.

     ADVISORS TO OUR BOARD OF DIRECTORS

         GEORGE ATKINSON has served as an advisor to our board of directors
since November 1997, during which he provided advice principally on matters
pertaining to movie copyrights and the acquisition of movie masters and sales
strategies. Mr. Atkinson was a pioneer of home video and was the President of
the 600+ Video Station network, which preceded major chains such as Blockbuster
Video. He was named by the Video Software Dealers Association as Video Retailer
of the Year and Video Man of the Year in 1979, and was a central character in
the New York Times best-selling book "Fast Forward: Hollywood, the Japanese and
the VCR Wars" by James Lardner.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), requires our executive officers and directors, and persons who
beneficially own more than 10% of a registered class of our common stock to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission ("Commission"). These officers, directors and
stockholders are required by Commission regulations to furnish us with copies of
all such reports that they file.

         Based solely upon a review of copies of these reports furnished to us
during 2002 and thereafter, or written representations received by us from
reporting persons that no other reports were required, we believe that all
Section 16(a) filing requirements applicable to our reporting persons during
2002 were complied with, except as described below.

         The following individuals are in the process of preparing late Forms 4
to report on the following numbers of Forms 4 the following numbers of
transactions that inadvertently were not timely reported. Ms. Caroline Michaels
- two reports, two transactions; Mr. Van Holster - two reports, two
transactions; Mr. John McKay - four reports, four transactions; Ms. Lisa
Lawrence - two reports, two transactions; Mr. Alex Kanakaris - three reports,
three transactions; Ms. Rose Forbes - one report, one transaction; Mr. Charles
Moore - one report, one transaction.

                                      -48-


<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

COMPENSATION OF EXECUTIVE OFFICERS

         The Summary Compensation Table below provides information concerning
the annual and long-term compensation for services in all capacities to
Kanakaris Wireless of our President and Chief Executive Officer and our
Secretary, or the named executives, during the years ended September 30, 2000,
2001 and 2002. There were no other executive officers whose annual salary and
bonus compensation exceeded $100,000 during the year ended September 30, 2002.
<TABLE>

                           SUMMARY COMPENSATION TABLE
<CAPTION>

                                                                           Long-Term
                                                  Annual Compensation    Compensation
                                               ------------------------  -------------
                                                                             Awards
                                                                           Securities
                                                                           Underlying         All Other
Name and Principal Position            Year    Salary ($)     Bonus ($)    Options (#)    Compensation($)(1)
---------------------------            ----    ----------     ---------    -----------    ------------------
<S>                                    <C>      <C>        <C>              <C>                <C>
Alex Kanakaris                         2002     174,576      693,780(2)          --           3,948(3)
   President and Chief Executive       2001     167,708    1,849,725(4)          --           3,905(3)
   Officer                             2000     175,000       42,760(5)     188,125(6)        3,208(3)
John Robert McKay                      2002      57,360       29,600(7)          --              --
   Secretary and Webmaster             2001     105,000       16,760(8)          --              --
                                       2000     105,000       12,145(9)      24,750(10)          --
     _______________
</TABLE>

         (1)  Aggregate amounts do not exceed the lesser of $50,000 or 10% of
              the total annual salary and bonus reported in this table.
         (2)  Represents $52,330 of debt forgiveness and $641,450 of common
              stock granted based on the approximate fair market value on the
              date of grant of common stock granted.
         (3)  Represents pro rata cost of life insurance payable to the heirs of
              Mr. Kanakaris
         (4)  Represents $227,225 of debt forgiveness and $1,622,500 of common
              stock granted based on the approximate fair market value on the
              date of grant of common stock granted.
         (5)  Represents debt forgiveness.
         (6)  Of this total, options to purchase an aggregate of 83,125 shares
              were cancelled on March 14, 2001.
         (7)  Represents $5,800 of debt forgiveness and $23,800 of common stock
              granted based on the approximate fair market value on the date of
              grant of common stock granted.
         (8)  Represents $6,760 of debt forgiveness and $10,000 of common stock
              granted based on the approximate fair market value on the date of
              grant of common stock granted.
         (9)  Represents $5,000 of cash and $7,145 of debt forgiveness.
         (10) Of this total, options to purchase an aggregate of 7,500 shares
              were cancelled on March 14, 2001.

STOCK OPTION GRANTS IN 2002

         In fiscal 2002, no options or stock appreciation rights were granted to
the named executives.

OPTION EXERCISES AND FISCAL YEAR-END VALUES

         The following table sets forth the number of shares acquired and value
realized upon exercise of options during the fiscal year ended September 30,
2002 and the number of exercisable and unexercisable in-the-money stock options
and their values at September 30, 2002 for the named executives. An option is
"in-the-money" if the fair market value for the underlying securities exceeds
the exercise price of the option.

                                      -49-


<PAGE>
<TABLE>

                      AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

                            Shares                   Number of Securities Underlying   Value ($) of Unexercised
                         Acquired on      Value          Unexercised Options at         In-the-Money Options at
Name                       Exercise    Realized ($)        September 30, 2002           September 30, 2002 (1)
----                       --------    ------------        ------------------           ----------------------
                                                       Exercisable     Unexercisable  Exercisable  Unexercisable
                                                       -----------     -------------  -----------  -------------
<S>                           <C>           <C>           <C>               <C>           <C>            <C>
Alex Kanakaris                --            --            105,000           --            $0             --

John Robert McKay             --            --             17,250           --            $0             --
_______________
</TABLE>

         (1)  The closing sale price of our common stock on the OTC Bulletin
              Board(R)as of September 30, 2002 was $.019, which price did not
              exceed the exercise price of the options.

LONG-TERM INCENTIVE PLAN AWARDS

         In fiscal 2002, no awards were given to named executives under
long-term incentive plans.

COMPENSATION OF DIRECTORS

         Our directors receive no compensation for attending meetings of the
board of directors but receive stock grants from time to time as compensation
for services rendered. Stock grants made during the year ended September 30,
2002 to our directors as compensation for services rendered are discussed in
more detail below. The differences in valuation of the common stock issued to
our directors result from the difference in the closing price of a share of our
common stock reported on the OTC Bulletin Board(R) on the date of grant and the
closing price of a share of our common stock reported on the OTC Bulletin
Board(R) on the date of issuance.

         On October 17, 2001, we issued 50,000 shares of common stock valued at
$21,000, or $0.42 per share, and having a fair value on the issuance date of
$38,000, or $0.76 per share, to then director Branch Lotspeich as compensation
for services rendered. These shares were issued as non-cash bonus compensation
in connection with periodic stock bonuses to our employees in recognition of
continued employment and dedication to Kanakaris Wireless.

         On October 17, 2001, we issued 10,000 shares of common stock valued at
$4,200, or $0.42 per share, and having a fair value on the issuance date of
$7,600, or $0.76 per share, to Caroline Michaels as compensation for services
rendered. These shares were issued as non-cash bonus compensation in connection
with periodic stock bonuses to our employees in recognition of continued
employment and dedication to Kanakaris Wireless.

         On October 17, 2001, we issued 5,000 shares of common stock valued at
$2,100, or $0.42 per share, and having a fair value on the issuance date of
$3,800, or $0.76 per share, to Van Holster as compensation for services
rendered. These shares were issued as non-cash bonus compensation in connection
with periodic stock bonuses to our employees in recognition of continued
employment and dedication to Kanakaris Wireless.

                                      -50-


<PAGE>

         On October 17, 2001, we issued 5,000 shares of common stock valued at
$2,100, or $0.42 per share, and having a fair value on the issuance date of
$3,800, or $0.76 per share, to John McKay as compensation for services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On October 17, 2001, we issued to 5,000 shares of common stock valued
at $2,100, or $0.42 per share, and having a fair value on the issuance date of
$3,800, or $0.76 per share, to Lisa Lawrence as compensation for services
rendered. These shares were issued as non-cash bonus compensation in connection
with periodic stock bonuses to our employees in recognition of continued
employment and dedication to Kanakaris Wireless.

         On January 11, 2002, we loaned Alex Kanakaris $36,000 at an annual
percentage rate of 5%. The loan plus all accrued and unpaid interest is payable
five years following the date of the loan. As of September 30, 2002 the
outstanding principal balance of this loan and all accrued interest had been
repaid. The loan made in January 2002 to Alex Kanakaris was made in lieu of
salary and was subsequently repaid by offsetting salary compensation owed Mr.
Kanakaris against this loan. In light of the enactment of the Sarbanes-Oxley Act
of 2002, it is our policy to no longer extend loans to our directors or
officers.

         On March 18, 2002, we issued 350,000 shares of common stock valued at
$35,000 and having a fair value on the issuance date of $35,000, or $0.10 per
share, to Alex Kanakaris as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On March 18, 2002, we issued 180,000 shares of common stock valued at
$18,000 and having a fair value on the issuance date of $18,000, or $0.10 per
share, to John McKay as a stock bonus for extraordinary services rendered. These
shares were issued as non-cash bonus compensation in connection with periodic
stock bonuses to our employees in recognition of continued employment and
dedication to Kanakaris Wireless.

         On March 18, 2002, we issued 50,000 shares of common stock valued at
$5,000 and having a fair value on the issuance date of $5,000, or $0.10 per
share, to Lisa Lawrence as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On March 18, 2002, we issued 20,000 shares of common stock valued at
$2,000 and having a fair value on the issuance date of $2,000, or $0.10 per
share, to Van Holster as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On March 18, 2002, we issued 15,000 shares of common stock valued at
$1,500 and having a fair value on the issuance date of $1,500, or $0.10 per
share, to Caroline Michaels as a stock bonus for extraordinary services
rendered. These shares were issued as non-cash bonus compensation in connection
with periodic stock bonuses to our employees in recognition of continued
employment and dedication to Kanakaris Wireless.

         On March 18, 2002, we issued 100,000 shares of common stock valued at
$10,000 and having a fair value on the issuance date of $10,000, or $0.10 per
share, to Rose Forbes as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

                                      -51-


<PAGE>

         On March 18, 2002, we issued 25,000 shares of common stock valued at
$2,500 and having a fair value on the issuance date of $2,500, or $0.10 per
share, to Charles Moore as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On April 16, 2002, we issued 1,000,000 shares of common stock valued at
$90,000 and having a fair value on the issuance date of $90,000, or $0.09 per
share, to Alex Kanakaris as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On April 16, 2002, we issued 250,000 shares of common stock valued at
$22,500 and having a fair value on the issuance date of $22,500, or $0.09 per
share, to John McKay as a stock bonus for extraordinary services rendered. These
shares were issued as non-cash bonus compensation in connection with periodic
stock bonuses to our employees in recognition of continued employment and
dedication to Kanakaris Wireless.

         On June 7, 2002, we issued 1,000,000 shares of common stock valued at
$30,000, or $0.03 per share, and having a fair value on the issuance date of
$28,000, or $0.028 per share, to Alex Kanakaris as a stock bonus for
extraordinary services rendered. These shares were issued as non-cash bonus
compensation in connection with periodic stock bonuses to our employees in
recognition of continued employment and dedication to Kanakaris Wireless.

         On June 7, 2002, we issued 500,000 shares of common stock valued at
$15,000, or $0.03 per share, and having a fair value on the issuance date of
$14,000, or $0.028 per share, to John McKay as a stock bonus for extraordinary
services rendered. These shares were issued as non-cash bonus compensation in
connection with periodic stock bonuses to our employees in recognition of
continued employment and dedication to Kanakaris Wireless.

         Kanakaris Wireless is the beneficiary of 80% of the proceeds of a term
life insurance policy in the amount of $10,000,000 covering Alex Kanakaris,
whose heirs are the beneficiaries of the remaining 20% of the proceeds of that
policy. We have paid all premiums associated with this term life insurance
policy, including $3,948 for the fiscal year ended September 30, 2002 and
attributable to the 20% portion of the proceeds payable under that policy to the
heirs of Mr. Kanakaris. These premium amounts were paid by us for the benefit of
the heirs of Mr. Kanakaris as part of Mr. Kanakaris' executive compensation
package.

         The fees for the services rendered as described above were approved by
the board of directors or an appropriate committee of the board of directors of
Kanakaris Wireless after consideration of the value of the services rendered
and/or to be rendered and after taking into account the fact that the fees were
paid in restricted shares of our common stock which would have to be held for at
least one year prior to their sale, and then only would be eligible for sale in
limited amounts. Given the nature of the services provided, the past involvement
of the service providers with Kanakaris Wireless through which they gained a

thorough understanding of its business and prospects, and the fact that all fees
were paid through the issuance of restricted shares of our common stock, we
believe that the fees paid for these services compare favorably to fees we would
have had to pay for similar services rendered by non-directors.

REPRICING OF OPTIONS AND SARS

         No adjustments to or repricing of stock options previously awarded to
named executives occurred in fiscal 2002.

                                      -52-


<PAGE>

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

         The following table sets forth, as of January 6, 2003, certain
information with respect to (i) each director of our company, (ii) the named
executives, and (iii) all directors and executive officers of our company as a
group, and (iv) each person known to our company to be the beneficial owner of
more than 5% of our common stock. The information with respect to each person
specified is as supplied or confirmed by such person or based upon statements
filed with the Commission.

<TABLE>
<CAPTION>

NAME AND ADDRESS OF                                         AMOUNT AND NATURE OF
BENEFICIAL OWNER(1) (2)             TITLE OF CLASS          BENEFICIAL OWNERSHIP(3)         PERCENT OF CLASS
-----------------------             --------------          -----------------------         ----------------
<S>                                 <C>                            <C>                            <C>
William G. Hopkins
25981 Glen Canyon
Laguna Canyon, CA 92653             Common                         4,250,000                       13.12%

Alex Kanakaris                      Common                         3,033,478 (4)                    9.32%
                                    Class A Preferred              1,000,000                      100.00%

Bristol Capital, LLC
6363 Sunset Blvd., 5th Floor
Los Angeles, CA 90028               Common                         1,705,007 (5)                    4.99%
                                    Series B Preferred                   900                      100.00%

John Robert McKay                   Common                           986,275 (6)                    3.04%

Rose Forbes                         Common                           105,000                         *

Lisa Lawrence                       Common                            91,000 (7)                     *

Van Holster                         Common                            37,760 (8)                     *

Caroline Michaels                   Common                            27,250 (9)                     *

Charles Moore                       Common                            25,000                         *

David T. Shomaker                   Common                               750                         *

All directors and executive
officers as a group (8 persons)     Common                         4,306,513 (10)                  13.21%
                                    Class A Preferred              1,000,000                      100.00%
                                    Series B Preferred                 --                           --
     _______________
</TABLE>

     *   Less than 1.00%

     (1)      The address of each director and executive officer named in this
              table is c/o Kanakaris Wireless, 2716 Ocean Park Blvd., Suite
              2005, Santa Monica, California 90405. Mr. Kanakaris and Mr. McKay
              are directors and executive officers of Kanakaris Wireless. Mr.
              Holster, Ms. Forbes, Ms. Lawrence, Ms. Michaels and Mr. Moore are
              directors of Kanakaris Wireless Mr. Shomaker is Acting Chief
              Financial Officer of Kanakaris Wireless and an advisor to our
              board of directors.

                                      -53-


<PAGE>

     (2)      The natural person(s) who exercise the sole or shared voting and
              dispositive powers with respect to the shares of capital stock
              held by the entities listed above are as follows: Paul Kessler and
              Diana Derycz Kessler for Bristol Capital, LLC.

     (3)      Beneficial ownership is determined in accordance with the rules of
              the Securities and Exchange Commission and generally includes
              voting or investment power with respect to securities. Except as
              indicated by footnote, and subject to community property laws
              where applicable, the persons named in the table above have sole
              voting and investment power with respect to all shares of common
              stock shown as beneficially owned by them. Shares of common stock
              subject to options currently exercisable, or exercisable within 60
              days after January 6, 2003, are deemed to be outstanding in
              calculating the percentage ownership of a person or group but are
              not deemed to be outstanding as to any other person or group.

     (4)      Consists of 2,878,478 shares of common stock issued and
              outstanding, 50,000 shares of common stock issuable upon
              conversion of Class A Convertible Preferred Stock and 105,000
              shares of common stock issuable upon exercise of options.

     (5)      Due to contractual beneficial ownership limitations, the number of
              shares shown has been limited to 4.999% of the sum of the shares
              of our common stock outstanding as of the date of the table and a
              number of additional shares deemed outstanding such that the
              resulting number, including shares presently outstanding and held
              by the beneficial owner, is equal to 4.99% of such sum.

     (6)      Consists of 969,025 shares of common stock issued and outstanding
              and 17,250 shares of common stock issuable upon exercise of
              options.

     (7)      Consists of 77,250 shares of common stock issued and outstanding
              and 13,750 shares of common stock issuable upon exercise of
              options.

     (8)      Consists of 36,760 shares of common stock issued and outstanding
              and 1,000 shares of common stock issuable upon exercise of
              options.

     (9)      Consists of 26,250 shares of common stock issued and outstanding
              and 1,000 shares of common stock issuable upon exercise of
              options.

     (10)     Consists of 4,118,513 shares of common stock issued and
              outstanding, 138,000 shares of common stock issuable upon exercise
              of options and 50,000 shares of common stock issuable upon
              conversion of Class A Convertible Preferred Stock.

                                      -54-


<PAGE>

EQUITY COMPENSATION PLAN INFORMATION

         The following table gives information about our common stock that may
be issued upon the exercise of options under our 2000 Stock Option Plan and our
options issued outside a formal option plan as of September 30, 2002 ("the
option plans").

<TABLE>
<CAPTION>

                                               Number of Securities       Weighted Average           Number of
                                                to be Issued Upon         Exercise Price of         Securities
                                             Exercise of Outstanding         Outstanding             Remaining
                                                Options, Warrants         Options, Warrants        Available for
Plan Category                                      and Rights (1)            and Rights           Future Issuance
-------------                                      --------------            ----------           ---------------
<S>                                                   <C>                     <C>                     <C>
Equity compensation plans approved by
   security holders                                     7,625                 $20.87                  142,375
Equity compensation plans not approved by
   security holders                                   283,669(2)              $10.29                    N/A(2)

Total                                                 291,294                 $10.57                  142,375
_______________
</TABLE>

     (1)      Number of shares is subject to adjustment for changes in
              capitalization for stock splits, stock dividends and similar
              events.

     (2)      Number of shares represents shares of common stock underlying
              outstanding non-qualified stock options issued outside of a formal
              stock option plan. Accordingly, the number of securities remaining
              available for future issuance is not applicable.

         The option plans permit grants of both incentive stock options (ISOs)
and non-qualified stock options (NQOs). Vesting periods under the option plan
vary from person to person and options under the option plan are exercisable
subject to continued employment and other conditions.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In connection with the acquisition by Kanakaris InternetWorks, Inc. of
Desience Corporation in October 1997, Mr. Lotspeich, our former Vice Chairman of
the Board and Secretary, became entitled to receive 2.5% of the gross sales of
Desience Corporation. Effective as of January 1, 2000, Mr. Lotspeich voluntarily
relinquished his rights to receive a percentage of gross sales for periods after
December 31, 1999. As of September 30, 2002, $16,526 was due and payable to Mr.
Lotspeich under this arrangement.

         Effective as of February 26, 1997, Alex Kanakaris, who is our Chairman
of the Board, President and Chief Executive Officer and who was then a director
and the President of Kanakaris InternetWorks, Inc., executed an unsecured
promissory note in favor of Kanakaris InternetWorks, Inc. in the principal
amount of the smaller of $50,000 or the sum of the drawn amounts between
February 26, 1997 and September 30, 1997, with interest at an annual rate of
6.625%. Interest payments under the note are due annually commencing June 30,
1998, with a final interest payment due at maturity of the note on February 26,
2002. Principal payments are due in five equal annual installments commencing
December 31, 1998, with a final principal payment due at maturity of the note.
Amounts due under this note through December 31, 2001 have been forgiven by our
company as part of compensation for services rendered. As of September 30, 2002,
the outstanding principal balance of this note was $9,920 and an aggregate of
$39,680 in principal and $4,929 in interest had been forgiven as of that date.

                                      -55-


<PAGE>

         Effective as of April 7, 1997, John McKay, who is a director and the
webmaster of Kanakaris Wireless and who was then a director and the webmaster of
Kanakaris InternetWorks, Inc., executed an unsecured promissory note in favor of
Kanakaris InternetWorks, Inc. in the principal amount of the smaller of $18,000
or the sum of the drawn amounts between April 7, 1997 and September 30, 1997,
with interest at an annual rate of 6.625%. Interest payments under the note are
due annually commencing June 30, 1998, with a final interest payment due at
maturity of the note on April 7, 2002. Principal payments are due in five equal
annual installments commencing December 31, 1998, with a final principal payment
due at maturity of the note. Amounts due under this note through December 31,
2001 have been forgiven by Kanakaris Wireless as part of compensation for
services rendered. As of September 30, 2002, the outstanding principal balance
of this note was $3,400 and an aggregate of $13,599 in principal and $1,689 in
interest had been forgiven as of that date.

         Effective as of May 19, 1997, Branch Lotspeich, who is a former
director and executive officer of Kanakaris Wireless and who was then a director
of Kanakaris InternetWorks, Inc. and the President of Desience Corporation,
executed an unsecured promissory note in favor of Kanakaris InternetWorks, Inc.
in the principal amount of the smaller of $10,000 or the sum of the drawn
amounts between May 19, 1997 and September 30, 1997, with interest at an annual
rate of 6.625%. Interest payments under the note are due annually commencing
June 30, 1998, with a final interest payment due at maturity of the note on May
19, 2002. Principal payments are due in five equal annual installments
commencing December 31, 1998, with a final principal payment due at maturity of
the note. Amounts due under this note through December 31, 2001 have been
forgiven by Kanakaris Wireless as part of compensation for services rendered. As
of September 30, 2002, the outstanding principal balance of this note was $1,920
and an aggregate of $7,680 in principal and $954 in interest had been forgiven
as of that date.

         Effective as of September 30, 1997, Alex Kanakaris executed an
unsecured promissory note in favor of Kanakaris InternetWorks, Inc. in the
principal amount of $153,000, with interest at an annual rate of 8.0%. Principal
and interest payments under the note were due in annual installments of $38,250
commencing September 30, 1998 and continuing until September 30, 2002, at which
time the remaining unpaid principal and interest were due in full. Amounts due
under this note have been forgiven by Kanakaris Wireless as part of compensation
for services rendered. As of September 30, 2002, there was no outstanding
balance on this note, and an aggregate of $153,000 in principal and no interest
had been forgiven as of that date.

         Effective as of December 31, 1997, John McKay executed an unsecured
promissory note in favor of Kanakaris InternetWorks, Inc. in the principal
amount of the smaller of $50,000 or the sum of the drawn amounts between January
1, 1998 and December 31, 1998, with interest at an annual rate of 6.625%.
Interest payments under the note are due annually commencing June 30, 1999, with
a final interest payment due at maturity of the note on January 1, 2003.
Principal payments are due in five equal annual installments commencing December
31, 1999, with a final principal payment due at maturity of the note. Amounts
due under this note through December 31, 2001 have been forgiven by Kanakaris
Wireless as part of compensation for services rendered. As of September 30,
2002, the outstanding principal balance of this note was $2,400 and an aggregate
of $9,599 in principal and $1,192 in interest had been forgiven as of that date.

         Effective as of December 31, 1997, Alex Kanakaris executed an unsecured
promissory note in favor of Kanakaris InternetWorks, Inc. in the principal
amount of the smaller of $85,000 or the sum of the drawn amounts between January
1, 1998 and December 31, 1998, with interest at an annual rate of 6.625%.
Interest payments under the note are due annually commencing June 30, 1999, with
a final interest payment due at maturity of the note on January 1, 2003.
Principal payments are due in five equal annual installments commencing December
31, 1998, with a final principal payment due at maturity of the note. Amounts
due under this note through December 31, 2001 have been forgiven by Kanakaris
Wireless as part of compensation for services rendered. As of September 30,
2002, the outstanding principal balance of this note was $4,160 and an aggregate
of $16,640 in principal and $2,067 in interest had been forgiven as of that
date.

                                      -56-


<PAGE>

         Effective as of December 31, 1997, Branch Lotspeich executed an
unsecured promissory note in favor of Kanakaris InternetWorks, Inc. in the

principal amount of the smaller of $30,000 or the sum of the drawn amounts
between January 1, 1998 and December 31, 1998, with interest at an annual rate
of 6.625%. Interest payments under the note are due annually commencing June 30,
1999, with a final interest payment due at maturity of the note on January 1,
2003. Principal payments are due in five equal annual installments commencing
December 31, 1998, with a final principal payment due at maturity of the note.
Amounts due under this note through December 31, 2001 have been forgiven by our
company as part of compensation for services rendered. As of September 30, 2002,
the outstanding principal balance of this note was $2,000 and an aggregate of
$8,000 in principal and $994 in interest had been forgiven as of that date.

         David Shomaker, our acting Chief Financial Officer, is a partner of
Haynie & Company, a certified public accounting firm. We engaged Haynie &
Company to provide us with accounting assistance, tax preparation services and
acting Chief Financial Officer services commencing in May 1999. Through April
30, 2001, we issued 28,750 shares of common stock to Haynie & Company in
connection with this arrangement. Also in connection with this arrangement,
Kanakaris Wireless paid to Haynie & Company a fee of $1,000 per month during
each month from May 1999 through October 1999, $2,000 per month from November
1999 through January 2000, and $4,000 per month from February 2000 through April
2001. Since May 2001, we have agreed to make cash payments based upon Haynie &
Company's regular per diem rates.

         On December 27, 1999, we executed an unsecured promissory note in favor
of Branch Lotspeich in the principal amount of $35,000, with interest at an
annual rate of 5% as payment for services rendered. Payment of principal and
accrued interest was due on or before January 10, 2002, with monthly payments of
at least 5% of the outstanding balance to be made beginning in February 2000.
This note was repaid in full.

         On December 31, 1999, as incentive compensation, we granted options to
purchase up to 105,000 shares of common stock to Alex Kanakaris, options to
purchase up to 60,000 shares of common stock to Branch Lotspeich, options to
purchase up to 17,250 shares of common stock to John McKay and options to
purchase up to 13,750 shares of common stock to Lisa Lawrence, each with an
exercise price of $10.40 per share, which was the fair market value of a share
of common stock on the date of grant.

         On January 7, 2000, our Desience division executed an unsecured
promissory note in favor of Alex Kanakaris in the principal amount of $35,000,
with interest at an annual rate of 5%. The promissory note was executed in
connection with a loan from Mr. Kanakaris that was made in order to satisfy
short-term financing needs. Payment of principal and accrued interest was due on
or before May 10, 2000. This note was repaid in full.

         On January 12, 2000, our board of directors authorized us to obtain a
term life insurance policy in the amount of $10,000,000 covering Alex Kanakaris
which, in the event of the death of Mr. Kanakaris, shall result in 80% of the
proceeds of the policy being paid to us and 20% of the proceeds of the policy
being paid to the heirs of Mr. Kanakaris, who include, among others, directors
Rose Forbes and Lisa Lawrence and then director Branch Lotspeich.

                                      -57-


<PAGE>

         On January 13, 2000, as incentive compensation, we granted options to
purchase up to 1,500 shares of common stock to then director Jeff Hall at an
exercise price of $26.20 per share, which was approximately, but not in excess
of, the fair market value of a share of common stock on the date of grant.

         On May 11, 2000 we issued 500 shares of common stock to director Lisa
Lawrence as compensation for consulting services rendered. Ms. Lawrence's
consulting services involved a special project aimed at retaining interns to
provide services to Kanakaris Wireless.

         On May 17, 2000, Alex Kanakaris executed a promissory note in favor of
Kanakaris Wireless in the principal amount of $160,000, with interest on the
unpaid principal balance at an annual rate of 7%. Principal and all accrued
interest were due on or before May 16, 2001. The note was collateralized by
7,112 shares of common stock of Kanakaris Wireless owned by Mr. Kanakaris.
Amounts due under this note were forgiven as part of compensation for services
rendered. As of September 30, 2002, there was no outstanding balance on this
note, and an aggregate of $160,000 in principal and $12,563 in interest had been
forgiven as of that date.

         On May 25, 2000, we granted non-qualified options to purchase shares of
common stock at $14.10 per share, which was the closing sale price of a share of
common stock on the trading day immediately preceding that date, under our 2000
Stock Option Plan to certain officers and directors as follows: Alex Kanakaris
received an option to purchase 45,000 shares, then director Branch Lotspeich
received an option to purchase up to 16,250 shares, John McKay received an
option to purchase up to 5,000 shares, then director Patrick McKenna received an
option to purchase up to 12,500 shares, Caroline Michaels, who subsequently
became a director, received an option to purchase up to 1,000 shares, and Lisa
Lawrence received an option to purchase up to 12,500 shares. On March 14, 2001,
the 78,750 options held by Messrs. Kanakaris, Lotspeich and McKay and by Ms.
Lawrence were cancelled.

         Effective as of June 12, 2000, David Shomaker executed an unsecured
promissory note in favor of Kanakaris Wireless in the principal amount of
$15,000, with interest on the unpaid principal balance at an annual rate of 10%.
As of September 30, 2000, we cancelled the outstanding balance due in lieu of
payment of compensation for services rendered and an aggregate of $15,000 in
principal and $452 in interest had been forgiven as of that date. The services
rendered by Mr. Shomaker included monthly and quarterly accounting,
audit-related services, assistance with stockholder meeting matters, preparation
of tax returns and tax planning, provision of monthly cash flow analysis,
preparation of income projections, analysis in connection with corporate
acquisition opportunities, preparation of corporate business plans and other
related financial services.

         In August 2000, we issued 1,500 shares of common stock valued at
$22,500 to director Lisa Lawrence as compensation for services rendered. These
shares were issued as a bonus for obtaining content for our website.

         In August 2000, we granted non-qualified stock options to purchase
shares of common stock at $15.00 per share, which was the closing sale price of
a share of common stock on the trading day immediately preceding that date,
under our 2000 Stock Option Plan to certain officers and directors as follows:
Alex Kanakaris received an option to purchase 38,125 shares, John McKay received
an option to purchase up to 2,500 shares and then director Lisa Lawrence
received an option to purchase up to 7,500 shares. On March 14, 2001, these
options were cancelled.

         On November 6, 2000, we issued 2,500 shares of common stock valued at
$19,000 to then director Jeff Hall as compensation for consulting services
rendered. These shares were issued as compensation for advice given by Mr. Hall,
who was the President of the Brentwood Media Group at the time of issuance,
relating to the publishing business and for strategic analysis in connection
with cost/return analysis relating to potential publishing opportunities.

                                      -58-


<PAGE>

         On November 6, 2000, we issued 5,000 shares of common stock valued at
$38,000 to Rose Forbes as compensation for consulting services rendered. The
shares granted to Ms. Forbes, who was employed by a movie studio at the time of
issuance, were granted as compensation for Ms. Forbes' advice relating to movie
industry issues pertaining to online film distribution, including legal rights
and other barriers to online film distribution.

         On November 6, 2000, we issued 12,500 shares of common stock valued at
$95,000 to Lisa Lawrence as compensation for extraordinary services rendered.
These shares were issued to Ms. Lawrence as compensation for her success in
organizing and managing the participation of Kanakaris Wireless in several
Internet industry events.

         On November 6, 2000, we issued 2,500 shares of common stock valued at
$19,000 to then director Pat McKenna as compensation for consulting services
rendered. These shares were issued to Mr. McKenna, who was employed in the
Internet industry at the time of issuance, for business consultation he rendered
as a member of our board of directors, including strategic advice pertaining to
partnering with larger Internet-oriented companies.

         On December 11, 2000, we issued 100,000 shares of common stock valued
at $510,000 to Alex Kanakaris as a stock bonus for extraordinary services
rendered. These shares were issued as bonus compensation for Mr. Kanakaris'
successful implementation of an online movie delivery program.

         On January 17, 2001, we entered into a Charter Membership Agreement
with the New York Internet Chamber of Commerce, or NYICC, of which Charles Moore
is founder and President, which resulted in our payment to NYICC of $5,000 for
various promotional services to be provided by NYICC to Kanakaris Wireless.

         On April 6, 2001, we issued 12,500 shares of common stock valued at
$31,250 to then director Branch Lotspeich as compensation for services rendered.
These shares were issued in lieu of cash compensation payable to Mr. Lotspeich
for services as an employee of Kanakaris Wireless.

         On April 18, 2001, we issued 50,000 shares of common stock valued at
$100,000 to Alex Kanakaris as compensation for services rendered. These shares
were issued as non-cash bonus compensation in connection with periodic stock
bonuses to our employees in recognition of continued employment and dedication
to Kanakaris Wireless.

         On April 18, 2001, we issued 5,000 shares of common stock valued at
$10,000 to John McKay as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On April 18, 2001, we issued 7,500 shares of common stock valued at
$15,000 to Lisa Lawrence as compensation for services rendered. These shares
were issued as non-cash bonus compensation in connection with periodic stock
bonuses to our employees in recognition of continued employment and dedication
to Kanakaris Wireless.

         On April 18, 2001, we issued 1,250 shares of common stock valued at
$2,500 to Caroline Michaels as compensation for services rendered. These shares
were issued as non-cash bonus compensation in connection with periodic stock
bonuses to our employees in recognition of continued employment and dedication
to Kanakaris Wireless.

                                      -59-


<PAGE>

         On April 18, 2001, we issued 1,250 shares of common stock valued at
$2,500 to Van Holster as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On May 1, 2001, we issued 14,881 shares of common stock valued at
$31,250 to then director Branch Lotspeich as compensation for services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         As of May 15, 2001, we issued 375,000 shares of common stock valued at
$1,012,500 to Alex Kanakaris as compensation for services rendered and to be
rendered. These shares were issued as bonus compensation in connection with Mr.
Kanakaris' efforts to enhance our prospects of negotiating potential mergers and
acquisitions and potential growth opportunities.

         On October 17, 2001, we issued to Branch Lotspeich 50,000 shares of
common stock valued at $21,000 as compensation for services rendered. These
shares were issued as non-cash bonus compensation in connection with periodic
stock bonuses to our employees in recognition of continued employment and
dedication to Kanakaris Wireless.

         On October 17, 2001, we issued to Caroline Michaels 10,000 shares of
common stock valued at $4,200 as compensation for services rendered. These
shares were issued as non-cash bonus compensation in connection with periodic
stock bonuses to our employees in recognition of continued employment and
dedication to Kanakaris Wireless.

         On October 17, 2001, we issued to Van Holster 5,000 shares of common
stock valued at $2,100 as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On October 17, 2001, we issued to John McKay 5,000 shares of common
stock valued at $2,100 as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On October 17, 2001, we issued to Lisa Lawrence 5,000 shares of common
stock valued at $2,100 as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On January 11, 2002, we loaned Alex Kanakaris $36,000 at an annual
percentage rate of 5%. The loan plus all accrued and unpaid interest is payable
five years following the date of the loan. As of September 30, 2002 the
outstanding principal balance of this loan and all accrued interest had been
repaid.

         On March 18, 2002, we issued to Alex Kanakaris 350,000 shares of common
stock valued at $35,000 as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

                                      -60-


<PAGE>

         On March 18, 2002, we issued to John McKay 180,000 shares of common
stock valued at $18,000 as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On March 18, 2002, we issued to Lisa Lawrence 50,000 shares of common
stock valued at $5,000 as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On March 18, 2002, we issued to Van Holster 20,000 shares of common
stock valued at $2,000 as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On March 18, 2002, we issued to Caroline Michaels 15,000 shares of
common stock valued at $1,500 as a stock bonus for extraordinary services
rendered. These shares were issued as non-cash bonus compensation in connection
with periodic stock bonuses to our employees in recognition of continued
employment and dedication to Kanakaris Wireless.

         On March 18, 2002, we issued to Rose Forbes 100,000 shares of common
stock valued at $10,000 as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On March 18, 2002, we issued to Charles Moore 25,000 shares of common
stock valued at $2,500 as compensation for services rendered. These shares were
issued as non-cash bonus compensation in connection with periodic stock bonuses
to our employees in recognition of continued employment and dedication to
Kanakaris Wireless.

         On April 16, 2002, we issued to Alex Kanakaris 1,000,000 shares of
common stock valued at $90,000 as a stock bonus for extraordinary services
rendered. These shares were issued as non-cash bonus compensation in connection
with periodic stock bonuses to our employees in recognition of continued
employment and dedication to Kanakaris Wireless.

         On April 16, 2002, we issued to John McKay 250,000 shares of common
stock valued at $22,500 as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On June 7, 2002, we issued to Alex Kanakaris 1,000,000 shares of common
stock valued at $30,000 as a stock bonus for extraordinary services rendered.
These shares were issued as non-cash bonus compensation in connection with
periodic stock bonuses to our employees in recognition of continued employment
and dedication to Kanakaris Wireless.

         On June 7, 2002, we issued to John McKay 500,000 shares of common stock
valued at $15,000 as a stock bonus for extraordinary services rendered. These
shares were issued as non-cash bonus compensation in connection with periodic
stock bonuses to our employees in recognition of continued employment and
dedication to Kanakaris Wireless.

                                      -61-


<PAGE>

         We are the beneficiary of 80% of the proceeds of a term life insurance
policy in the amount of $10,000,000 covering Alex Kanakaris, whose heirs are the
beneficiaries of the remaining 20% of the proceeds of that policy. We have paid
all premiums associated with this term life insurance policy, including $3,948
for the fiscal year ended September 30, 2002, $3,905 for the fiscal year ended
September 30, 2001 and $3,208 for the fiscal year ended September 30, 2000, all
of which are attributable to the 20% portion of the proceeds payable under that
policy to the heirs of Mr. Kanakaris. These premium amounts were paid by us for
the benefit of the heirs of Mr. Kanakaris as part of Mr. Kanakaris' executive
compensation package.

         We are or have been a party to various employment, consulting and
compensation arrangements with related parties, as more particularly described
above under the headings "Management -- Compensation of Directors" and
"Management -- Executive Compensation."

         For each of the issuances described above and made for consulting or
other services rendered, the per share value of the common stock issued was the
fair market value of the common stock on the grant date, which equaled the
closing price of a share of common stock on the OTC Bulletin Board(R) on that
date.

         We do not have a formal loan forgiveness policy and the arrangements
for our loans to our officers or directors have been made on a case-by-case
basis. With respect to the loans described above made to officers and directors
that have been forgiven from time to time, our board of directors or an
appropriate committee of our board of directors has approved these arrangements.

         The loans made in 1997 were made at the request of the individuals
receiving those loans and we committed to write off those loans on an annual
basis over a period of five years, with each write off of principal and accrued
and unpaid interest being recorded as compensation paid to the corresponding
individual. These loans were approved by our board of directors or an
appropriate committee of our board of directors but did not correspond to any
specific services outside of the ordinary course of the directors' and executive
officers' employment with Kanakaris Wireless.

         The loan made in May 2000 to Alex Kanakaris was made at the request of
Mr. Kanakaris and we wrote off this loan and recorded as compensation to Mr.
Kanakaris the principal and accrued and unpaid interest amounts on the loan as a
result of Mr. Kanakaris' extraordinary efforts in operating our business during
2000, which extraordinary efforts included:

     o        direction of the successful acquisition of hundreds of movie
              masters for utilization on our websites;

     o        creation of a working online movie delivery website during a time
              period when many highly-funded and high profile attempts to create
              similar sites failed; and

     o        bringing our websites to the awareness of a larger audience
              through interviews on radio, TV and print media pertaining to the
              evolution of the Internet, many of which were in connection with
              Mr. Kanakaris' book, Signs of Intelligent Life on the Internet.

         The loan made in June 2000 to David Shomaker was made in connection
with services provided by Mr. Shomaker, as more particularly described above,
and was subsequently repaid by offsetting compensation owed Mr. Shomaker against
this loan. The loan made in January 2002 to Alex Kanakaris was made in lieu of
salary and was subsequently repaid by offsetting salary compensation owed Mr.
Kanakaris against this loan. In light of the enactment of the Sarbanes-Oxley Act
of 2002, it is our policy to no longer extend loans to our directors or
officers.

                                      -62-


<PAGE>

         For each of the issuances described above and made for consulting or
other services rendered, the per share value of the common stock issued was the
fair market value of the common stock on the grant date, which equaled the
closing price of a share of common stock on the OTC Bulletin Board(R) on that
date.

         We are or have been a party to various employment, consulting and
compensation arrangements with related parties, as more particularly described
above under the headings "Management--Compensation of Executive Officers" and
"Management--Compensation of Directors."

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

         (a)      EXHIBITS.

         Reference is made to the Index to Exhibits that follows the
consolidated financial statements contained in this report.

         (b)      REPORTS ON FORM 8-K.

         During the quarter ended September 30, 2002, the Registrant did not
file any current reports on Form 8-K.

                                      -63-


<PAGE>
<TABLE>

                                       KANAKARIS WIRELESS AND SUBSIDIARIES

                                          INDEX TO FINANCIAL STATEMENTS
<CAPTION>

                                                                                                           PAGE
                                                                                                           ----
<S>                                                                                                        <C>

Consolidated Financial Statements As Of And For The Years Ended September 30, 2002 and 2001
-------------------------------------------------------------------------------------------

Independent Auditors' Report................................................................................F-2

Consolidated Balance Sheets as of September 30, 2002 and 2001...............................................F-3

Consolidated Statements of Operations for the Years Ended
     September 30, 2002 and 2001............................................................................F-5

Consolidated Statements of Comprehensive Loss for the Years Ended
     September 30, 2002 and 2001............................................................................F-6

Consolidated Statements of Changes in Stockholders' Deficiency
     For the Years Ended September 30, 2002 and 2001........................................................F-7

Consolidated Statements of Cash Flows for the Years Ended
     September 30, 2002 and 2001............................................................................F-9

Notes to Consolidated Financial Statements for the Years Ended
     September 30, 2002 and 2001............................................................................F-12

</TABLE>

                                                      F-1


<PAGE>

                        INDEPENDENT AUDITORS' REPORT
                        ----------------------------

To the Board of Directors of:
Kanakaris Wireless

We have audited the accompanying consolidated balance sheets of Kanakaris
Wireless and Subsidiaries as of September 30, 2002 and 2001 and the related
consolidated statements of operations, comprehensive loss, changes in
stockholders' deficiency and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. These standards require that we plan and
perform the audits 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 financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Kanakaris Wireless
and Subsidiaries as of September 30, 2002 and 2001 and the results of their
operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 24 to the
financial statements, the Company has a net loss from operations of $8,078,143,
a negative cash flow from operating activities of $144,957, a working capital
deficiency of $6,526,792 and a stockholders' deficiency of $6,436,992. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

WEINBERG & COMPANY, P.A.

/s/ WEINBERG & COMPANY, P.A.

Los Angeles, California
December 19, 2002

                                      F-2


<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                           Consolidated Balance Sheets
                        As of September 30, 2002 and 2001

                                                          2002          2001
                                                       -----------   -----------
ASSETS

Current assets:
  Cash                                                 $   21,661    $   51,473
  Accounts receivable, net                                130,029       122,093
  Inventories, net                                         27,496         1,960
  Investments in marketable securities                      8,571        64,000
  Current maturities of notes receivable -
     shareholders and related parties                      36,280       110,810
  Current maturities of notes receivable - other           25,000            --
  Vendor deposits                                             700            --
  Interest receivable                                      49,287        35,305
  Prepaid expenses                                         14,080        20,063
                                                       -----------   -----------
          TOTAL CURRENT ASSETS                            313,104       405,704
                                                       -----------   -----------

Property and equipment, net of accumulated
  depreciation and amortization                            88,050        48,683
                                                       -----------   -----------

Other assets:
 Film library - net of accumulated amortization                --       384,936
 Goodwill - net of accumulated amortization                    --       328,565
 Other                                                      1,750         2,836
                                                       -----------   -----------
          TOTAL OTHER ASSETS                                1,750       716,337
                                                       -----------   -----------
          TOTAL ASSETS                                 $  402,904    $1,170,724
                                                       ===========   ===========

          See accompanying notes to consolidated financial statements.

                                      F-3


<PAGE>
<TABLE>

                         KANAKARIS WIRELESS AND SUBSIDIARIES
                             Consolidated Balance Sheets
                          As of September 30, 2002 and 2001
<CAPTION>

                                                           2002             2001
                                                       -------------   -------------
<S>                                                    <C>             <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
  Accounts payable and accrued expenses                $  2,769,038    $  1,087,331
  Due to former shareholder of former subsidiary            113,183         104,695
  Convertible debentures                                  3,585,125       2,756,500
  Convertible promissory notes                              372,550              --
                                                       -------------   -------------
          TOTAL CURRENT LIABILITIES                       6,839,896       3,948,526
                                                       -------------   -------------

Stockholders' deficiency:
  Preferred stock, Class A Convertible shares
     $0.01 par value; 5,000,000 shares
     authorized; 1,000,000 issued and outstanding            10,000          10,000
  Preferred stock, Class B Convertible shares
     $1,000 par value; 900 shares
     authorized; 900 issued and outstanding                 900,000              --
  Common stock, $0.001 par value; 250,000,000 and
     100,000,000 shares authorized; 24,450,065 and
     4,514,704 in 2002 and 2001 respectively, issued
     and outstanding                                         24,450           4,514
  Additional paid-in capital                             31,707,539      28,928,690
  Accumulated deficit                                   (38,725,325)    (30,564,905)
  Deferred expenses                                        (353,656)     (1,108,101)
  Comprehensive loss                                             --         (48,000)
                                                       -------------   -------------

          TOTAL STOCKHOLDERS' DEFICIENCY                 (6,436,992)     (2,777,802)
                                                       -------------   -------------
          TOTAL LIABILITIES AND
          STOCKHOLDERS' DEFICIENCY                     $    402,904    $  1,170,724
                                                       =============   =============

             See accompanying notes to consolidated financial statements.

                                         F-4
</TABLE>



<PAGE>
<TABLE>

                          KANAKARIS WIRELESS AND SUBSIDIARIES
                         Consolidated Statements of Operations
                    For the Years Ended September 30, 2002 and 2001
<CAPTION>

                                                            2002             2001
                                                        -------------   -------------
<S>                                                     <C>             <C>
Net sales                                               $    413,946    $  1,186,681
Cost of sales                                                315,045         361,761
                                                        -------------   -------------
          GROSS PROFIT                                        98,901         824,920
                                                        -------------   -------------

Operating expenses:
  Executive compensation                                   1,034,742       1,443,982
  Salaries                                                   227,399         309,218
  Payroll taxes and employee benefits                         24,935          30,173
  Consulting services                                      1,235,871       1,793,110
  Travel and entertainment                                    66,461         185,668
  Telephone and utilities                                     41,606          43,579
  Marketing, advertising and investor relations               78,152         601,478
  Professional fees                                          690,044         818,129
  Rent                                                        39,897          69,689
  Office and other expenses                                  289,815         193,390
  Equipment rental and expense                                 1,551             671
  Insurance                                                   83,305          72,902
  Depreciation and amortization                              136,410         146,682
  Bad debt expense                                            83,770         159,260
  Taxes - other                                                  357           4,047
  Bank charges                                                 3,191           1,591
  Website development                                            323          50,932
  Loss on impairment of goodwill                           2,112,784              --
  Loss on impairment of film library                         284,190              --
                                                        -------------   -------------

          TOTAL OPERATING EXPENSES                         6,434,803       5,924,501
                                                        -------------   -------------
     Loss from operations before interest
        and other income (expense)                        (6,335,902)     (5,099,581)
                                                        -------------   -------------
Interest and other income (expense):
  Interest income                                             17,987          43,847
  Dividend income                                                 --             474
  Interest and financing expense                          (1,619,299)     (3,240,584)
  Other income (expense)                                     (37,500)         24,695
  Loss on impairment of investment
     in marketable securities                               (103,429)       (980,000)
                                                        -------------   -------------
          TOTAL INTEREST AND OTHER INCOME (EXPENSE)       (1,742,241)     (4,151,568)
                                                        -------------   -------------
     Loss before discontinued operations                  (8,078,143)     (9,251,149)
     Discontinued operations                                 (82,277)         27,090
                                                        -------------   -------------
     Net loss                                           $ (8,160,420)   $ (9,224,059)
                                                        =============   =============
     Net loss per common share:
          Basic and diluted - continuing operations     $       (.68)   $      (3.28)
          Basic and diluted - discontinued operations           (.01)            .01
                                                        -------------   -------------
     Net loss per common share                          $       (.69)   $      (3.27)
                                                        =============   =============
     Weighted average common shares
        outstanding - basic and diluted                   11,823,447       2,820,250
                                                        =============   =============

             See accompanying notes to consolidated financial statements.

                                          F-5
</TABLE>



<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                  Consolidated Statements of Comprehensive Loss
                 For the Years Ended September 30, 2002 and 2001

                                                         2002           2001
                                                     ------------   ------------
Net loss                                             $(8,160,420)   $(9,224,059)
Other comprehensive loss:

     Unrealized loss on marketable securities                 --        (48,000)
                                                     ------------   ------------
Comprehensive loss                                   $(8,160,420)   $(9,272,059)
                                                     ============   ============

          See accompanying notes to consolidated financial statements.

                                      F-6


<PAGE>
<TABLE>

                                                 KANAKARIS WIRELESS AND SUBSIDIARIES
                                    Consolidated Statement of Changes in Stockholders' Deficiency
                                           For the Years Ended September 30, 2002 and 2001
<CAPTION>

                                     Preferred Stock                Common Stock
                               ----------------------------  ----------------------------                  Accumulated
                                  Shares         Amount         Shares         Amount          APIC          Deficit
                               -------------  -------------  -------------  -------------  -------------  -------------
<S>                               <C>         <C>               <C>         <C>            <C>            <C>
BALANCES
SEPTEMBER 30, 2000                1,000,000   $     10,000      1,729,884   $      1,730   $ 19,211,227   $(21,340,846)

  Stock issued for cash:                 --             --        178,333            178        249,822             --

  Stock issued for:
     Compensation                        --             --        587,381            587      1,828,288             --
     Consulting services                 --             --        420,342            420      1,293,470             --
     Marketing, advertising
      and investor relations             --             --         30,000             30        177,970             --
     Professional
      services                           --             --         15,000             15         43,985             --

  Settlement of
   Netbooks.com dispute                  --             --          1,250              1          3,749             --

  Converted debentures                   --             --      1,552,514          1,553      3,089,119             --

  Convertible debt
   financing costs                       --             --             --             --      2,665,002             --

  Issuance of 125,000 common
   stock warrants to
   a consultant                          --             --             --             --        366,058             --

  Cancellation of stock
   subscriptions                         --             --             --             --             --             --

  Unrealized loss on
   marketable securities                 --             --             --             --             --             --

  Net (loss)                             --             --             --             --             --     (9,224,059)
                               -------------  -------------  -------------  -------------  -------------  -------------
BALANCES
SEPTEMBER 30, 2001                1,000,000   $     10,000      4,514,704   $      4,514   $ 28,928,690   $(30,564,905)
                               =============  =============  =============  =============  =============  =============
</TABLE>

continued below:

                                                                F-7a


<PAGE>
<TABLE>
<CAPTION>

continued from above:
                                  Deferred      Comprehensive      Stock
                                  Expenses          Loss        Subscriptions        Total
                                -------------   -------------   -------------   -------------
<S>                             <C>             <C>             <C>             <C>
BALANCES
SEPTEMBER 30, 2000              $         --    $         --    $     (1,260)   $ (2,119,149)

  Stock issued for cash:                  --              --              --         250,000

  Stock issued for:
     Compensation                   (822,656)             --              --       1,006,219
     Consulting services            (285,445)             --              --       1,008,445
     Marketing, advertising
      and investor relations              --              --              --         178,000
     Professional
      services                            --              --              --          44,000

  Settlement of
   Netbooks.com dispute                   --              --              --           3,750

  Converted debentures                    --              --              --       3,090,672

  Convertible debt
   financing costs                        --              --              --       2,665,002

  Issuance of 125,000 common
   stock warrants to
   a consultant                           --              --              --         366,058

  Cancellation of stock
   subscriptions                          --              --           1,260           1,260

  Unrealized loss on
   marketable securities                  --         (48,000)             --         (48,000)

  Net (loss)                              --              --              --      (9,224,059)
                                -------------   -------------   -------------   -------------
BALANCES
SEPTEMBER 30, 2001              $ (1,108,101)   $    (48,000)   $         --    $ (2,777,802)
                                =============   =============   =============   =============

See accompanying notes to consolidated financial statements.

                                             F-7b
</TABLE>



<PAGE>

KANAKARIS WIRELESS AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Deficiency
For the Years Ended September 30, 2002 and 2001

<TABLE>

                                                 KANAKARIS WIRELESS AND SUBSIDIARIES
                                    Consolidated Statement of Changes in Stockholders' Deficiency
                                           For the Years Ended September 30, 2002 and 2001
<CAPTION>

                                     Preferred Stock                Common Stock
                               ----------------------------  ----------------------------                  Accumulated
                                  Shares         Amount         Shares         Amount          APIC          Deficit
                               -------------  -------------  -------------  -------------  -------------  -------------
<S>                               <C>         <C>               <C>         <C>            <C>            <C>

BALANCES
SEPTEMBER 30, 2001                1,000,000   $     10,000      4,514,704   $      4,514   $ 28,928,690   $(30,564,905)

  Stock issued for cash:                 --             --      5,206,250          5,207        311,263             --

  Stock issued for:
    Compensation                         --             --      4,005,000          4,005        267,175             --
    Consulting services                  --             --      4,792,128          4,792        745,834             --
    Professional
     services                            --             --         65,200             65          7,435             --

  Settlement agreement                   --             --        285,000            285         51,390             --

  Converted debentures                   --             --      5,581,783          5,582        255,459             --

  Convertible debt
   financing costs                       --             --             --             --      1,093,452             --

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

  Series B preferred                    900        900,000             --             --             --             --

  Realized loss on
   marketable securities                 --             --             --             --             --             --

  Net (loss)                             --             --             --             --             --     (8,160,420)
                               -------------  -------------  -------------  -------------  -------------  -------------
BALANCES
SEPTEMBER 30, 2002                1,000,900   $    910,000     24,450,065   $     24,450   $ 31,707,539   $(38,725,325)
                               =============  =============  =============  =============  =============  =============
continued below

                                                                           F-8a

</TABLE>


<PAGE>

continued from above:
                                  Deferred      Comprehensive
                                  Expenses          Loss            Total
                                -------------   -------------   -------------

BALANCES                        $ (1,108,101)   $    (48,000)   $ (2,777,802)
SEPTEMBER 30, 2001

  Stock issued for cash:                  --              --         316,470

  Stock issued for:
    Compensation                     506,251              --         777,431
    Consulting services              248,194              --         998,820
    Professional
     services                             --              --           7,500

  Settlement agreement                    --              --          51,675

  Converted debentures                    --              --         261,041

  Convertible debt
   financing costs                        --              --       1,093,452

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

  Series B preferred                      --              --         900,000

  Realized loss on
   marketable securities                  --          48,000          48,000

  Net (loss)                              --              --      (8,160,420)
                                -------------   -------------   -------------
BALANCES
SEPTEMBER 30, 2002              $   (353,656)   $         --    $ (6,436,992)
                                =============   =============   =============

          See accompanying notes to consolidated financial statements.

                                      F-8b



<PAGE>
<TABLE>

                          KANAKARIS WIRELESS AND SUBSIDIARIES
                         Consolidated Statements of Cash Flows
                    For the Years Ended September 30, 2002 and 2001
<CAPTION>

                                                               2002           2001
                                                           ------------   ------------
<S>                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $(8,160,420)   $(9,224,059)
  Adjustments to reconcile net loss
     to net cash used in operating activities:
       Amortization of goodwill                                     --         28,538
       Depreciation and amortization                           137,252        118,393
       Impairment of goodwill                                2,449,836             --
       Stock issued for Netbooks.com legal settlement               --          3,750
       Settlement agreement                                     51,675             --
       Income realized from stock received for services             --     (1,092,000)
       Gain on sale of assets                                 (247,301)            --
       Loss on impairment of investment in
         marketable securities and film library                387,619        980,000
       Provision for bad debts                                  63,567        159,260
       Stock issued for compensation, consulting,
         marketing and professional services                 1,783,751      2,236,664
       Stock options issued for consulting services             46,841        366,058
       Convertible debt - marketing cost                       234,500        270,100
       Convertible debt - financing cost                     1,093,452      2,665,002
       Convertible debt - interest cost                         64,666        327,173
  Changes in assets and liabilities
     (Increase) decrease in:
          Accounts receivable                                  (71,503)       180,153
          Inventory                                            (25,536)         2,495
          Prepaid expenses                                       5,983        144,970
          Advance to supplies and security deposits                386             --
          Interest receivable                                  (13,982)       (25,236)
     Increase in:
          Accounts payable and accrued expenses              2,054,257        289,339
                                                           ------------   ------------
          NET CASH USED IN OPERATING ACTIVITIES               (144,957)    (2,569,400)
                                                           ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                --        (17,824)
  Acquisition of subsidiary                                 (1,291,355)            --
  Decrease in notes receivable -
    shareholders and related parties                            74,530        234,529
  Increase in security deposits                                     --         (1,436)
  Note receivable repayments                                   225,000         47,000
  Acquisition of film library                                       --        (31,397)
                                                           ------------   ------------
     NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES      (991,825)       230,872
                                                           ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment to former shareholder of subsidiary                       --         (5,000)
  Proceeds from convertible debt                               790,500      1,529,900
  Proceeds from sale of common stock                           316,470        250,000
                                                           ------------   ------------
          NET CASH PROVIDED BY FINANCING ACTIVITIES          1,106,970      1,774,900
                                                           ------------   ------------
Net (decrease) in cash                                         (29,812)      (563,628)

Cash, beginning of year                                         51,473        615,101
                                                           ------------   ------------
Cash, end of year                                          $    21,661    $    51,473
                                                           ============   ============

              See accompanying notes to consolidated financial statements

                                          F-9
</TABLE>



<PAGE>

                       KANAKARIS WIRELESS AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                 For the Years Ended September 30, 2002 and 2001

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the year ended September 30, 2002, the Company issued 4,792,128 shares of
common stock for consulting services having a fair value of $750,626. The
4,792,128 shares issued during the year ended September 30, 2002, were issued to
a variety of business consultants including 5,000 shares to a non-employee
member of the Company's board of directors, 10,000 shares to a member of the
Company's board of directors who was also an employee of the Company, and
4,777,128 to eighteen other consultants.

During the year ended September 30, 2002, the Company issued an aggregate of
285,000 shares of common stock having a fair market value of $51,675 to a former
officer in satisfaction of certain claims.

During the year ended September 30, 2002, the Company issued 65,200 shares of
common stock for legal services having a fair value of $7,500.

During the year ended September 30, 2002, the Company issued 4,005,000 shares of
common stock having a fair value of $271,180. Of the 4,005,000 shares issued,
2,350,000 shares were issued to the Company's Chairman of the Board, Chief
Executive Officer and President, 935,000 shares were issued to an employee of
the Company who was also a member of the Company's board of directors, 55,000
shares were issued to two directors who were then employees of the Company,
210,000 shares were issued to five non- employee directors of the Company, and
455,000 shares were issued to thirteen non- director employees of the Company,
including employees of the Company's Fast Forward Marketing Subsidiary.

During the year ended September 30, 2002, the Company issued an aggregate of
5,556,757 shares of common stock having a fair value of approximately $261,000
to various debenture investors representing the conversion of principal and
interest.

During the year ended September 30, 2002, the Company converted $372,550 of
accounts payable to convertible promissory notes.

During the year ended September 30, 2001, the Company issued 465,342 shares of
common stock for consulting, marketing and professional services having a fair
value of $1,515,890. Of the 465,342 shares issued during the year ended
September 30, 2001, 2,500 shares were issued for legal consulting services,
12,500 shares were issued for accounting and bookkeeping services, and 450,342
shares were issued to a variety of business consultants including 10,000 shares
to three members of the Company's board of directors and 440,342 shares to eight
other consultants.

                                      F-10


<PAGE>

During the year ended September 30, 2001, the Company issued 587,380 shares of
common stock having a value of $1,828,875. Of the 587,381 shares issued during
the year ended September 30, 2001, 525,000 shares were issued to the Company's
Chairman of the Board, Chief Executive Officer and President, 47,381 shares were
issued to two employees of the Company who were also members of the Company's
board of directors, and 15,000 shares were issued to six non-director employees
of the Company.

During the year ended September 30, 2001, the Company issued an aggregate of
1,552,514 shares of common stock having a fair value of approximately $3,091,000
to various debenture investors representing the conversion of principal and
interest.

During the year ended September 30, 2001, the Company issued 1,250 shares of
common stock in settlement of the Netbooks.com dispute having a fair value of
$3,750.

The Company has a liability of $113,183 at September 30, 2002 and $104,695 at
September 30, 2001 which represents the amount due to a former sole shareholder
of the Company's former subsidiary pursuant to the agreement regarding the
previous acquisition of the former subsidiary.

During the years ended September 30, 2002 and 2001, the Company issued 581,250
and 125,000 common stock warrants and options respectively, to consultants for
services having a fair value as computed under SFAS No. 123 using the
Black-Scholes Model of $46,841 and $366,058, respectively.

          See accompanying notes to consolidated financial statements.

                                      F-11


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------   ------------------------------------------

         (A) BUSINESS ORGANIZATION AND ACTIVITY

         Kanakaris Wireless, which on June 2, 2000 changed its name from
         Kanakaris Communications, Inc., (the "Company"), was incorporated in
         the State of Nevada on November 1, 1991. The Company operates various
         websites including www.kanakaris.com, an interactive entertainment
         content delivery website. The Company's websites consolidate previous
         websites developed by the Company including www.CinemaPop.com,
         www.WordPop.com and www.AK.TV. The Company's websites offer consumers
         over 400 click-and-view online movies, a television-styled web channel
         which plays regularly scheduled movies and other features, and
         print-on-demand books with online preview chapters. The Company's
         websites offer for sale various products of the pop culture genre and
         VHS and DVD titles. The Company also develops and supplies software and
         products for electronic commerce and content delivery. The Company
         operated a subsidiary, which was sold in March 2002, which designed and
         installed modular data control consoles. In April 2002, the Company
         acquired the business of Fast Forward Marketing, Inc., a national
         distributor of VHS and DVD movies and features, and now operates a
         video distribution business through its Fast Forward Marketing, Inc.
         subsidiary. Fast Forward Marketing, Inc. provides sales and marketing
         services in the video and audio industries throughout the United
         States. The Company purchases its products from major motion picture
         studios and/or independent video producers and sells directly to video
         retailers including children's educational stores, gift shops, museum
         stores, educational distributors, and direct mail catalogs.

         (B) BUSINESS COMBINATIONS

         On October 10, 1997 (the "Acquisition Date"), Kanakaris Internetworks,
         Inc. ("KIW") consummated a Stock Purchase Agreement with the
         shareholder (the "Seller") of Desience Corporation ("Desience") to
         purchase 10,000 common shares representing 100% of its issued and
         outstanding common stock in exchange for a 4% royalty on the gross
         sales (after collection) of Desience subsequent to the Acquisition
         Date, to be paid monthly for as long as Desience remains in business or
         its products are sold. Pursuant to APB 16, since the Seller had no
         continuing affiliation with KIW, the 4% royalty is accounted for as an
         increase to goodwill at the date the amount is determinable. In
         addition, the Seller shall receive 5% of funds which are to be
         allocated to Desience arising from KIW's next securities offering as a
         non-refundable advance on the royalty. As of September 30, 2002, no
         advances have been given. KIW will hold harmless the Seller from any
         claims, causes of action, costs, expenses, liabilities, and prior
         shareholder advances. Immediately following the exchange, Desience
         became a wholly-owned subsidiary of KIW. The fair value of the assets
         and liabilities acquired pursuant to the acquisition of Desience was
         $148,776 and $468,120, respectively, which resulted in goodwill of

                                      F-12


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         $319,344 at the Acquisition Date since no trademarks, copyrights,
         existing or identified long term requirement contracts or other
         intangibles existed at that date. Additions to goodwill resulting from
         the royalty for the year ended September 30, 2002 and 2001 were $8,488
         and $12,144, respectively. As of September 30, 2002, all goodwill was
         written-off, as a consequence of the sale of the subsidiary.

         On March 4, 2002, the Company entered into an asset purchase agreement
         whereby substantially all of the assets and business of Desience were
         sold. Included in the sale were all contract rights. Accordingly, for
         accounting purposes, the financial activity of Desience is being
         treated as a discontinued operation and is presented in the statements
         of operations separately from continuing operations.

         On March 15, 2002, the Company formed a new corporation called FFM
         Acquisition Corp. This corporation was used to acquire the business of
         Fast Forward Marketing, Inc. on April 8, 2002, and now operates under
         the name of Fast Forward Marketing, Inc. Fast Forward Marketing, Inc.
         provides sales and marketing services in the video and audio industries
         throughout the United States. The Company purchases its products from
         major motion picture studios and/or independent video producers and
         sells directly to video retailers including children's educational
         stores, gift shops, museum stores, educational distributors, and direct
         mail catalogs.

         (C) PRINCIPLES OF CONSOLIDATION

         The accompanying condensed consolidated financial statements include
         the accounts of the Company, and its wholly owned subsidiaries
         Kanakaris Internetworks Inc., Desience Corporation, and Fast Forward
         Marketing, Inc. (formerly known as FFM Acquisition, Corp.). All
         significant intercompany balances and transactions have been eliminated
         in consolidation. Desience has been classified as a discontinued
         operation, and the prior year's information has been restated to
         account for this classification.

         (D) USE OF ESTIMATES

         The accompanying financial statements have been prepared in accordance
         with generally accepted accounting principles in the United States of
         America. The preparation of financial statements in accordance with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenue and expenses during the reporting period. Actual results could
         differ from those estimates.

                                      F-13


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         (E) CASH AND CASH EQUIVALENTS

         For purposes of the statements of cash flows, the Company considers all
         highly liquid debt instruments purchased with an original maturity of
         three months or less to be cash equivalents. As of September 30, 2002,
         the Company only has cash.

         (F) ACCOUNTS RECEIVABLE AND PAYABLE

         Fast Forward Marketing, Inc. has an agreement with its customers and
         suppliers that allows for returns of merchandise. Accordingly, a
         reserve for accounts receivable and payable has been provided. The
         reserve accounts require the use of significant estimates, which could
         differ from actual results. The Company believes the techniques and
         assumptions used in establishing the reserve accounts are appropriate.
         As of September 30, 2002, the Company recorded a reserve for accounts
         receivable of approximately $63,000, and a reserve for accounts payable
         of approximately $7,000.

         (G) INVENTORIES, NET

         Inventories, which consist of videos and video parts, are valued at the
         lower of cost or market. Cost is determined by the first-in, first-out
         (FIFO) method. Management performs periodic assessments to determine
         the existence of obsolete, slow-moving and non-salable inventories and
         records necessary provisions to reduce such inventories to net
         realizable value. As of September 30, 2002, the Company has recorded a
         reserve for inventory of $27,497.

         (H) INVESTMENTS IN MARKETABLE SECURITIES

         The Company classifies marketable debt securities as "held to maturity"
         if it has the positive intent and ability to hold the securities to
         maturity. All other marketable securities are classified as "available
         for sale." Securities classified as "available for sale" are carried on
         the financial statements at fair market value. Unrealized gains and
         losses are reported as a separate component of comprehensive income.
         Unrealized losses are charged against net income when a decline in fair
         value is determined to be other than temporary. Securities classified
         as held to maturity are carried at amortized cost.

         At September 30, 2002, investments in marketable securities consisted
         of available-for-sale securities of $8,571. For the year ended
         September 30, 2001, the Company had an unrealized loss from marketable
         securities of $48,000 due to a temporary decline in fair market value.
         In 2002 and 2001, the Company had realized losses from marketable
         securities of $103,429 and $980,000, respectively, due to a decline in
         fair value, which, in accordance with FASB 115, the Company determined
         was other than temporary and accordingly is included in the statement
         of operations.

                                      F-14


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         (I) PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost and depreciated using the
         straight line method over the estimated economic useful life of 5 to 7
         years. The Company periodically reviews such assets for possible
         impairments and any expected losses are recorded currently. Maintenance
         and repairs are charged to expense as incurred. Major improvements are
         capitalized. Depreciation expense for the years ended September 30,
         2002 and 2001 was $56,348 and $11,935, respectively.

         (J) FILM LIBRARY

         The cost to acquire and encode the Company's film library, which as of
         September 30, 2002 aggregated $503,736, is being amortized on a
         straight-line basis over a 5-year period. Amortization expense for the
         years ended September 30, 2002 and 2001 amounted to $100,746 and
         $99,377, respectively. As of September 30, 2002 and 2001, accumulated
         amortization was $219,546 and $118,800, respectively.

         The Company evaluates the recoverability of the film library, when
         indicators of impairment are present, by reviewing current and
         projected profitability or undiscounted cash flows of such assets.
         Intangible assets that are subject to amortization are reviewed for
         potential impairment whenever events or circumstances indicate that
         carrying amounts may not be recoverable. For the year ended September
         30, 2002, the Company determined that, based on estimated future cash
         flows, the carrying amount of the film library would be considered
         fully impaired. As a result the Company recorded an impairment charge
         of $284,190 during the year ended September 30, 2002.

         (K) SOFTWARE DEVELOPMENT COSTS

         In accordance with EITF Issue No. 00-2, the Company accounts for its
         web site development costs in accordance with Statement of Position No.
         98-1 "Accounting for the Costs of Computer Software Developed or
         Obtained for Internal Use" ("SOP 98-1").

         SOP 98-1 requires the expensing of all costs of the preliminary project
         stage and the training and application maintenance stage and the
         capitalization and amortization of all internal or external direct
         costs incurred during the application development stage.

         (L) GOODWILL

         Goodwill represented the excess of the purchase price over the fair
         value of net assets acquired in connection with the Fast Forward
         Marketing, Inc. and Desience Corporation acquisitions and was being
         amortized on a straight-line basis over twenty years. The Company

                                      F-15


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         periodically evaluates the recoverability of goodwill. The measurement
         of possible impairment is based primarily on the Company's ability to
         recover the unamortized balance of the goodwill from expected future
         operating cash flows on an undiscounted basis. As of September 30,
         2002, the Company determined its goodwill was fully impaired and wrote
         off the unamortized portion of approximately $2.1 million. The current
         charge has been included in operating expenses on the accompanying
         financial statements.

         (M) REVENUE RECOGNITION

         The Company offers monthly recurring subscriptions at $4.95 per month.
         Once a subscription is received from a new subscriber, the customer is
         automatically billed each month at the per month rate of $4.95 until
         the customer cancels the subscription. All CinemaPop films can be
         purchased on an individual pay-per-view basis for $2.95 per viewing.
         The customer can view pay-per-view films for a 24-hour period following
         initial purchase. The Company also sells videos, and movie and sports
         memorabilia and other products of the pop culture genre on a per-item
         basis.

         The Company offers books for sale on a print-on-demand basis, which are
         printed and shipped directly to the customer. Prices for the Company's
         print-on-demand books range from $1.95 to $25.00 per book. The Company
         accepts Visa and MasterCard for secure online payments. The Company
         accepts returns on all items purchased from its websites and offers
         full refunds on subscriptions and pay-per-view transactions to any
         unsatisfied customer.

         Any royalty due is accounted for by the Company as a cost of sale. Most
         on-demand, DVD or VHS movies do not require the payment of any royalty.
         Where a royalty payment is required, it is paid subsequent to the
         receipt of the order and is recorded as a cost of sale. All memorabilia
         sales are fulfilled by third parties, for which the Company pays a
         wholesale price. Most books currently offered do not require payment of
         a royalty. For books that do require payment of a royalty, these
         payments are made periodically and recorded as a cost of sale.

         Desience, a wholly-owned subsidiary of the Company, produced revenues
         from product sales of business furniture and modular consoles and
         incidental revenues for installation and freight. Product sale revenues
         and freight revenues were recognized when the product was shipped.
         Installation revenues were recognized as work was completed.

         Fast Forward Marketing, Inc. recognizes revenues upon shipment of
         product, at which time title passes to the customer. The Company
         records a provision for estimated future returns, which has been offset
         against total sales. Sales returns and allowances totaled approximately
         $50,000 for the year ended September 30, 2002.

                                      F-16


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         (N) EARNINGS PER SHARE

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

         (O) INCOME TAXES

         The Company accounts for income taxes under Statement of Financial
         Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
         109"). SFAS No. 109 is an asset and liability approach that requires
         the recognition of deferred tax assets and liabilities for the expected
         future tax consequences of events that have been recognized in the
         Company's financial statements or tax returns. In estimating future tax
         consequences, SFAS No. 109 generally considers all expected future
         events other than enactments of changes in the tax law or rates. Any
         available deferred tax assets arising from net operating loss
         carryforwards have been offset by a deferred tax valuation allowance on
         the entire amount.

         (P) CONCENTRATION OF CREDIT RISK

         The Company maintains its cash in bank deposit accounts which, at
         times, may exceed federally insured limits. The Company has not
         experienced any losses in such accounts and believes it is not exposed
         to any significant credit risk for cash and cash equivalents.

         (Q) NEW ACCOUNTING PRONOUNCEMENTS

         The Financial Accounting Standards Board has recently issued several
         new Statements of Financial Accounting Standards. Statement No. 141,
         "Business Combinations" ("SFAS No. 141") supersedes APB Opinion 16 and
         various related pronouncements. Pursuant to the new guidance in SFAS
         No. 141, all business combinations must be accounted for under the
         purchase method of accounting; the pooling-of-interests method is no
         longer permitted. SFAS No. 141 also establishes new rules concerning
         the recognition of goodwill and other intangible assets arising in a
         purchase business combination and requires disclosure of more
         information concerning a business combination in the period in which it
         is completed. This statement is generally effective for business
         combinations initiated on or after July 1, 2001.

         Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
         142") supersedes APB Opinion 17 and related interpretations. SFAS No.
         142 establishes new rules on accounting for the acquisition of
         intangible assets not acquired in a business combination and the manner
         in which goodwill and all other intangibles should be accounted for
         subsequent to their initial recognition in a business combination
         accounted for under SFAS No. 141. Under SFAS No. 142, intangible assets

                                      F-17


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         should be recorded at fair value. Intangible assets with finite useful
         lives should be amortized over such period and those with indefinite
         lives should not be amortized. All intangible assets being amortized as
         well as those that are not, are both subject to review for potential
         impairment under SFAS No. 121, "Accounting for the Impairment of
         Long-Lived Assets and for Long-Lived Assets to be Disposed of". SFAS
         No. 142 also requires that goodwill arising in a business combination
         should not be amortized but is subject to impairment testing at the
         reporting unit level to which the goodwill was assigned at the date of
         the business combination.

         SFAS No. 142 is effective for fiscal years beginning after December 15,
         2001 and must be applied as of the beginning of such year to all
         goodwill and other intangible assets that have already been recorded in
         the balance sheet as of the first day in which SFAS No. 142 is
         initially applied, regardless of when such assets were acquired.
         Goodwill acquired in a business combination whose acquisition date is
         on or after July 1, 2001, should not be amortized, but should be
         reviewed for impairment pursuant to SFAS No. 121, even though SFAS No.
         142 has not been adopted. However, previously acquired goodwill should
         continue to be amortized until SFAS No. 142 is first adopted.

         Statement No. 143 "Accounting for Asset Retirement Obligations" ("SFAS
         No. 143") establishes standards for the initial measurement and
         subsequent accounting for obligations associated with the sale,
         abandonment, or other type of disposal of long-lived tangible assets
         arising from the acquisition, construction, or development and/or
         normal operation of such assets. SFAS No. 143 is effective for fiscal
         years beginning after June 15, 2002, with earlier application
         encouraged.

         In August 2001, the FASB issued FAS 144, "Accounting for the Impairment
         or Disposal of Long-Lived Assets." FAS 144 replaces FAS 121,
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to Be Disposed Of." The FASB issued FAS 144 to establish a
         single accounting model, based on the framework established in FAS 121,
         as FAS 121 did not address the accounting for a segment of a business
         accounted for as a discontinued operation under APB 30, "Reporting The
         Results of Operations Reporting The Effects of Disposal of a Segment of
         a Business, and Extraordinary Unusual and Infrequently Occurring Events
         and Transactions." FAS144 also resolves significant implementation
         issues related to FAS 121. Companies are required to adopt FAS 144 for
         fiscal years beginning after December 15, 2001, but early adoption is
         permitted. We will adopt FAS 144 as of the beginning of fiscal 2003. We
         do not expect the adoption of FAS 144 to have a material impact on our
         operating results and financial position.

                                      F-18


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         In April 2002, the FASB issued Financial Accounting Standards No. 145
         ("FAS 145") "Rescission of FASB Statement Nos. 4, 44 and 64, Amendment
         of FASB Statement No. 13 and Technical Corrections". This statement
         rescinds FAS 4 "Reporting Gains and Losses from Extinguishment of Debt"
         and an amendment of that statement, FAS 64 "Extinguishments of Debt
         Made to Satisfy Sinking-Fund Requirements". The statements also
         rescinds FAS 44 "Accounting for Intangible Assets of Motor Carriers"
         and amends FAS 13 "Accounting for Leases" to eliminate an inconsistency
         between the required accounting for sale-leaseback transactions. FAS
         145 also amends other existing authoritative pronouncements to make
         various technical corrections, clarify meanings, or describe their
         applicability under changed conditions. FAS 145 is effective for fiscal
         years beginning after May 15, 2002 and to certain transactions
         occurring after that date. The Company adopted FAS 145 prospectively on
         May 15, 2002. The adoption of this standard did not have a material
         effect on the Company's consolidated financial statements.

         In July 2002, the FASB issued Financial Accounting Standards No. 146
         ("FAS 146") "Accounting for Costs Associated with Exit or Disposal
         Activities". This Statement addresses financial accounting and
         reporting for costs associated with exit or disposal activities and
         nullifies Emerging Issues Task Force (EITF) issue No. 94-3 "Liability
         Recognition for Certain Employee Termination Benefits and Other Costs
         to Exit an Activity (including certain costs incurred in a
         restructuring)". FAS 146 requires that a liability for a cost
         associated with exit or disposal activity be recognized when the
         liability is incurred. Under EITF 94-3, a liability for an exit cost
         was recognized at the date of the entity's commitment to the exit plan.
         FAS 146 is effective for fiscal years beginning after December 31,
         2002, with early application encouraged. The Company is in the process
         of assessing the impact of adopting FAS 146.

         The Company believes that the adoption of these pronouncements will not
         have a material effect on the Company's financial position or results
         of operations.

         (R) FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "Disclosures about
         Fair Value of Financial Instruments," requires disclosures of
         information about the fair value of certain financial instruments for
         which it is practicable to estimate the value. For purposes of this
         disclosure, the fair value of a financial instrument is the amount at
         which the instrument could be exchanged in a current transaction
         between willing parties other than in a forced sale or liquidation.

         The carrying amount of the Company's financial instruments, including
         accounts receivable, notes and loans receivable, accounts payable,
         accrued liabilities, convertible debentures and amount due to the
         former Desience stockholder, approximates fair value due to the
         relatively short period to maturity for these instruments.

                                      F-19


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         (S) ADVERTISING COSTS

         In accordance with the Accounting Standards Executive Committee
         Statement of Position 93-7, costs incurred for producing and
         communicating advertising of the Company are charged to operations.

         (T) STOCK OPTIONS

         In accordance with Statement of Financial Accounting Standards No. 123
         "Accounting for Stock Based Compensation" ("SFAS No. 123"), the Company
         has elected to account for stock options issued to employees under
         Accounting Principles Board Opinion No. 25 ("APB Opinion No. 25") and
         related interpretations. The Company accounts for stock options issued
         to consultants and for other services in accordance with SFAS No. 123.

         (U) COMPREHENSIVE INCOME (LOSS)

         Statement of Financial Accounting Standards No. 130, "Reporting
         Comprehensive Income (Loss)," requires that total comprehensive income
         (loss) be reported in the financial statements. Total comprehensive
         income (loss) is presented on the consolidated statement of
         comprehensive income (loss).

         (V) DEFERRED EXPENSES

         Deferred expenses as of September 30, 2002 represent the deferred
         portion of the fair value of stock issued to two consultants and one
         officer for services that are being expensed over the respective lives
         of the contracts. The current amortization charge to operations is
         related to the Company receiving services in connection with the
         underlying agreements. The Company will continue to evaluate the
         recoverability of the unamortized portion of the deferred consulting
         expense in subsequent periods.

NOTE 2   ACCOUNTS RECEIVABLE AND CONCENTRATIONS
------   --------------------------------------

         Accounts receivable as of September 30, 2002 and 2001 were $130,029 and
         $122,093, respectively. The Company recorded an allowance for doubtful
         accounts of approximately $55,000 for the year ended September 30,
         2002. As of September 30, 2002 and 2001, approximately 21% and 79%,
         respectively, of accounts receivable were due from one customer.

                                      F-20


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 3   INVENTORIES
------   -----------

         Inventories at September 30 consisted of the following:

                                                        2002           2001
                                                     -----------   -----------

         Finished goods                              $   10,102    $       --
         Parts                                           44,891         1,960
                                                     -----------   -----------
         Gross Inventory                                 54,993         1,960

         Reserve for inventory                          (27,497)           --
                                                     -----------   -----------
         Net inventory                               $   27,496    $    1,960
                                                     ===========   ===========

         Significant management judgment is required to determine the reserve
         for obsolete or excess inventory. The Company currently considers
         inventory quantities greater than a one-year supply based on current
         year activity as well as any additional specifically identified
         inventory to be excess. The Company also provides for the total value
         of inventories that are determined to be obsolete based on criteria
         such as customer demand. At September 30, 2002, the inventory reserves
         were $27,497. Changes in strategic direction, such as discontinuance of
         product lines, changes in technology or changes in market conditions,
         could result in significant changes in required reserves.

NOTE 4   NOTES RECEIVABLE - SHAREHOLDERS AND RELATED PARTIES
------   ---------------------------------------------------

         The following is a summary of notes receivable as of September 30, 2002
         and 2001:

                                                          2002          2001
                                                       -----------   -----------

       Notes receivable - Shareholder, unsecured.
         Interest at 6.625% is payable beginning June
         30, 1998 when all accrued interest will be
         due, then annually on each subsequent June
         30. Principal payments are due beginning
         December 31, 1998 when one-fifth of the
         outstanding amount is due. Subsequent
         payments are due one-fifth each December 31
         until February 26, 2003 when all outstanding
         principal and interest is due.                $   14,080    $   28,160

       Notes receivable - Shareholder, unsecured.
         Interest at 6.625% is payable beginning June
         30, 1998 when all accrued interest will be
         due, then annually on each subsequent June
         30. Principal payments are due beginning
         December 31, 1998 when one-fifth of the
         outstanding amount is due. Subsequent
         payments are due one-fifth each December 31
         until February 26, 2003 when all outstanding
         principal and interest is due.                    12,480        24,960

                                      F-21


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

       Notes receivable - Shareholder, unsecured.
         Interest at 6.625% is payable beginning June
         30, 1998 when all accrued interest will be
         due, then annually on each subsequent June
         30. Principal payments are due beginning
         December 31, 1998 when one-fifth of the
         outstanding amount is due. Subsequent
         payments are due one-fifth each December 31
         until February 26, 2003 when all outstanding
         principal and interest is due.                     5,800        11,600

       Notes receivable - Shareholder, unsecured.
         Interest at 6.625% is payable beginning June
         30, 1998 when all accrued interest will be
         due, then annually on each subsequent June
         30. Principal payments are due beginning
         December 31, 1998 when one-fifth of the
         outstanding amount is due. Subsequent
         payments are due one-fifth each December 31
         until February 26, 2003 when all outstanding
         principal and interest is due.                     3,920         7,840

       Note receivable - Shareholder, unsecured.
         Interest at 8%, principal and interest is
         payable in five annual installments of
         $38,250 beginning September 30, 1998.                 --        38,250
                                                       -----------   -----------

          Total Notes Receivable                           36,280       110,810
          Less:  Current maturities                        36,280       110,810
                                                       -----------   -----------

     TOTAL NOTES RECEIVABLE -
     LESS CURRENT MATURITIES                           $       --    $       --
                                                       ===========   ===========

NOTE 5   NOTES RECEIVABLE - OTHER
------   ------------------------

         As of September 30, 2002, notes receivable consist of the following:

            Russ Bassett Corp                                        $   25,000
            Shawn Hackman                                               158,000
            Greenwood & Hall                                            300,000
                Total notes receivable                                  483,000
            Less allowance for doubtful accounts                       (458,000)
                                                                     -----------
                Notes receivable, net                                $   25,000
                                                                     ===========

                                      F-22


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         The note receivable from Russ Bassett Corp. is non-interest bearing and
         was receivable in equal monthly installments of $25,000 with the final
         payment scheduled to occur in November 2002. During the year ended
         September 30, 2002, $225,000 was received by the Company under the note
         receivable from Russ Basset Corp. and Russ Basset Corp. is current in
         its payments under the note.

         The note receivable from Shawn Hackman is non-interest bearing and
         represents the Company's settlement of a claim against its former
         attorney. The amount of the settlement to be paid to the Company was
         $250,000 and $92,000 of that amount has been received by the Company.
         The entire remaining balance of $158,000 owed by Mr. Hackman was
         reserved as uncollectible as of September 30, 2001.

         The note receivable from Greenwood & Hall represents two separate notes
         in the amounts of $175,000 and $125,000, both of which bear interest at
         10%. No principal payments have ever been received by the Company. The
         entire balance of $300,000 has been reserved as uncollectible as of
         September 30, 2001. Interest income of approximately $18,000 has been
         recorded during the year ended September 30, 2002; however, the Company
         ceased recording interest income on this note receivable on March 31,
         2002.

         Only the note receivable from Russ Basset Corp. is not fully or
         partially reserved for in the Company's allowance for doubtful accounts
         reserve. This note is being paid monthly and Russ Basset Corp. is
         current in its payment obligations under this note. Because this note
         will be paid in full within a one year period, it is classified as a
         current asset.

NOTE 6   PROPERTY AND EQUIPMENT
------   ----------------------

         Property and equipment consist of the following as of September 30,
         2002:

              Office equipment                                    $   89,929
              Software                                                71,795
              Furniture and fixtures                                   6,408
                                                                  -----------
                                                                     168,132
              Less accumulated depreciation                          (80,082)
                                                                  -----------
                                                                  $   88,050
                                                                  ===========

         Depreciation expense for the years ended September 30, 2002 and 2001
         was $56,348 and $11,935, respectively.

                                      F-23


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 7   COMMITMENTS AND CONTINGENCIES
------   -----------------------------

         (A) LEASES

         The Company occupied facilities under a month-to-month agreement at
         approximately $1,600 per month until May 2002. In April 2001, the
         Company rented an office in Aliso Viejo, California. The office was
         leased on a month-to-month basis through September 30, 2001. The
         monthly rent on this lease was approximately $8,500 per month. As of
         September 30, 2002, the Company also had office space in Santa Monica
         on a month-to-month basis with rent at approximately $5,400 per month.
         Rent expense for the years ended September 30, 2002 and 2001 was
         $39,897 and $69,689, respectively.

         (B) LEGAL ACTIONS

         Dataview Consoles, Inc., dba Swanson Engineering & Manufacturing
         Company, entered into a settlement agreement with the Company in 2001
         under which the Company and Desience agreed to pay twelve monthly
         installments of $3,500. As of September 30, 2002, all required payments
         had been made under this agreement.

         On March 8, 2001, Loudeye Technologies, Inc., commenced an action
         against the Company. The complaint alleges breach of contract for
         $44,107 and also seeks attorneys' fees, court costs and late charges.
         On October 11, 2001, the Company filed an answer to the Loudeye
         complaint that includes a general denial of all allegations made by
         Loudeye and, as of September 30, 2002, no further action had been taken
         by either Loudeye or the Company.

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

         (C) SERVICE AGREEMENTS

         On October 9, 2001, the Company entered into a service agreement with
         Mind Pointe, Inc. Based upon the terms of the contract, Mind Pointe,
         Inc. will provide web hosting, development services, and programming
         and design assistance for the Company's websites. The Company has
         agreed to pay a maximum of approximately $17,000 each month for these
         services. During the year ended September 30, 2002, approximately
         $138,000 was charged to operations under this agreement.

                                      F-24


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         (D) CONSULTING

         (i)      On June 7, 2001, the Company entered into a one year
                  consulting agreement. Based upon the terms of the agreement,
                  the Company granted 50,000 shares of the Company's common
                  stock valued at $165,000 plus warrants to purchase 100,000
                  shares of the Company's common stock at an exercise price of
                  $2.00 per share. The exercise price was subsequently decreased
                  to $1.00 per share. As of September 30, 2001, the consultant
                  had exercised all warrants. The first 25,000 shares were
                  purchased at an exercise price of $2.00 per share. The
                  remaining 75,000 shares were purchased at an exercise price of
                  $1.00 per share.

         (ii)     On September 4, 2001, the Company entered into a one year
                  consulting agreement with an individual who is affiliated with
                  Alliance Equities, Inc. Based upon the terms of the agreement,
                  the Company was to receive consulting services relating to
                  management, strategic planning and marketing in connection
                  with its business in exchange for 244,445 shares of the
                  Company's common stock plus warrants to purchase 200,000
                  shares of the Company's common stock with an exercise price at
                  $1.00 per share that expire on September 30, 2001. As of
                  September 30, 2001, 75,000 warrants were exercised and the
                  Company received $68,500 and $6,500 was recorded as a
                  consulting expense from the exercise of these warrants. The
                  remaining 125,000 warrants expired and were not exercised.
                  There was no charge to operations for the year ended September
                  30, 2001 to reflect the fair value of the warrants as computed
                  under SFAS No. 123 using the Black-Scholes Model because the
                  amount was determined to be immaterial.

         (E) ADVERTISING AGREEMENT

         On November 14, 2000, the Company entered into an advertising agreement
         with eConnect, a publicly traded corporation. The terms of the
         agreement granted eConnect the exclusive ability to place banner
         advertisements with hyperlinks on the home pages of CinemaPop.com and
         WordPop.com, the Company's web sites for movies and books. The Company
         also sent one e-mail message per month to its subscriber and web
         partner base with a message provided by eConnect which included
         information about eCash pads in trade magazine advertisements.
         Additionally, the Company provided the eConnect website with access to
         several video feature films so that it would demonstrate the eCash pad
         ordering system with a link.

         The term of this agreement was for six months, with one six-month
         renewal option which was not exercised. In consideration for the
         services the Company rendered under this agreement, the Company was
         paid $1,000,000 (which was included in net sales) in the form of
         eConnect restricted stock valued at the closing price of $1.25 per
         share on November 14, 2000, amounting to 800,000 shares. As of
         September 30, 2001, the stock was valued at $.025 per share and the
         Company recorded a realized loss on impairment of investments in
         marketable securities of $980,000. This amount is included in the
         Company's statement of operations.

                                      F-25


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 8   REVOLVING LINE-OF-CREDIT
------   ------------------------

         On February 25, 1999, the Company entered into a Revolving
         Line-of-Credit Agreement ("the Agreement") with Alliance Equities, Inc.
         ("Alliance"), a Florida-based venture capital firm. Under the terms of
         the Agreement, as amended to date, Alliance will make available through
         December 30, 2003, a $7,000,000 revolving line of credit with interest
         on the unpaid principal at 10% per annum. Under the terms of the
         Agreement, the Company may draw up to $500,000 per month on the total
         line-of-credit upon written request by the Company to the Lender.
         Additionally the parties have agreed that any portion of the
         indebtedness may be paid back by the Company either with cash or by the
         issuance of common stock. Furthermore, in a separate Memorandum of
         Agreement the two parties agreed that Alliance will provide ongoing
         consulting services to the Company including, but not limited to,
         strategic growth advice and introductions, marketing advice, and
         business ideas. Alliance will be compensated for these services at the
         option of the Company either in cash, or through the issuance of stock
         or credit towards the purchase of stock. As of September 30, 2002,
         $15,000 was payable under this line-of-credit and the Company had
         issued to Alliance 80,000 shares of the Company's common stock valued
         at approximately $554,400 for consulting services since 1999. This
         arrangement was terminated with a 30 day notification by the Company in
         September 2002.

NOTE 9   SERIES A PREFERRED STOCK
------   ------------------------

         The Company's Articles of Incorporation authorize the issuance of
         5,000,000 shares of preferred stock. The 1,000,000 shares of preferred
         stock issued in connection with the Big Tex business combination are
         convertible to common stock at an initial conversion rate of one share
         of common stock per share of Class A convertible preferred stock.
         Initially, each share of preferred stock was entitled to, among other
         things, three non-cumulative votes per share on all matters presented
         to the Company's stockholders for action.

         At a special meeting of the Company's stockholders held on May 24,
         2000, the holders of the Company's preferred stock and common stock
         agreed to amend the Company's Articles of Incorporation so that the
         voting rights of the preferred stock were increased from 3 votes per
         share to twenty votes per share. As a result of this increase in voting
         rights, the Chairman of the Board, who is President and Chief Executive
         Officer, became entitled to exercise voting control over the Company.

                                      F-26


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

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

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

NOTE 10   PRIVATE PLACEMENTS
-------   ------------------

         During 2002, the Company issued 4,005,000 shares of common stock to
         officers and stockholders, for compensation having a fair value of
         $271,180, 2,942,128 shares of common stock for consulting services
         having a fair value of $621,826, 1,850,000 shares of common stock for
         marketing, advertising and investor relations having a fair value of
         $128,800, and 65,200 shares of common stock for professional services
         having a fair value of $7,500.

         During the years ended September 30, 2002 and 2001, the Company
         completed private placements wherein it sold to investors an aggregate
         of 5,206,250 and 140,834 common shares for cash of $316,470 and
         $243,500, respectively.

         During 2001, the Company issued 587,380 shares of common stock to
         officers and stockholders for compensation having a fair value of
         $1,828,874, 420,342 shares of common stock for consulting services
         having a fair value of $1,293,890, 30,000 shares of common stock for
         marketing, advertising and investor relations having a fair value of
         $178,000 and 15,000 shares of common stock for professional services
         having a fair value of $44,000.

         The common shares issued in lieu of compensation and outside services
         were valued for financial accounting purposes at the fair market value
         of the common stock on the grant date.

NOTE 11   STOCK INCENTIVE PLANS AND EMPLOYEE STOCK OPTIONS
-------   ------------------------------------------------

         Effective as of May 24, 2000, the Company's Board of Directors and
         stockholders adopted a new stock option plan, entitled the 2000 Stock
         Option Plan (the "Plan"). The Plan was developed to provide a means
         whereby designated officers, employees and non-employee directors of
         the Company and its subsidiaries and employees of companies who do
         business with the Company may be granted incentive or non-qualified
         stock options to purchase common stock of the Company.

                                      F-27


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         The Plan authorizes the issuance of options to purchase up to an
         aggregate of 150,000 shares of the Company's common stock. Incentive
         stock options granted under the Plan must have an exercise price of not
         less than 100% of the fair market value of the common stock on the date
         the option is granted and must be exercised, if at all, within ten
         years from the date of grant. In the case of an incentive stock option
         granted to an individual who owns more than 10% of the total voting
         securities of the Company on the date of grant, such exercise price
         shall not be less than 110% of fair market value on the date of grant,
         and the option period may not exceed five years. Non-qualified stock
         options granted under the Plan must have an exercise price of not less
         than 85% of fair market value of the common stock on the date the
         option is granted. Options may be exercised during a period of time
         fixed by the committee that administers the Plan, except that no option
         may be exercised more than 10 years after the date of grant.

         Effective March 14, 2001, the Company's board of directors approved a
         motion to cancel 126,875 options previously granted to various
         officers, directors and employees, with the consent of those officers,
         directors and employees.

         For financial statement disclosure purposes, the fair market value of
         each stock option granted during the year ended September 30, 2002 was
         estimated on the date of grant using the Black-Scholes Model in
         accordance with FASB No. 123 using the following weighted-average
         assumptions: expected dividend yield 0%, risk-free interest rate of
         2.0%, volatility of 113% and expected term of one year.

         The Company applies APB Opinion No. 25 and related interpretations in
         accounting for its stock-based compensation plans. Accordingly, no
         compensation cost has been recognized for options issued to employees,
         officers and directors under the plans for the years ended September
         30, 2002 and 2001. Had compensation cost for the Company's stock-based
         compensation plans been determined on the fair value basis at the grant
         dates for awards under the plans, consistent with Statement of
         Accounting Standards No. 123, "Accounting for Stock Based Compensation"
         ("SFAS No. 123"), the Company's net loss for the years ended September
         30, 2002 and 2001 would have been the pro-forma amounts indicated
         below, since there were no employee option issuances during the years.

                                                       2002          2001

          Net loss                As reported       $ (7,876,230)  $ (9,224,059)
                                  Pro forma         $ (7,876,230)  $ (9,224,059)

          Net loss per
          share (basic and        As reported       $       (.67)  $      (3.27)
          diluted)
                                  Pro forma         $       (.67)  $      (3.27)

         The effect of applying SFAS No. 123 is not likely to be representative
         of the effects on reported net loss for future years due to, among
         other things, the effects of vesting.

                                      F-28


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         A summary of the Company's Stock Option Plans as of September 30, 2002
         and changes during the year ended is presented below:

                                                                     Weighted
                                                                     Average
                                                     Number of       Exercise
                                                      Options          Price
                                                    -------------  -------------
          Stock Options
          -------------

          Balance at beginning of period                 291,294   $      10.57
          Cancelled                                           --             --
          Granted                                        281,250            .57
          Exercised                                           --             --
          Forfeited                                           --             --
          Balance at end of period                            --             --
                                                    -------------  -------------
                                                         872,544   $       3.91
                                                    -------------  -------------
          Options exercisable at end of period           872,544   $       3.91
                                                    -------------  -------------
          Weighted average fair value of options
           granted during the period                               $  3,411,647
                                                                   -------------

         The following table summarizes information about stock options issued
         under the Company's stock option plan and outstanding at September 30,
         2002:
<TABLE>
<CAPTION>

                               Options Outstanding                Options Exercisable
               ------------------------------------------------  ----------------------
                                           Weighted
                               Number       Average    Weighted     Number     Weighted
                 Range of    Outstanding   Remaining   Average    Exercisable  Average
                 Exercise   at September  Contractual  Exercise  at September  Exercise
                  Price       30, 2002        Life      Price     30, 2002      Price
               -----------  ------------  -----------  --------  ------------  --------
<S>                            <C>          <C>        <C>          <C>        <C>
               $ .57-10.57     872,544      9 Years    $  3.91      872,544    $  3.91
               -----------  ------------  -----------  --------  ------------  --------
</TABLE>

NOTE 12   COMMON STOCK OPTIONS ISSUED FOR CONSULTING AND OTHER SERVICES
-------   -------------------------------------------------------------

         The Company issued 156,250 warrants on October 26, 2001, at an initial
         exercise price of $.80 per share as consideration for a consulting
         agreement. The exercise price was subsequently adjusted to $.108 per
         share. The fair market value of the options aggregating $16,977, was
         estimated on the grant date using the Black- Scholes option pricing
         method as required under SFAS No. 123 with the following weighted
         average assumptions: expected dividend yield 0%, volatility 113%,
         risk-free interest rate 1.96%, expected term one year. The $16,977 was
         charged to consulting expense at the grant date.

                                      F-29


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         The Company issued 425,000 warrants on November 29, 2001, at an initial
         exercise price of $.40 per share as consideration for a consulting
         agreement. The exercise price was subsequently adjusted to $.07 per
         share. The fair market value of the options aggregating $29,864, was
         estimated on the grant date using the Black- Scholes option pricing
         method as required under SFAS No. 123 with the following weighted
         average assumptions: expected dividend yield 0%, volatility 113%,
         risk-free interest rate 2.08%, expected term one year. The $29,864 was
         charged to consulting expense at the grant date.

         The Company issued 75,000 common stock warrants on June 7, 2001, at an
         initial exercise price of $2.00 per share as consideration for a
         consulting agreement. The exercise price was subsequently adjusted to
         $1.00 per share. The fair market value of the options aggregating
         $189,502, was estimated on the grant date using the Black-Scholes
         option pricing method as required under SFAS No. 123 with the following
         weighted average assumptions: expected dividend yield 0%, volatility
         130%, risk-free interest rate 4.25%, expected term one year. The
         $189,502 was charged to consulting expense at the grant date.

         In addition, the Company issued 25,000 common stock warrants on June 7,
         2001, at an exercise price of $2.00 per share as additional
         consideration for the same consulting services. The fair market value
         of the options aggregating $51,149, was estimated on the grant date
         using the Black-Scholes option pricing method as required under SFAS
         No. 123 with the following weighted average assumptions: expected
         dividend yield 0%, volatility 130%, risk-free interest rate 4.25%,
         expected option life one year. The $51,149 was charged to consulting
         expense at the grant date.

         During the year ended September 30, 2002, the Company entered into a
         consulting agreement with an unrelated party for strategic planning,
         acquisitions and other services in exchange for the option to purchase
         581,250 shares of the Company's common stock at exercise prices ranging
         from $.40 to $.80 and having a fair value of $46,841. As of September
         30, 2002 the issuee did not exercise any options. The transaction was
         recorded as deferred consulting expense and was amortized over the life
         of the agreement. The Company recorded a current charge to operations
         of $46,841 for the year ended September 30, 2002.

NOTE 13   COMMON STOCK RESALE REGISTRATIONS
-------   ---------------------------------

         In a series of SB-2 registration statements, the Company registered
         underlying common stock required to be issued upon the conversion of
         the related convertible debentures and warrants. The Company is
         obligated to register for resale shares of common stock that are
         issuable in connection with its 2002 debenture offering.

                                      F-30


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 14   CONVERTIBLE DEBT
-------   ----------------

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

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

         Relating to the $1,000,000 of debentures due February 1, 2001, the
         Company issued 15,000 common stock warrants on February 1, 2001, at an
         exercise price of $38 per share as consideration for debt financing.
         The fair market value of the warrants were deemed immaterial as
         estimated on the grant date using the Black-Scholes option pricing
         method as required under SFAS 123 with the following weighted average
         assumptions: expected dividend yield 0%, volatility 87%, risk-free
         interest rate 6.22%, expected option life 3 years. As of the date of
         this report no warrants have been exercised.

         Relating to the $4,500,000 of debentures due May 1, 2001, the Company
         issued 67,500 common stock warrants on April 1, 2001, at an exercise
         price of $38 per share as consideration for debt financing. The fair
         market value of the warrants were deemed immaterial as estimated on the
         grant date using the Black-Scholes option pricing method as required
         under SFAS 123 with the following weighted average assumptions:
         expected dividend yield 0%, volatility 87%, risk-free interest rate
         6.15%, expected option life 3 years. As of the date of this report no
         warrants have been exercised.

         Pursuant to the Rules and Regulations of the Securities and Exchange
         Commission regarding beneficial conversion features, the Company has
         expensed as financing costs any excess of the fair market value of the
         common stock at the debenture issuance date over the fixed conversion
         price which for fiscal year 2000 amounted to $925,000 for debentures
         due February 1, 2001 and $1,760,000 for debentures due May 1, 2001.

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

                                      F-31


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         The debentures are immediately convertible into shares of the Company's
         common stock. The initial conversion price for the January and March
         2001 debentures was equal to the lesser of (i) $3.00 and (ii) the
         average of the lowest three intraday trading prices during the twenty
         trading days immediately prior to the conversion date, discounted by
         37.5%.

         Pursuant to the Rules and Regulations of the Securities and Exchange
         Commission regarding beneficial conversion features, the Company has
         expensed as financing costs any excess of the fair market value of the
         common stock at the debenture issuance date over the fixed conversion
         price which for fiscal year 2001 amounted to $533,500 for the
         debentures due January 5, 2002, and $412,500 for the debentures due
         March 9, 2002.

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

         Upon the issuance of the first $650,000 of convertible debentures, the
         Purchasers received five-year term warrants to purchase three shares of
         the Company's common stock for each $20.00 invested or which may have
         been invested in the two $650,000 tranches of convertible debentures.
         The initial exercise price of the warrants was equal to the lesser of
         (i) $2.50 and (ii) the average of the lowest three intraday trading
         prices during the twenty trading days immediately preceding the
         exercise date. For all debentures issued in January and March 2001,
         interest is 12% per annum, payable quarterly in common stock or cash at
         the option of the Purchasers.

         The debentures are immediately convertible into shares of the Company's
         common stock. The initial conversion price for the January and March
         2001 debentures was equal to the lesser of (i) $3.00 and (ii) the
         average of the lowest three intraday trading prices during the twenty
         trading days immediately prior to the conversion date, discounted by
         37.5%.

         In connection with the 2001 issuance of the convertible debentures due
         January 5, 2002, the Company has issued warrants to acquire additional
         shares of the Company's common stock as follows:

                  The Company issued 20,000 common stock warrants on January 5,
                  2001, at an exercise price of $50 per share as consideration
                  for debt financing. The fair market value of the warrants were
                  deemed immaterial as estimated on the grant date using the
                  Black-Scholes option pricing method as required under SFAS 123
                  with the following weighted average assumptions: expected
                  dividend yield 0%, volatility 101%, risk-free interest rate
                  4.81%, expected option life 3 years. As of the date of this
                  report no warrants have been exercised.

                                      F-32


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

                  The Company issued 3,750 common stock warrants on February 15,
                  2001, at an exercise price of $50 per share as consideration
                  for debt financing. The fair market value of the warrants were
                  deemed immaterial as estimated on the grant date using the
                  Black-Scholes option pricing method as required under SFAS 123
                  with the following weighted average assumptions: expected
                  dividend yield 0%, volatility 101%, risk-free interest rate
                  4.68%, expected option life 3 years. As of the date of this
                  report no warrants have been exercised.

                  The Company issued 8,750 common stock warrants on March 9,
                  2001, at an exercise price of $50 per share as consideration
                  for debt financing. The fair market value of the warrants were
                  deemed immaterial as estimated on the grant date using the
                  Black- Scholes option pricing method as required under SFAS
                  123 with the following weighted average assumptions: expected
                  dividend yield 0%, volatility 101%, risk-free interest rate
                  4.30%, expected option life 3 years. As of the date of this
                  report no warrants have been exercised.

         In connection with the 2001 issuance of the convertible debentures due
         March 9, 2002, the Company issued 32,500 common stock warrants on March
         5, 2001, at an exercise price of $50 per share as consideration for
         debt financing. The fair market value of the warrants were deemed
         immaterial as estimated on the grant date using the Black-Scholes
         option pricing method as required under SFAS 123 with the following
         weighted average assumptions: expected dividend yield 0%, volatility
         101%, risk-free interest rate 4.30%, expected option life 3 years. As
         of the date of this report no warrants have been exercised.

         As of April 30, 2001, $1,848,500 of the original $4,500,000 principal
         balance of 10% Convertible Debentures due May 1, 2001 remained
         outstanding. As of April 30, 2001, the Company entered into an
         agreement with the holders of these debentures to extend the due date
         of these debentures to May 1, 2002. In consideration for the extension,
         the Company granted to the holders warrants to purchase up to an
         aggregate of 67,500 shares of common stock at an initial exercise price
         equal to the lesser of the average of the lowest three intraday trading
         prices during the 20 trading days immediately preceding the grant of
         the warrants, discounted by 37.5%, and the average of the lowest three
         intraday trading prices of a share of common stock during the 20
         trading days immediately preceding exercise of the warrants.

         The 67,500 warrants had an exercise price of $1.17 per share as
         consideration for extending the due date related to debt financing. The
         fair market value of the warrants, aggregating $97,108 was estimated on
         the grant date using the Black-Scholes option pricing method as
         required under SFAS 123 with the following weighted average
         assumptions: expected dividend yield 0%, volatility 132%, risk-free
         interest rate 4.25%, expected option life 3 years. The $97,108 was
         charged to interest and financial costs at the grant date. As of the
         date of this report no warrants have been exercised.

                                      F-33


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

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

         The debentures initially were convertible into shares of common stock
         at the lesser of $2.00 per share and 50% of the average of the lowest
         three intraday trading prices of a share of common stock during the
         twenty trading days immediately preceding conversion.

         Pursuant to the Rules and Regulations of the Securities and Exchange
         Commission regarding beneficial conversion features, the Company has
         expensed as financing costs any excess of the fair market value of the
         common stock at the debenture issuance date over the fixed conversion
         price which for fiscal year 2001 amounted to $50,000 for debentures due
         June 29, 2002.

         On May 6, 2002, the Company restated one of its June 2001 convertible
         debentures to reflect an additional $125,000 investment, resulting in
         an aggregate of $625,000 of June 2001 convertible debentures
         outstanding.

         Upon the issuance of the June 2001 debentures, the Purchasers received
         five-year term warrants to purchase three shares of the Company's
         common stock for each $20.00 invested. The initial exercise price of
         the warrants was equal to the lesser of $1.168 and the average of the
         lowest three intraday trading prices of a share of common stock during
         the 20 trading days immediately preceding exercise.

         The Company issued 75,000 common stock warrants on June 29, 2001, at an
         exercise price of $1.17 per share as consideration for debt financing.
         The fair market value of the warrants were deemed immaterial as
         estimated on the grant date using the Black-Scholes option pricing
         method as required under SFAS 123 with the following weighted average
         assumptions: expected dividend yield 0%, volatility 101%, risk-free
         interest rate 3.58%, expected option life 3 years. As of the date of
         this report no warrants have been exercised.

         As of June 29, 2001, the Company entered into a letter agreement with
         certain of its debenture investors, which provided various
         anti-dilution adjustments to the debentures and warrants issued in the
         April 2000, January 2001 and March 2001 debenture offerings. These
         adjustments were made partly in lieu of other adjustments that would
         have been imposed under the terms of the April 2000, January 2001 and
         March 2001 debenture offering documents. As a result of these
         adjustments, the conversion prices for the debentures held by these
         entities and issued in the April 2000, January 2001 and March 2001
         offerings were reduced to the lesser of (i) $2.00 per share, and (ii)
         50% of the average of the three lowest intraday trading prices of a

                                      F-34


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         share of our common stock for the 20 trading days immediately preceding
         the conversion of the debentures. In addition, the exercise prices of
         the warrants issued in connection with the April 2000, January 2001 and
         March 2001 offerings were reduced to the lesser of (i) $1.168 per
         share, and (ii) the average of the three lowest intraday trading prices
         of a share of our common stock for the 20 trading days immediately
         preceding the exercise of the warrants.

         The debentures contain a contingency provision whereby, if the Company
         issues common stock at a price less than both the fixed conversion
         price and the then market price on the date of issuance the fixed
         conversion price shall be adjusted as stipulated in the agreement.

         In order to provide working capital and financing for the Company's
         expansion, as of January 9, 2002, the Company entered into a securities
         purchase agreement and related agreements with one accredited investor
         (the "Purchasers") for the purchase of $200,000 of the Company's 12%
         Convertible Debentures due January 9, 2003. The debentures bear
         interest at a rate of 12% per annum, payable quarterly in common stock
         or cash at the option of the Purchasers.

         The debentures initially were convertible into shares of common stock
         at the lesser of $0.055 per share and 50% of the average of the lowest
         three intraday trading prices of a share of common stock during the
         trading days immediately preceding conversion.

         Pursuant to the Rules and Regulations of the Securities and Exchange
         Commission regarding beneficial conversion features, the Company has
         expensed as financing costs any excess of the fair market value of the
         common stock at the debenture issuance date over the fixed conversion
         price which for fiscal year 2002 amounted to $200,000 for debentures
         due January 9, 2003.

         Upon the issuance of the January 2002 debentures, the Purchasers
         received five-year term warrants to purchase three shares of the
         Company's common stock for each $20.00 invested. The initial exercise
         price of the warrants was equal to the lesser of $0.055 and the average
         of the lowest three intraday trading prices of a share of common stock
         during the 20 trading days immediately preceding exercise.

         The Company issued 600,000 common stock warrants on January 9, 2002, at
         an exercise price of $0.055 per share as consideration for debt
         financing. The fair market value of the warrants were $49,049 as
         estimated on the grant date using the Black-Scholes option pricing
         method as required under SFAS 123 with the following weighted average
         assumptions: expected dividend yield 0%, volatility 123%, risk-free
         interest rate 2.16%, expected option life one year. As of the date of
         this report no warrants have been exercised. The value of the warrants
         was recorded by the Company as a current operating expense in the
         accompanying financial statements.

                                      F-35


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         As of January 9, 2002, the Company entered into a letter agreement with
         certain of its debenture investors, which letter agreement provided
         various anti-dilution adjustments to the debentures and warrants issued
         in the April 2000 debenture offering. These adjustments were made
         partly in lieu of other adjustments that would have been imposed under
         the terms of the April 2000 debenture offering documents. As a result
         of these adjustments, the conversion prices for the debentures held by
         these entities and issued in the April 2000 offering were reduced to
         the lesser of (i) $0.055 per share, and (ii) 50% of the average of the
         three lowest intraday trading prices of a share of our common stock for
         the 20 trading days immediately preceding the conversion of the
         debentures. In addition, the exercise price of the warrants issued to
         certain debenture investors in connection with the April 2000 and
         January 2001 offerings, respectively, and issued on April 30, 2001,
         were reduced to 50% of the average of the three lowest intraday trading
         prices of a share of our common stock for the 20 trading days
         immediately preceding the exercise of the warrants. In addition, the
         exercise period of the warrants issued in connection with the April
         2000, January 2001 and March 2001 offerings was extended from five to
         seven years.

         In order to provide working capital and financing for the Company's
         expansion and for the acquisition of the Company's Fast Forward
         Marketing, Inc. business, as of March 29, 2002, the Company entered
         into a securities purchase agreement and related agreements with four
         accredited investors (the "Purchasers") for the purchase of $500,000 of
         the Company's 12% Convertible Debentures due March 29, 2003. The
         debentures bear interest at a rate of 12% per annum, payable quarterly
         in common stock or cash at the option of the Purchasers. The net
         proceeds of the offering, after payment of some related expenses, were
         $380,000.

         The debentures initially were convertible into shares of common stock
         at the lesser of $0.035 per share and 50% of the average of the lowest
         three intraday trading prices of a share of common stock during the
         trading days immediately preceding conversion.

         Pursuant to the Rules and Regulations of the Securities and Exchange
         Commission regarding beneficial conversion features, the Company has
         expensed as financing costs any excess of the fair market value of the
         common stock at the debenture issuance date over the fixed conversion
         price which for fiscal year 2002 amounted to $500,000 for debentures
         due March 29, 2003.

         Upon the issuance of the March 2002 debentures, the Purchasers received
         five-year term warrants to purchase three shares of the Company's
         common stock for each $1.00 invested. The initial exercise price of the
         warrants was equal to the lesser of $0.035 and the average of the
         lowest three intraday trading prices of a share of common stock during
         the 20 trading days immediately preceding exercise.

                                      F-36


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         The Company issued 1,500,000 common stock warrants on March 29, 2002,
         at an exercise price of $0.035 per share as consideration for debt
         financing. The fair market value of the warrants were $109,039 as
         estimated on the grant date using the Black-Scholes option pricing
         method as required under SFAS 123 with the following weighted average
         assumptions: expected dividend yield 0%, volatility 123%, risk-free
         interest rate 2.57%, expected option life one year. As of the date of
         this report no warrants have been exercised. The value of the warrants
         was recorded by the Company as a current operating expense in the
         accompanying financial statements.

         In order to provide working capital and financing for the Company's
         operation and expansion, as of September 11, 2002, the Company entered
         into a securities purchase agreement and related agreements with three
         accredited investors (the "Purchasers") for the purchase of up to
         $600,000 of the Company's 12% Convertible Debentures. The debentures
         bear interest at a rate of 12% per annum, payable quarterly in common
         stock or cash at the option of the Purchasers. The debentures were to
         be sold in three separate tranches and the first tranche, in the amount
         of $250,000, was consummated in September 2002 and the convertible
         debentures relating to the first tranche are due September 11, 2003.
         The aggregate net proceeds of the September 2002 tranche, after payment
         of some related expenses, was approximately $165,000.

         The debentures initially were convertible into shares of common stock
         at the lesser of $0.01 per share and 50% of the average of the lowest
         three intraday trading prices of a share of common stock during the
         trading days immediately preceding conversion.

         Pursuant to the Rules and Regulations of the Securities and Exchange
         Commission regarding beneficial conversion features, the Company has
         expensed as financing costs any excess of the fair market value of the
         common stock at the debenture issuance date over the fixed conversion
         price which for fiscal year 2002 amounted to $200,000 for debentures
         due September 11, 2003.

         Upon the issuance of the September 2002 debentures, the Purchasers
         received five-year term warrants to purchase three shares of the
         Company's common stock for each $20.00 invested. The initial exercise
         price of the warrants was equal to $0.005.

         The Company issued 750,000 common stock warrants on September 11, 2002,
         at an exercise price of $0.005 per share as consideration for debt
         financing. The fair market value of the warrants were deemed immaterial
         as estimated on the grant date using the Black- Scholes option pricing
         method as required under SFAS 123 with the following weighted average
         assumptions: expected dividend yield 0%, volatility 123%, risk-free
         interest rate 2.57%, expected option life 3 years. As of the date of
         this report no warrants have been exercised.

                                      F-37


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

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

         Pursuant to the rules and regulations of the SEC regarding beneficial
         conversion features, the Company expensed as financing costs any excess
         of the fair market value of the common stock at the debenture issuance
         date over the fixed conversion price which amounts aggregated
         approximately $1,093,000 and $2,665,000 in 2002 and 2001, respectively.
         There was no amortization period for these financing costs since the
         debentures were convertible immediately upon issuance.

         As of September 30, 2002, in addition to the debentures issued in
         September 2002 described above:

         o        $1,443,625 of the original $4,500,000 principal balance of
                  Convertible Debentures due May 1, 2002 remained outstanding;

         o        $185,181 of the original $650,000 principal balance of 12%
                  Convertible Debentures due January 5, 2002 remained
                  outstanding;

         o        $438,819 of the original $650,000 principal balance of 12%
                  Convertible Debentures due March 9, 2002 remained outstanding;

         o        $625,000 of the original $625,000 principal balance of 12%
                  Convertible Debentures due June 29, 2002 remained outstanding;

         o        $200,000 of the original $200,000 principal balance of 12%
                  Convertible Debentures due January 9, 2003 remained
                  outstanding; and

         o        $500,000 of the original $500,000 principal balance of 12%
                  Convertible Debentures due March 29, 2003 remained
                  outstanding.

         As of September 30, 2002, the Company entered into an agreement with
         the holders of the debentures listed above to extend the due date of
         these debentures to September 23, 2003. In consideration for the
         extension, the Company granted to the holders of these debentures
         warrants to purchase up to an aggregate of 5,189,126 shares of common
         stock at an exercise price equal to the average of the lowest three
         intraday trading prices during the 20 trading days immediately
         preceding the exercise of the warrants. The warrants granted included
         warrants to Bank Insinger de Beaufort to purchase up to 1,285,028
         shares of common stock, warrants to AJW Partners, LLC to purchase up to
         808,010 shares of common stock, warrants to New Millennium Capital
         Partners II, LLC to purchase up to 808,010 shares of common stock,
         warrants to Equilibrium Equity, LLC to purchase up to 56,062 shares of
         common stock, warrants to Bristol Investment Fund, Ltd. to purchase up
         to 240,000 shares of common stock, warrants to Bristol Capital, LLC to

                                      F-38


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         purchase up to 132,016 shares of common stock, warrants to Alliance
         Equities, Inc. to purchase up to 60,000 shares of common stock,
         warrants to AJW Offshore, Ltd. (f/k/a AJW/New Millennium Offshore,
         Ltd.) to purchase up to 900,000 shares of common stock, and warrants to
         AJW Qualified Partners, LLC (f/k/a Pegasus Capital Partners, LLC) to
         purchase up to 900,000 shares of common stock.

         Since September 2001, the Company has failed to make all or part of its
         required interest payments under its various outstanding convertible
         debentures. As a result, the Company is in default under its
         outstanding convertible debentures.

         Pursuant to the rules and regulations of the SEC regarding beneficial
         conversion features, the Company expensed as financing costs any excess
         of the fair market value of the common stock at the debenture issuance
         date over the fixed conversion price, which amounted to approximately
         $736,400 for the year ended September 30, 2002. There was no
         amortization period for these financing costs since the debentures were
         convertible immediately upon issuance.

         The Company's convertible debentures and related warrants contain
         anti-dilution provisions whereby, if the Company issues common stock or
         securities convertible into or exercisable for common stock at a price
         less than the conversion or exercise prices of the debentures or
         warrants, the conversion and exercise prices of the debentures or
         warrants shall be adjusted as stipulated in the agreements governing
         such debentures and warrants. The Company recorded financing costs of
         approximately $157,100 during the year ended September 30, 2002 in
         connection with the repricing of existing debentures and warrants that
         occurred as a result of the January 2002 debenture offering.

         During the year ended September 30, 2002, the Company issued an
         aggregate of 5,556,757 shares of common stock to five accredited
         investors in connection with regular interest payments and upon
         conversion of an aggregate of $196,000 of principal plus accrued
         interest $59,000 on the Company's convertible debentures. No gain or
         loss was recognized upon the conversion of debt to equity.

         As of September 30, 2002, the Company was indebted for an aggregate of
         $3,585,125 on these convertible debentures. To the extent debentures
         issued by the Company are converted into shares of common stock, the
         Company will not be obligated to repay the converted amounts.

         During September 2002, the Company signed a non-binding letter of
         intent for up to $3,000,000 of financing from an unrelated financing
         institution. As of December 15, 2002, the Company had borrowed $600,000
         on this arrangement.

                                      F-39


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 15   CONVERTIBLE PROMISSORY NOTES
-------   ----------------------------

         On February 28, 2002, the Company entered into agreements with its
         legal counsel and its accounting firm to replace an aggregate of
         $372,550 of existing accounts payable to those entities with 6%
         convertible promissory notes due November 30, 2002. The convertible
         promissory notes have a conversion price equal to the lesser of (i)
         $0.085 and (ii) the average of the three lowest intraday trading prices
         of a share of our common stock for the 20 trading days immediately
         preceding the conversion of the notes. As of September 30, 2002, the
         full amount of these promissory notes remained outstanding.

NOTE 16   INCOME TAXES
-------   ------------

         The Company's tax expense differs from the "expected" tax expense
         (benefit) for the years ended September 30, 2002 and 2001 (computed by
         applying the Federal corporate tax rate of 34 percent to loss before
         taxes) as follows:

                                                        2002           2001
                                                    -------------  -------------
          Computed "expected" tax (benefit)         $ (2,678,000)  $ (1,966,000)
          Change in valuation allowance                2,678,000      1,966,000
                                                    -------------  -------------
                                                    $         --   $         --
                                                    =============  =============

         The tax effects of temporary differences that give rise to significant
         portions of deferred tax assets and liabilities as of September 30,
         2002 and 2001 are as follows:

                                                        2002           2001
                                                    -------------  -------------
          Deferred tax assets:

          Net operating loss carryforward           $  9,800,000   $  5,665,000
                                                    -------------  -------------
          Total gross deferred tax assets              9,800,000      5,665,000
          Less valuation allowance                    (9,800,000)    (5,665,000)
                                                    -------------  -------------
                                                    $         --   $         --
                                                    =============  =============

         As of September 30, 2002, the Company has net operating loss
         carryforwards in the aggregate of approximately $28,800,000 and
         $28,400,000 for federal and state purposes, respectively, which expire
         in various years through 2021.

NOTE 17   SEGMENT INFORMATION
-------   -------------------

         As discussed in Note 1(A), the Company's operations are classified into
         two reportable business segments: Kanakaris Wireless which supplies
         Internet products for electronic commerce and Fast Forward Marketing
         which distributes video tapes. Both of the Company's business segments
         have their headquarters and major operating facilities located in the

                                      F-40


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         United States. The principal markets for the Company's products are in
         the United States. There were no inter-segment sales or purchases.
         Financial information by business segment is summarized as follows:

                                           Internet       Video
                       2002                Commerce    Distribution     Total
          ------------------------------ ------------  ------------ ------------
           Revenues                      $    58,559   $   355,387  $   413,946
          Segment profit (loss)           (5,508,031)   (1,535,375)  (7,043,406)
           Total assets                      513,488        68,467      581,955
          Additions to long-lived assets          --     1,291,355    1,291,355
          Depreciation and amortization      117,685        18,725      136,410

                                           Internet       Video
                       2002                Commerce    Distribution     Total
          ------------------------------ ------------  ------------ ------------
           Revenues                      $ 1,186,681   $        --  $ 1,186,681
          Segment profit (loss)           (9,251,149)           --   (9,251,149)
           Total assets                    1,135,953            --    1,135,953
          Additions to long-lived assets      49,221            --       49,221
          Depreciation and amortization      146,682            --      146,682

NOTE 18   REVERSE STOCK SPLIT
-------   -------------------

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

NOTE 19   SERIES B PREFERRED STOCK
-------   ------------------------

         Effective April 10, 2002, the Company entered into an Exchange
         Agreement with Bristol Capital, LLC pursuant to which it issued 900
         shares of its Series B Convertible Preferred Stock and acquired from
         Bristol Capital its 50% interest in the Company's now wholly-owned Fast
         Forward Marketing subsidiary in consideration for providing the
         opportunity to acquire the Fast Forward Marketing business. Each share
         of the Company's Series B Convertible Preferred Stock has a stated
         value of $1,000 and is convertible into shares of its common

                                      F-41


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         stock at the lesser of (i) $0.086, and (ii) 82% of the average of the
         three lowest intraday trading prices of a share of its common stock
         during the twenty trading days preceding the conversion date. The
         Series B Convertible Preferred Stock accrues dividends at a rate of 8%
         per annum, which is payable on a quarterly basis in arrears, at the
         option of the holder, in cash or shares of our common stock based on
         the then applicable conversion price. As of September 30, 2002, all 900
         shares of the Company's Series B Convertible Preferred Stock remained
         outstanding.

NOTE 20   STOCKHOLDERS' EQUITY AND STOCK ISSUANCES
-------   ----------------------------------------

         A. DEBENTURE INVESTORS

         During the year ended September 30, 2002, the Company issued an
         aggregate of 5,581,783 shares of common stock having a fair value of
         approximately $261,000 to various debenture investors representing the
         conversion of principal and interest.

         B. LEGAL AND CONSULTING

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

         (ii)     On October 17, 2001, the Company issued 115,000 shares of
                  common stock having a fair value of $87,400 to Company
                  personnel and an outside consultant for services provided
                  between October 1, 2001 and December 31, 2001.

         (iii)    On October 26, 2001, as amended on November 29, 2001, the
                  Company entered into a consulting agreement to obtain
                  assistance in strategic planning and acquisitions. The term of
                  the agreement was initially for six months but was amended to
                  include a six month extension retroactive to the October 26,
                  2001 commencement date. Based upon the terms of the agreement
                  the Company issued 1,583,442 shares of its common stock having
                  a fair value of $447,001 for consulting services. In addition,
                  the Company provided the consultant the option to purchase
                  156,250 shares of common stock at an exercise price of $.80
                  per share, and 425,000 shares at an exercise price of $.40 per
                  share, respectively. As of December 31, 2001, all of the
                  shares were issued to the consultant and the Company received
                  approximately $211,000 upon the exercise of the warrants. This
                  amount reflects a repricing adjustment of the exercise price
                  for the warrants. The original exercise price was stated in
                  the Company's registration statement on Form S-8 filed on
                  November 30, 2001.

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

                                      F-42


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

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

         (vi)     On December 19, 2001, the Company issued 200,000 shares of
                  common stock for consulting services having a fair value of
                  $30,000.

         (vii)    On January 9, 2002, the Company issued 65,200 shares of common
                  stock having a fair value of $7,500 for legal services.

         (viii)   On March 18, 2002, the Company issued 160,000 shares of common
                  stock to two consultants having a fair value of $11,520.

         (ix)     On March 20, 2002, the Company issued 150,000 shares of common
                  stock for consulting services having a fair value of $10,800.

         (x)      On April 2, 2002, the Company issued 300,000 shares of common
                  stock for consulting services having a fair value of $25,500.

         (xi)     On June 7, 2002, the Company issued 1,380,000 shares of common
                  stock for consulting services having a fair value of $41,400.

         (xii)    On September 4, 2002, the Company issued 600,000 shares of
                  common stock for consulting services having a fair value of
                  $12,000.

         C. SETTLEMENT AGREEMENT

         On December 3, 2001, the Company entered into a settlement agreement
         with a former officer in satisfaction of certain claims, and issued
         125,000 shares of common stock having a fair market value of $46,875,
         62,500 of which shares are covered by registration rights. During the
         year ended September 30, 2002, an additional 160,000 shares of common
         stock were issued to that former officer having a fair market value of
         $4,800.

NOTE 21   ADJUSTMENTS TO OUTSTANDING SECURITIES
-------   -------------------------------------

         In January 2002, the Company entered into an agreement with Bank
         Insinger de Beaufort, Bristol Investment Fund, Ltd., Bristol Capital,
         LLC, and Paul Kessler, who is a principal of Bristol Capital, LLC.
         Under the agreement, the conversion price of the 10% Convertible
         Debenture due May 1, 2002 that Bank Insinger purchased in the Company's
         April 2000 offering was amended to be the lesser of $0.055 and 50% of
         the average of the lowest three intraday trading prices during the
         twenty trading days immediately preceding a conversion. In addition,
         the exercise prices of the warrants issued to Bank Insinger in the
         February 2000, April 2000 and May 2001 offerings, the warrants issued
         to Bristol Investment Fund in the January 2001 offering, the warrants

                                      F-43


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         issued to Bank Insinger in the April 2000 offering that were
         transferred to Bristol Capital, and the option issued to Paul Kessler
         pursuant to a consulting agreement dated as of September 26, 2000 were
         amended so that the exercise prices are equal to 50% of the average of
         the lowest three intraday trading prices during the twenty trading days
         immediately preceding an exercise. The expiration dates of each of the
         warrants and options described in the preceding sentence were extended
         so that each is exercisable until the seventh anniversary of its
         issuance.

         As of September 30, 2002, the Company entered into an agreement with
         the holders of all of its outstanding convertible debentures other than
         those debentures issued on September 11, 2002, to extend the due date
         of those outstanding debentures to September 23, 2003. In consideration
         for the extension, the Company granted to the holders of these
         debentures warrants to purchase up to an aggregate of 5,189,126 shares
         of common stock at an exercise price equal to the average of the lowest
         three intraday trading prices during the 20 trading days immediately
         preceding the exercise of the warrants. The warrants granted included
         warrants to Bank Insinger de Beaufort to purchase up to 1,285,028
         shares of common stock, warrants to AJW Partners, LLC to purchase up to
         808,010 shares of common stock, warrants to New Millennium Capital
         Partners II, LLC to purchase up to 808,010 shares of common stock,
         warrants to Equilibrium Equity, LLC to purchase up to 56,062 shares of
         common stock, warrants to Bristol Investment Fund, Ltd. to purchase up
         to 240,000 shares of common stock, warrants to Bristol Capital, LLC to
         purchase up to 132,016 shares of common stock, warrants to Alliance
         Equities, Inc. to purchase up to 60,000 shares of common stock,
         warrants to AJW Offshore, Ltd. (f/k/a AJW/New Millennium Offshore,
         Ltd.) to purchase up to 900,000 shares of common stock, and warrants to
         AJW Qualified Partners, LLC (f/k/a Pegasus Capital Partners, LLC) to
         purchase up to 900,000 shares of common stock.

NOTE 22   RELATED PARTY TRANSACTIONS
-------   --------------------------

         During the year ended September 30, 2002, the Company issued 5,130,000
         shares of its common stock to officers, directors and related party
         consultants, having an aggregate fair market value of $631,000. During
         this period, the Company also loaned $36,000 at an annual interest rate
         of 5% to an officer and director. The loan and all accrued and unpaid
         interest was payable five years following the date of the loan. As of
         September 30, 2002, the full amount of this loan was offset against
         deferred compensation owed that officer.

         During the year ended September 30, 2001, the Company issued 611,130
         shares of its common stock to officers, directors, accountants and
         related party consultants, having an aggregate fair market value of
         $1,935,250.

                                      F-44


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 23   DISCONTINUED OPERATIONS
-------   -----------------------

         On March 4, 2002, the Company sold substantially all of the assets and
         business of its Desience division. The purchase price was $250,000,
         with $50,000 paid at closing and $25,000 per month to be paid over a
         period of eight months following the closing. In addition, if a certain
         pending sales transaction closes in 2002, the Company may receive up to
         an additional $100,000. Included in the loss from discontinued
         operations as of September 30, 2002, is the write-off of goodwill
         associated with our Desience division of approximately $337,000.

         The following is included in the loss from discontinued operations for
         the year ended September 30, 2002:

           Sales                                                   $   215,451
           Cost of sales                                               138,508
                                                                   ------------
           Gross profit                                                 76,943
           Operating expenses                                          (92,197)
           Other income                                                 22,728
                                                                   ------------
           Income before discontinued operations                         7,474
           Gain on sale of business assets                             247,301
           Write-off of remaining goodwill                            (337,052)
                                                                   ------------
           Loss from discontinued operations                       $   (82,277)
                                                                   ============

NOTE 24   ACQUISITION OF FAST FORWARD MARKETING
-------   -------------------------------------

         On March 15, 2002, the Company formed a new corporation called FFM
         Acquisition Corp. On April 8, this corporation acquired, for a cost of
         up to $516,000, certain assets and liabilities of a distributor of
         video products for both major motion picture studios and independent
         producers. The cost of $516,000 includes $255,000 in cash paid to the
         seller on the date of closing and $261,000 to be paid upon the
         collection of outstanding accounts receivable which were transferred to
         FFM Acquisition Corp. in connection with the acquisition. In April
         2002, FFM Acquisition Corp amended its articles of incorporation to
         change its name to Fast Forward Marketing, Inc., and will have the same
         year end as the Company.

         The purchase price allocation recorded for the acquisition of certain
         assets and liabilities of Fast Forward Marketing, Inc., approximates
         the following:

             Accounts receivable                                 $   55,000
             Inventory                                               29,000
             Fixed assets                                            72,000
             Other current assets                                     1,000
                                                                 -----------
                  Total assets acquired                             157,000

                                      F-45


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

             Less liabilities assumed:
             Accounts payable and accrued expenses                 (854,000)
                                                                 -----------
             Excess of liabilities assumed over assets acquired     697,000
             Plus: Series B stock issued                            900,000
             Plus: Purchase price                                   516,000
                                                                 -----------
             Goodwill                                            $2,113,000
                                                                 ===========

         Effective April 10, 2002, the Company entered into an Exchange
         Agreement with Bristol Capital, LLC pursuant to which it issued 900
         shares of its Series B Convertible Preferred Stock and acquired from
         Bristol Capital its 50% interest in the Company's now wholly- owned
         Fast Forwarding Marketing subsidiary which was issued to Bristol
         Capital in consideration for providing the opportunity to acquire the
         Fast Forward Marketing business. Each share of the Company's Series B
         Convertible Preferred Stock has a stated value of $1,000 and is
         convertible into shares of its common stock at the lesser of (i)
         $0.086, and (ii) 82% of the average of the three lowest intraday
         trading prices of a share of its common stock during the twenty trading
         preceding the conversion date. The Series B Convertible Preferred Stock
         accrues dividends at a rate of 8% per annum, which is payable on a
         quarterly basis in arrears, at the option of the holder, in cash or
         shares of our common stock based on the then applicable conversion
         price.

         In the months following the Company's asset acquisition of Fast Forward
         Marketing, the Company discovered that there was a material difference
         in the amount of accounts payable and accounts receivable as stipulated
         by the previous owner of Fast Forward Marketing at the closing of the
         acquisition. The Company determined that the stipulated list of
         accounts payable from the previous owner dated April 8, 2002 was
         understated by approximately $579,000, which was owed to several
         different entities. Subsequent to this discovery, the Company recorded
         the respective payables. Additionally, the Company determined that the
         stipulated list of accounts receivable from the previous owner was
         overstated by approximately $79,000. Subsequent to this discovery, the
         Company recorded the respective receivables. The Company recorded these
         amounts as an addition to goodwill on the accompanying financial
         statements, which has been written down to zero.

         The Company is in the process of reviewing with legal counsel its right
         to file a lawsuit against the former owner of Fast Forward Marketing to
         seek collection of the amounts discussed above.

                                      F-46


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

NOTE 25   LIQUIDITY
-------   ---------

         During the year ended September 30, 2002 the Company incurred a
         negative cash flow from operating activities of $114,957 and as of
         September 30, 2002 had a working capital deficiency of $6,526,792 and
         an accumulated deficit of $38,725,325. As of that date, the Company had
         $21,661 in cash, $130,029 in accounts receivable, net, and $61,280 in
         notes receivable. The Company had accounts payable and accrued expenses
         of $2,769,038 and outstanding convertible debentures of $3,585,125,
         including convertible debentures issued prior to the beginning of
         fiscal year 2002. To the extent convertible debentures the Company has
         issued are converted into shares of common stock, the Company will not
         be obligated to repay the converted amounts.

         The Company has been, and currently is, working toward identifying and
         obtaining new sources of funding. Deteriorating global economic
         conditions may cause prolonged declines in investor confidence in and
         accessibility to capital markets. Deteriorating global economic
         conditions may make it more difficult for the Company to secure funding
         because, during times of deteriorating global economic conditions,
         prospective lenders and investors generally have less funds to lend or
         invest and are more hesitant to lend to or invest in small, financially
         unhealthy companies such as the Company. Further, the Company's
         debenture financing documents contain notice and right of first refusal
         provisions and the grant of security interests in substantially all of
         the Company's assets in favor of its debenture investors, all of which
         provisions will restrict the Company's ability to obtain debt and/or
         equity financing.

         Future financing may not be available on a timely basis, in sufficient
         amounts or on terms acceptable to the Company. This financing may also
         dilute existing stockholders' equity. Any future financing that the
         Company may obtain may cause significant dilution to existing
         stockholders. Any debt financing or other financing of securities
         senior to common stock that the Company is able to obtain will likely
         include financial and other covenants that will restrict the Company's
         flexibility. At a minimum, the Company expects these covenants to
         include restrictions on its ability to pay dividends on its common
         stock. Any failure to comply with these covenants would have a material
         adverse effect on the Company's business, prospects, financial
         condition, results of operations and cash flows.

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

                                      F-47


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         In an effort to increase sales related to the Company's content
         delivery business, the Company has implemented new subscription- and
         pay-per-view-based services for users to view the content available
         through its websites. The Company has also launched an interactive
         personal meeting place within its websites that allows users to send
         and receive video messages and to use online chat features. Also, the
         Company is expanding its e-commerce product offerings to capture more
         sales of products of the pop culture genre.

         In addition, the Company is devoting efforts to expand its customer
         base for its video distribution business in order to increase sales
         related to this business. The Company is examining the viability of
         distributing videos over the Internet in order to increase sales of its
         video distribution business and to reduce its distribution costs as a
         result of more efficient video distribution procedures. The Company's
         websites also offer some of the videos it distributes for sale directly
         over the Internet. The Company believes that if it is successful in
         implementing the above business strategies, it will generate increased
         revenues from its Internet, e-commerce and video distribution business
         activities.

NOTE 25   GOING CONCERN
-------   -------------

         The Company's financial statements for the year ended September 30,
         2002 have been prepared on a going concern basis which contemplates the
         realization of assets and the settlement of liabilities and commitments
         in the normal course of business. The Company had a net loss from
         operations of $8,078,143, a negative cash flow from operating
         activities of $144,957, a working capital deficiency of $6,526,792 and
         a stockholders' deficiency of $6,436,992. Due to the Company's net
         losses, negative cash flows, working capital deficiency and
         stockholders' deficiency, the Company may not be able to meet such
         objectives as presently structured. The financial statements do not
         include any adjustments that might result from the outcome of this
         uncertainty.

NOTE 26   SUBSEQUENT EVENTS
-------   -----------------

         In October 2002, the revolving line-of-credit agreement with Alliance
         Equities, Inc. was terminated.

         In order to provide working capital and financing for the Company's
         operation and expansion, on September 11, 2002, the Company entered
         into a securities purchase agreement and related agreements with three
         accredited investors (the "Purchasers") for the purchase of up to
         $600,000 of the Company's 12% Convertible Debentures. The debentures
         bear interest at a rate of 12% per annum, payable quarterly in common
         stock or cash at the option of the Purchasers. The debentures were to
         be sold in three separate tranches and the second tranche, in the
         amount of $175,000, was consummated in October 2002 and the convertible
         debentures relating to the second tranche are due October 15, 2003. The
         aggregate net proceeds of the October 2002 tranche, after payment of

                                      F-48


<PAGE>
                      KANAKARIS WIRELESS AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       As of September 30, 2002 and 2001
                       ---------------------------------

         some related expenses, were approximately $108,000. The third tranche,
         in the amount of $175,000, was consummated in December 2002 and the
         convertible debentures relating to the second tranche are due December
         9, 2003. The aggregate net proceeds of the December 2002 tranche, after
         payment of some related expenses, were approximately $122,000.

         The debentures initially were convertible into shares of common stock
         at the lesser of $0.01 per share and 50% of the average of the lowest
         three intraday trading prices of a share of common stock during the
         trading days immediately preceding conversion.

         Upon the issuance of the October and December 2002 debentures, the
         Purchasers received five-year term warrants to purchase three shares of
         the Company's common stock for each $1.00 invested. The initial
         exercise price of the warrants was equal to $0.005.

         In November 2002, the Company moved the operations of Fast Forward
         Marketing division out of the Santa Monica offices and temporarily into
         the residence of an officer.

         In November 2002, the Company's 6% convertible promissory notes due
         November 30, 2002 in the aggregate principal amount of $372,550 matured
         and the Company failed to timely repay these notes.

         As of September 30, 2002, the Company had eight employees. The Company
         terminated all of its employees during November 2002, with the
         exception of four individuals, two of which are officers of the
         Company. In connection with the terminations, the Company has recorded
         a current period charge of an immaterial amount.

         Christel H. Uittenbogaart,the former shareholder of Desience, commenced
         an action against the Company, its subsidiary, Kanakaris InternetWorks,
         Inc., et al, in Los Angeles Superior Court on December 17, 2002. The
         complaint alleged that the Company and Kanakaris InternetWorks owed Ms.
         Uittenbogaart $113,183 as of March 31, 2002 under the royalty
         provisions of a Stock Purchase Agreement entered into between Kanakaris
         InternetWorks, Inc. and Ms. Uittenbogaart, and alleged other damages in
         unspecific amounts. Ms. Uittenbogaart's complaint included allegations
         of breach of contract, breach of the implied covenant of good faith,
         fraud, and negligent misrepresentation. In addition, Ms. Uittenbogaart
         alleged the existence of a constructive trust based on unjust
         enrichment and sought an equitable lien against property of the
         Company's subsidiary, Desience Corporation, held by the defendants.
         Lastly, Ms. Uittenbogaart demanded an accounting of the gross sales,
         profits and funds generated as a result of the purchase of Desience
         Corporation from Ms. Uittenbogaart in 1997. The Company has engaged
         counsel to defend it against all of Ms. Uittenbogaart's claims but has
         not yet filed a response to the complaint filed by Ms. Uittenbogaart.
         The Company has recorded the amount of this liability to the former
         shareholder of Desience.

                                      F-49



<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number                   Description
------                   -----------

2.1      Stock Purchase Agreement dated as of October 10, 1997 by and between
         Christel H. Uttenbogaart and Kanakaris InternetWorks, Inc.(1)

2.2      Acquisition Agreement dated as of November 25, 1997 between Big Tex
         Enterprises, Inc. and Kanakaris InternetWorks, Inc.(1)

2.3      Asset Purchase Agreement between Desience Corporation, a wholly- owned
         subsidiary of Kanakaris Wireless, and Russ Bassett Corp., dated as of
         March 4, 2002. (15)

2.4      Asset Purchase Agreement dated as of March 29, 2002 by and between the
         Registrant, FFM Acquisition Corp., Fast Forward Marketing, Inc. and
         Intervisual Books, Inc. (16)

2.5      Amendment to Asset Purchase Agreement dated as of April 8, 2002 by and
         between the Registrant, FFM Acquisition Corp., Fast Forward Marketing,
         Inc. and Intervisual Books, Inc. (16)

3.1      Amended and Restated Articles of Incorporation of the Registrant (4)

3.2      Amended and Restated Bylaws of the Registrant (4)

3.3      Amendment to Article III of the Amended and Restated Bylaws adopted by
         the Registrant's Board of Directors on January 23, 2001 (6)

3.4      Amendment to Article IX of the Amended and Restated Bylaws adopted by
         the Registrant's Board of Directors on January 23, 2001 (6)

3.5      Amendments to Articles II, III and IX of the Amended and Restated
         Bylaws adopted by the Registrant's Board of Directors on February 5,
         2001 (7)

3.6      Amendment to Article III of the Amended and Restated Bylaws adopted by
         the Registrant's Board of Directors on June 21, 2001 (9)

3.7      Amendment to Restated Articles of Incorporation of the Registrant (8)

3.8      Certificate of Designations, Preferences and Rights of Series B
         Convertible Preferred Stock of Kanakaris Wireless (16)

4.1      Specimen Common Stock Certificate (1)

10.1     Kanakaris Communications, Inc. 2000 Stock Option Plan (4)(#)

10.2     Encoding.com Terms and Conditions and related purchase orders (2)

10.3     Windows Media(TM)Technology Promotion Agreement dated February 18, 1999
         between Microsoft Corporation and the Registrant (1)

                                      -62-


<PAGE>

10.4     Memorandum of Understanding dated November 9, 1999 by and between Lain
         International and the Registrant (5)

10.5     Sublease Agreement dated as of October 8, 1999 by and between
         Belfiore-Fitzgerald and the Registrant (1)

10.6     License Agreement dated as of February 18, 1999 between the Registrant
         and ION Systems, Inc. (1)

10.7     First Amendment to License Agreement dated effective as of March 22,
         1999 by and between the Registrant and ION Systems, Inc. (1)

10.8     Second Amendment to License Agreement dated as of May 4, 2000 by and
         between the Registrant and ION Systems, Inc. (4)

10.9     Memorandum of Understanding dated November 1, 1999 by and between
         SyCoNet.com Inc. and the Registrant (1)

10.10    Promissory Note dated May 17, 2000 made by Alex Kanakaris in favor of
         the Registrant (#)(4)

10.11    Agreement for Payment of Royalties dated as of April 20, 2000 between
         the Registrant and John Clark (4)

10.12    Memorandum of Understanding dated February 25, 1999 between the
         Registrant and Alliance Equities (1)

10.13    Memorandum of Understanding dated April 7, 1999 between the Registrant
         and Alliance Equities (1)

10.14    Revolving Line of Credit Agreement dated as of December 10, 1999 by and
         between the Registrant and Alliance Equities (2)

10.15    Memorandum dated December 28, 2000 from Alliance Equities to the
         Registrant extending Revolving Line of Credit Agreement (5)

10.16    Promissory Note dated May 19, 1997 made by Branch Lotspeich in favor of
         Kanakaris InternetWorks, Inc.(#)(1)

10.17    Promissory Note dated February 26, 1997 made by Alex Kanakaris in favor
         of Kanakaris InternetWorks, Inc.(#)(1)

10.18    Promissory Note dated September 30, 1997 made by Alex Kanakaris in
         favor of Kanakaris InternetWorks, Inc.(#)(1)

10.19    Promissory Note dated April 7, 1997 made by John McKay in favor of
         Kanakaris InternetWorks, Inc.(#)(1)

10.20    Promissory Note dated January 8, 1998 made by John McKay in favor of
         Kanakaris InternetWorks, Inc.(#)(1)

                                      -63-


<PAGE>

10.21    Promissory Note dated January 8, 1998 made by Alex Kanakaris in favor
         of Kanakaris InternetWorks, Inc.(#)(1)

10.22    Promissory Note dated January 8, 1998 made by Branch Lotspeich in favor
         of Kanakaris InternetWorks, Inc.(#)(1)

10.23    Promissory Note dated January 7, 2000 made by the Registrant in favor
         of Alex F. Kanakaris (#)(3)

10.24    Promissory Note dated December 27, 1999 made by the Registrant in favor
         of Branch Lotspeich (#)(3)

10.25    Non-Qualified Stock Option Agreement dated December 31, 1999 between
         the Registrant and Alex F. Kanakaris (#)(3)

10.26    Non-Qualified Stock Option Agreement dated December 31, 1999 between
         the Registrant and Branch Lotspeich (#)(3)

10.27    Non-Qualified Stock Option Agreement dated December 31, 1999 between
         the Registrant and John R. McKay (#)(3)

10.28    Agreement dated October 21, 1999 between eConnect and the Registrant
         (1)

10.29    Windows Media(TM)ICP Broadband Jumpstart Program Agreement dated as of
         March 6, 2000 between the Registrant and Microsoft Corporation (4)

10.30    Windows Media(TM)ICP Broadband Jumpstart Program Agreement dated
         effective as of December 7, 1999 between the Registrant and Microsoft
         Corporation (1)

10.31    Convertible Debenture Purchase Agreement dated as of February 4, 2000
         between the investors named therein and the Registrant (3)

10.32    10% Convertible Debenture due February 1, 2001 made by the Registrant
         in favor of New Millennium Capital Partners II, LLC (3)

10.33    10% Convertible Debenture due February 1, 2001 made by the Registrant
         in favor of AJW Partners, LLC (3)

10.34    10% Convertible Debenture due February 1, 2001 made by the Registrant
         in favor of Bank Insinger de Beaufort (3)

10.35    Stock Purchase Warrant dated as of February 4, 2000 issued by the
         Registrant to New Millennium Capital Partners II, LLC (3)

10.36    Stock Purchase Warrant dated as of February 4, 2000 issued by the
         Registrant to AJW Partners, LLC (3)

10.37    Stock Purchase Warrant dated as of February 4, 2000 issued by the
         Registrant to Bank Insinger de Beaufort (3)

10.38    Stock Escrow and Security Agreement dated as of February 4, 2000
         between the Registrant, Owen Naccarato and the investors named therein
         (3)

                                      -64-


<PAGE>

10.39    Registration Rights Agreement dated as of February 4, 2000 by and
         between the Registrant and the investors named therein (3)

10.40    Convertible Debenture Purchase Agreement dated as of April 13, 2000
         between the investors named therein and the Registrant (4)

10.41    10% Convertible Debenture due May 1, 2001 made by the Registrant in
         favor of New Millennium Capital Partners II, LLC (4)

10.42    10% Convertible Debenture due May 1, 2001 made by the Registrant in
         favor of AJW Partners, LLC (4)

10.43    10% Convertible Debenture due May 1, 2001 made by the Registrant in
         favor of Bank Insinger de Beaufort (4)

10.44    10% Convertible Debenture due May 1, 2001 made by the Registrant in
         favor of Equilibrium Equity, LLC (4)

10.45    Stock Purchase Warrant dated as of April 13, 2000 issued by the
         Registrant to New Millennium Capital Partners II, LLC (4)

10.46    Stock Purchase Warrant dated as of April 13, 2000 issued by the
         Registrant to AJW Partners, LLC (4)

10.47    Stock Purchase Warrant dated as of April 13, 2000 issued by the
         Registrant to Bank Insinger de Beaufort (4)

10.48    Stock Purchase Warrant dated as of April 13, 2000 issued by the
         Registrant to Equilibrium Equity, LLC (4)

10.49    Registration Rights Agreement dated as of April 13, 2000 by and between
         the Registrant and the investors named therein (4)

10.50    Stock Escrow and Security Agreement dated as of April 13, 2000 between
         the Registrant, Owen Naccarato and the investors named therein (4)

10.51    Debenture Purchase Agreement dated as of August 5, 1999 between the
         Registrant and Alliance Equities (1)

10.52    Kanakaris Communications, Inc. 10% Convertible Subordinated Debenture
         due August 4, 2000 made by the Registrant in favor of Alliance Equities
         (1)

10.53    Registration Rights Agreement dated as of August 5, 1999 between the
         Registrant and Alliance Equities (1)

10.54    Kanakaris Communications, Inc. 10% Convertible Subordinated Debenture
         due September 29, 2000 made by the Registrant in favor of the Payee
         named therein (1)

10.55    Stock Escrow and Security Agreement dated as of November 1, 1999
         between the Registrant, Owen Naccarato and the Holder named therein (1)

                                      -65-


<PAGE>

10.56    Registration Rights Agreement dated as of September 29, 1999 by and
         between the Registrant and the Purchaser named therein (1)

10.57    Form of 10% Convertible Debenture due May 1, 2001 made in August 2000
         by the Registrant in favor of AJW Partners, LLC, New Millennium Capital
         Partners II, LLC and Equilibrium Equity, LLC (5)

10.58    Form of Stock Purchase Warrant dated as of August 2000 issued by the
         Registrant to AJW Partners, LLC, New Millennium Capital Partners II,
         LLC and Equilibrium Equity, LLC (5)

10.59    Securities Purchase Agreement dated as of January 5, 2001 by and among
         the investors named therein and the Registrant (5)

10.60    Form of Convertible Debenture due January 5, 2002 made by the
         Registrant in favor of AJW Partners, LLC, New Millennium Capital
         Partners II, LLC, Equilibrium Equity, LLC and Bristol Investment Fund,
         Ltd. (5)

10.61    Registration Rights Agreement dated as of January 5, 2001 by and
         between the Registrant and the investors named therein (5)

10.62    Form of Stock Purchase Warrant dated as of January 5, 2001 issued by
         the Registrant to AJW Partners, LLC, New Millennium Capital Partners
         II, LLC, Equilibrium Equity, LLC and Bristol Investment Fund, Ltd. (5)

10.63    The New York Internet Chamber of Commerce Charter Membership Agreement
         dated January 17, 2001 by and between The New York Internet Chamber of
         Commerce and the Registrant (6)

10.64    Letter agreement dated as of April 30, 2001 by and among the Registrant
         and AJW Partners, LLC, New Millennium Capital Partners II, LLC,
         Equilibrium Equity, LLC, Bristol Investment Fund, Ltd. and Bank
         Insinger de Beaufort (8)

10.65    Letter agreement dated December 29, 2000 between Haynie & Company, CPAs
         and the Registrant (#) (8)

10.66    Form of Convertible Debenture due March 9, 2002 made by the Registrant
         in favor of AJW Partners, LLC, New Millennium Capital Partners II, LLC,
         Equilibrium Equity, LLC and Bristol Investment Fund, Ltd. (9)

10.67    Securities Purchase Agreement dated as of June 29, 2001 between the
         Registrant and AJW Partners, LLC, New Millennium Capital Partners II,
         LLC and Alliance Equities, Inc. (9)

10.68    Form of 12% Convertible Debenture due June 29, 2002 made by the
         Registrant in favor of each of AJW Partners, LLC, New Millennium
         Capital Partners II, LLC and Alliance Equities, Inc. (9)

10.69    Form of Stock Purchase Warrant dated June 29, 2001 issued by the
         Registrant to each of AJW Partners, LLC, New Millennium Capital
         Partners II, LLC and Alliance Equities, Inc. (9)

                                      -66-


<PAGE>

10.70    Registration Rights Agreement dated as of June 29, 2001 by and between
         the Registrant and AJW Partners, LLC, New Millennium Capital Partners
         II, LLC and Alliance Equities, Inc. (9)

10.71    Letter Agreement dated as of June 29, 2001 by and among the Registrant
         and AJW Partners, LLC, New Millennium Capital Partners II, LLC and
         Equilibrium Equity, LLC (9)

10.72    Consulting Agreement dated as of September 4, 2001 by and between the
         Registrant and Richard Epstein (10)

10.73    Consulting Agreement dated as of October 26, 2001 by and between the
         Registrant and Kevin Welch (11)

10.74    Common Stock Purchase Warrant dated as of October 26, 2001 by and
         between the Registrant and Kevin Welch (11)

10.75    Consulting Agreement dated as of November 5, 2001 by and between the
         Registrant and Paul Lemmon (12)

10.76    Common Stock Purchase Warrant dated as of November 29, 2001 made by the
         Registrant in favor of Kevin Welch (13)

10.77    Consulting Agreement Extension dated as of November 29, 2001 by and
         between the Registrant and Kevin Welch (13)

10.78    Letter dated December 13, 2001 from Alliance Equities, Inc. to the
         Registrant regarding Extension of Line of Credit (14)

10.79    Securities Purchase Agreement dated as of January 9, 2002 by and
         between Bank Insinger de Beaufort Safe Custody NV and the Registrant
         (14)

10.80    Convertible Debenture due January 9, 2003 made by the Registrant in
         favor of Bank Insinger de Beaufort Safe Custody NV (14)

10.81    Registration Rights Agreement dated as of January 9, 2002 by and
         between the Registrant and Bank Insinger de Beaufort Safe Custody NV
         (14)

10.82    Stock Purchase Warrant dated as of January 9, 2002 issued by the
         Registrant to Bank Insinger de Beaufort Safe Custody NV (14)

10.83    Security Agreement dated as of January 9, 2002 by and between the
         Registrant and Bank Insinger de Beaufort Safe Custody NV (14)

10.84    Letter Agreement dated January 9, 2002 by and between the Registrant
         and Bank Insinger de Beaufort Safe Custody NV, Bristol Investment Fund,
         Ltd., Bristol Capital, LLC and Paul Kessler (14)

10.85    Agreement dated as of February 28, 2002 by and between the Registrant
         and Rutan & Tucker, LLP (17)

                                      -67-


<PAGE>

10.86    6% Convertible Promissory Note due November 30, 2002 made by the
         Registrant in favor of Rutan & Tucker, LLP (17)

10.87    Agreement dated as of February 28, 2002 by and between the Registrant
         and Haynie & Company (17)

10.88    6% Convertible Promissory Note due November 30, 2002 made by the
         Registrant in favor of Haynie & Company (17)

10.89    Securities Purchase Agreement dated as of March 29, 2002 by and among
         the Registrant and each of the purchasers identified therein (16)

10.90    Form of 12% Secured Convertible Debenture due March 29, 2003 (16)

10.91    Form of Common Stock Purchase Warrant dated March 29, 2002 (16)

10.92    Registration Rights Agreement dated as of March 29, 2002 by and among
         the Registrant and each of the investors identified therein (16)

10.93    Security Agreement dated as of March 29, 2002 by and among the
         Registrant and each of the secured parties identified therein (16)

10.94    Security Agreement dated as of April 1, 2002 by and among the
         Registrant and each of the secured parties identified therein (16)

10.95    Exchange Agreement dated as of April 10, 2002 by and between the
         Registrant and Bristol Capital, LLC (16)

10.96    Registration Rights Agreement dated as of April 10, 2002 by and between
         the Registrant and Bristol Capital, LLC (16)

10.97    Securities Purchase Agreement dated as of September 11, 2002 by and
         among the Registrant and each of the purchasers identified therein (18)

10.98    Form of 12% Secured Convertible Debenture due September 11, 2003 (18)

10.99    Form of Common Stock Purchase Warrant dated September 11, 2002 (18)

10.100   Registration Rights Agreement dated as of September 11, 2002 by and
         among the Registrant and each of the investors identified therein (18)

10.101   Security Agreement dated as of September 11, 2002 by and among the
         Registrant and each of the secured parties identified therein (18)

10.102   Letter Agreement dated September 23, 2002 by and among the Registrant
         and the investors identified therein (18)

10.103   Form of Common Stock Purchase Warrant dated September 23, 2002 (18)

10.104   Registration Rights Agreement dated as of September 23, 2002 by and
         among the Registrant and each of the investors identified therein (18)

                                      -68-


<PAGE>

10.105   Form of Secured Convertible Debenture due October 15, 2003

10.106   Form of Common Stock Purchase Warrant dated as of October 15, 2002

10.107   Amendment No. 1 to Securities Purchase Agreement dated December 9, 2002
         between the Registrant and the investors named therein

10.108   Form of Secured Convertible Debenture due December 9, 2003

10.109   Form of Common Stock Purchase Warrant dated as of December 9, 2002

21.1     Subsidiaries of the Registrant (16)

_________________

(#)      Management contract or compensatory plan, contract or arrangement
         required to be filed as an exhibit.

(1)      Filed as an exhibit to the Registrant's Amendment No. 1 to Form SB-2
         filed with the Securities and Exchange Commission on November 19, 1999
         (Registration No. 333-84909) and incorporated herein by reference

(2)      Filed as an exhibit to the Registrant's Amendment No. 3 to Form SB-2
         filed with the Securities and Exchange Commission on December 21, 1999
         (Registration No. 333-84909) and incorporated herein by reference.

(3)      Filed as an exhibit to the Registrant's Form SB-2 filed with the
         Securities and Exchange Commission on March 3, 2000 (Registration No.
         333-31748) and incorporated herein by reference.

(4)      Filed as an exhibit to the Registrant's Form SB-2 filed with the
         Securities and Exchange Commission on June 12, 2000 (Registration No.
         333-39102) and incorporated herein by reference.

(5)      Filed as an exhibit to the Registrant's Amendment No. 1 to Form 10-KSB
         filed with the Securities and Exchange Commission on January 25, 2001
         (File No. 0-28213) and incorporated herein by reference.

(6)      Filed as an exhibit to the Registrant's Form SB-2 filed with the
         Securities and Exchange Commission on January 29, 2001 (Registration
         No. 333-54514) and incorporated herein by reference.

(7)      Filed as an exhibit to the Registrant's Amendment No. 1 to Form SB-2
         filed with the Securities and Exchange Commission on February 6, 2001
         (Registration No. 333-54514) and incorporated herein by reference.

(8)      Filed as an exhibit to the Registrant's Post-Effective Amendment No. 1
         to Form SB-2 filed with the Securities and Exchange Commission on May
         7, 2001 (Registration No. 333-54514) and incorporated herein by
         reference.

                                      -69-


<PAGE>

(9)      Filed as an exhibit to the Registrant's Form 10-QSB for the quarter
         ended June 30, 2001 filed with the Securities and Exchange Commission
         on August 16, 2001 (File No. 0-28213) and incorporated herein by
         reference.

(10)     Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on September 17, 2001 (Registration
         No. 333-69476) and incorporated herein by reference.

(11)     Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on November 1, 2001 (Registration
         No. 333-72618) and incorporated herein by reference.

(12)     Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on November 28, 2001 (Registration
         No. 333-74040) and incorporated herein by reference.

(13)     Filed as an exhibit to the Registrant's Form S-8 filed with the
         Securities and Exchange Commission on November 30, 2001 (Registration
         No. 333-74238) and incorporated herein by reference.

(14)     Filed as an exhibit to the Registrant's Form 10-KSB filed with the
         Securities and Exchange Commission on January 15, 2002 (File No.
         0-28213)and incorporated herein by reference.

(15)     Filed as an exhibit to the Registrant's Form 8-K filed with the
         Securities and Exchange Commission on March 19, 2002 (File No. 0-28213)
         and incorporated herein by reference.

(16)     Filed as an exhibit to the Registrant's Form 8-K filed with the
         Securities and Exchange Commission on April 22, 2002 (File No. 0-28213)
         and incorporated herein by reference.

(17)     Filed as an exhibit to the Registrant's Form SB-2 filed with the
         Securities and Exchange Commission on May 9, 2002 (Registration No.
         333-87908) and incorporated herein by reference.

(18)     Filed as an exhibit to the Registrant's Amendment No. 1 to Form SB-2
         filed with the Securities and Exchange Commission on September 30, 2002
         (Registration No. 333-87908) and incorporated herein by reference.

                                      -70-


<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized as of the 13th day of January, 2003.

                               KANAKARIS WIRELESS

                               By: /S/ ALEX F. KANAKARIS
                                   ---------------------------------------------
                                   Alex F. Kanakaris
                                   President, Chief Executive Officer (Principal
                                   Executive Officer) and Chairman of the Board

         In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and as of
the dates indicated.
<TABLE>
<CAPTION>

        Name                                 Title                            Date
        ----                                 -----                            ----
<S>                               <C>                                     <C>

/S/ ALEX F. KANAKARIS             President, Chief Executive Officer      January 13, 2003
-----------------------------     (Principal Executive Officer),
Alex F. Kanakaris                 Chairman of the Board and Director

/S/ DAVID THOMAS SHOMAKER         Acting Chief Financial Officer          January 13, 2003
-----------------------------     (Principal Financial and Accounting
David Thomas Shomaker             Officer)

/S/ JOHN ROBERT MCKAY             Secretary, Director and Webmaster       January 13, 2003
-----------------------------
John Robert McKay

/S/ LISA LAWRENCE                 Director                                January 13, 2003
-----------------------------
Lisa Lawrence

                                  Director                                January 13, 2003
-----------------------------
Van Holster

/S/ ROSE FORBES                   Director                                January 13, 2003
-----------------------------
Rose Forbes

/S/ CAROLINE MICHAELS             Director                                January 13, 2003
-----------------------------
Caroline Michaels

                                  Director                                January 13, 2003
-----------------------------
Charles Moore

</TABLE>

                                      -71-


<PAGE>

                                 CERTIFICATIONS

I, Alex F. Kanakaris, certify that:

         1. I have reviewed this annual report on Form 10-KSB of Kanakaris
Wireless ("annual report");

         2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report; and

         3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

Date: January 13, 2003                /S/ ALEX F. KANAKARIS
                                      ------------------------------------------
                                      Alex F. Kanakaris, Chief Executive Officer
                                      (Principal Executive Officer)

I, David Thomas Shomaker, certify that:

         1. I have reviewed this annual report on Form 10-KSB of Kanakaris
Wireless ("annual report");

         2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report; and

         3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

Date: January 13, 2003                /S/ DAVID THOMAS SHOMAKER
                                      ------------------------------------------
                                      David Thomas Shomaker, Acting Chief
                                      Financial Officer (Principal Financial
                                      Officer)



<PAGE>

                         EXHIBITS FILED WITH THIS REPORT

Exhibit
Number              Description
------              -----------

10.105   Form of Secured Convertible Debenture due October 15, 2003

10.106   Form of Common Stock Purchase Warrant dated as of October 15, 2002

10.107   Amendment No. 1 to Securities Purchase Agreement dated December 9, 2002
         between the Registrant and the investors named therein

10.108   Form of Secured Convertible Debenture due December 9, 2003

10.109   Form of Common Stock Purchase Warrant dated as of December 9, 2002

99.1     Certifications of Chief Executive Officer and Chief Financial Officer
         Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
         of the Sarbanes-Oxley Act Of 2002