SETTLEMENT AGREEMENT AND MUTUAL RELEASE

         This  Settlement  Agreement and Mutual  Release (this  "Agreement")  is
entered  into this 16th day of January  2004,  by and between  Reality  Wireless
Networks,   Inc.,  a  Nevada   corporation   ("RWNT"),   and  Richard  Scardigli
("Scardigli").  RWNT and Scardigli shall be referred to  collectively  herein as
the "Parties."

                                   WITNESSETH:

         WHEREAS, Scardigli is owed approximately $175,000 by RWNT in connection
with a loan to RWNT (the "Debt").

         WHEREAS,  RWNT and Scardigli desire to amicably settle,  compromise and
resolve any and all controversies and claims between  themselves with respect to
the Debt to avoid the burden and expense of arbitration and/or litigation.

         WHEREAS,  in connection  with the resolution of such matters,  RWNT and
Scardigli  shall  provide  each  other with a full  release  and  settlement  in
accordance with the terms hereinafter set forth.

         NOW, THEREFORE, it is the desire of the Parties to state in writing the
details of their  agreements.  For money paid and  received  and other  valuable
consideration between the Parties, it is mutually agreed as follows:

         1.  Settlement  of Claims  against and Release of RWNT. In exchange for
RWNT' issuing to Scardigli 3,000,000 "freely tradable" shares of common stock of
RWNT (the  "Stock"),  which Stock shall be issued after  receipt by RWNT of this
fully  executed  Agreement,  Scardigli,  on behalf of  himself,  his  employees,
affiliates and assigns,  hereby fully, forever,  irrevocably and unconditionally
settles,  releases,  remises and discharges RWNT and each of its former, current
and  future  officers,  directors,  stockholders,  attorneys,  agents,  spouses,
administrators,  employees  and all persons  acting by,  through,  under,  or in
concert  with  them  from  any and all  claims,  charges,  complaints,  demands,
actions, causes of action, suits, rights, debts, sums of money, costs, accounts,
reckonings,  covenants,  contracts,  agreements,  promises,  doings,  omissions,
damages,   executions,   obligations,   liabilities,   and  expenses  (including
attorneys' fees and costs),  of every kind and nature,  known or unknown,  which
Scardigli ever had or now has against RWNT,  including,  but not limited to, all
claims arising out of the Debt, all common law claims including, but not limited
to,  actions in tort,  defamation,  breach of  contract,  and any  claims  under
federal, state or local statutes or ordinances not expressly referred to above.

         2.  Settlement of Claims against and Release of Scardigli.  In exchange
for  Scardigli's  settlement  of any and all claims  against RWNT and release of
RWNT, RWNT, on behalf of itself, its officers, directors,  employees, affiliates
and assigns,  hereby fully,  forever,  irrevocably and unconditionally  settles,
releases,  remises and discharges  Scardigli  from any and all claims,  charges,
complaints,  demands,  actions,  causes of action, suits, rights, debts, sums of
money, costs, accounts, reckonings,  covenants, contracts, agreements, promises,
doings, omissions, damages, executions,  obligations,  liabilities, and expenses


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(including  attorneys'  fees and  costs),  of every  kind and  nature,  known or
unknown,  which RWNT ever had or now has against  Scardigli  including,  but not
limited to, all claims arising out of the Debt, all common law claims including,
but not  limited to,  actions in tort,  defamation,  breach of contract  and any
claims  under  federal,  state or local  statutes or  ordinances  not  expressly
referred to above.

         3. Representations and Warranties of the Parties.

               3.1  Authority.  Each of the Parties has full power and authority
to enter  into this  Agreement.  All  action on the part of each of the  Parties
necessary for the authorization,  execution and delivery of this Agreement,  the
performance of all obligations of each of the Parties  hereunder has been taken,
and each of the Parties has all requisite power and authority to enter into this
Agreement.

               3.2  Consents  and  Approvals;  No Conflict.  The  execution  and
delivery of this Agreement by each of the Parties does not, and the  performance
of this  Agreement  by the  Parties  will not,  require any  consent,  approval,
authorization  or other  action  by,  or filing  with or  notification  to,  any
governmental or regulatory authority. The execution, delivery and performance of
this  Agreement by the Parties does not (i) conflict with or violate the charter
or by-laws,  partnership or other governing  documents of any of the Parties, or
(ii) conflict with or violate any law, rule, regulation,  order, writ, judgment,
injunction,  decree,  determination,  contract or award applicable to any of the
Parties.

               3.3 Effectiveness of Representations and Warranties.  Each of the
Parties' representations and warranties contained in this Agreement are true and
correct.

         4. Miscellaneous Provisions.

               4.1  This  Agreement   constitutes  the  complete  and  exclusive
agreement of the Parties.

               4.2 The Parties  understand  that this  Agreement  constitutes  a
compromise  and  settlement of disputed  claims.  No action taken by the Parties
hereto,  or any of them,  either previously or in connection with this Agreement
shall be deemed to be (a) an  admission  of the truth or  falsity  of any claims
heretofore  made or (b) an  acknowledgement  or admission by either party of any
fault or liability whatsoever to the other Party or to any third party.

               4.3 Each of the Parties  declares and represents that no promise,
inducement or agreement which is not specifically provided in this Agreement has
been  made by any Party to this  Agreement;  that this  Agreement  contains  the
entire agreement among the Parties;  and that the terms of this Agreement cannot
be modified except in writing signed by all Parties hereto.

               4.4 Each of the Parties agrees not to disclose to or discuss with
any person, except as where such disclosure may be required by law, court order,
government agency request or subpoena, or in connection with a legal proceeding,
the  substance of this  Agreement or matters  relating to any act or omission of
any Party in connection with any other Party.


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               4.5 This Agreement shall be construed, interpreted and applied in
accordance  with  the  substantive  laws of the  State  of  Washington,  without
reference to its choice of law rules.

               4.6 Any dispute between the Parties  pertaining to this Agreement
shall  be  resolved  through  binding  arbitration  conducted  by  the  American
Arbitration Association. The Parties agree that any arbitration proceeding shall
be conducted in Seattle,  Washington,  and consent to exclusive jurisdiction and
venue there. The award of the arbitrator(s) shall be final and binding,  and the
Parties waive any right to appeal the arbitral award, to the extent that a right
to appeal may be lawfully waived.  Each Party retains the right to seek judicial
assistance  (a) to compel  arbitration,  (b) to  obtain  injunctive  relief  and
interim  measures  of  protection  pending  arbitration,  and (c) to enforce any
decision of the arbitrator(s), including but not limited to the final award.

               4.7 No Party may assign any of its  rights  under this  Agreement
without the prior consent of the other Parties,  which shall not be unreasonably
withheld.  Subject to the preceding sentence,  this Agreement shall apply to, be
binding in all respects  upon,  and inure to the benefit of the  successors  and
permitted  assigns of the  Parties.  Nothing  expressed  or  referred to in this
Agreement  shall be  construed to give any person other than the Parties to this
Agreement any legal or equitable right,  remedy,  or claim under or with respect
to this Agreement or any provision of this Agreement.  This Agreement and all of
its  provisions  and  conditions  are for the sole and exclusive  benefit of the
Parties to this Agreement and their successors and assigns.

               4.8 All notices, demands and communications hereunder shall be in
writing and  personally  delivered  or sent by first class  mail,  certified  or
registered,  postage prepaid, return receipt requested, addressed to the parties
at the  addresses  below set forth,  or at such other address as any Party shall
have  furnished  to the other party in writing,  or shall be given by  telegram,
telex, facsimile  transmission,  overnight courier or hand delivery, in any case
to be effective  when received,  provided that actual  receipt shall  constitute
notice regardless of method of delivery.


                  If to RWNT:            Reality Wireless Networks, Inc.
                                         120 W. Campbell Ave., Suite E
                                         Campbell, California 95008

                  With a copy to:        David M. Otto
                                         The Otto Law Group, PLLC
                                         900 Fourth Ave., Suite 3140
                                         Seattle, WA 98164

                  If to Scardigli:       Richard Scardigli
                                         7820 Morgan Point
                                         Reno, NV.  89523



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               4.9 If any term or provision of this Agreement or any application
thereof  shall be  invalid or  unenforceable,  such term or  provision  shall be
deemed  to be  severed  and the  remainder  of  this  Agreement  and  any  other
application  of such term or  provision  shall not be  affected  or  invalidated
thereby.

               4.10 This  Agreement  may be executed by facsimile  and in one or
more counterparts, all of which taken together shall constitute one and the same
instrument.


                            [signature page follows]


<PAGE>


         IN WITNESS WHEREOF,  the Parties have executed this Agreement as of the
date first above written.


                                      REALITY WIRELESS NETWORKS, INC.




                                      --------------------------------
                                      Name:  Victor Romero
                                      Title:  President








                                      --------------------------------
                                      Name:   Richard Scardigli