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

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED June 30, 2004

            Securities and Exchange Commission File Number 000-26369


                         REALITY WIRELESS NETWORKS, INC.
             (Exact name of registrant as specified in its charter)

                  Nevada                                    88-0422026
     (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                 Identification Number)

                              7235 North Creek Loop
                              Gig Harbor, WA 98335
          (Address of principal executive offices, including zip code)

                                 (408) 626-1730
              (Registrant's Telephone Number, Including Area Code)


         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
requirements for the past 90 days.

                                            YES  X        NO  ___

  The number of issued and outstanding shares of the Registrants Common Stock,
$0.001 par value, as of August 13, 2004, was 499,792,931 issued and 423,959,828
                                  outstanding

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<PAGE>

                         REALITY WIRELESS NETWORKS, INC.


                                                                            PAGE

PART I - Financial Information                                                 2

Item 1.  Financial Statements:

         Consolidated Balance Sheet at June 30, 2004 (unaudited)               3
         Consolidated Statements of Operations for the three and nine
          months ended June 30, 2004 and 2003 (unaudited)                      4
         Consolidated Statements of Cash Flows for the nine months ended
           June 30, 2004 and 2003 (unaudited)                                  5
         Notes to Consolidated Financial Statements (unaudited)             6-10

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.                                               11

Item 3.  Controls and Procedures                                              14

PART II - Other Information                                                   15

Item 1.  Legal Proceedings.                                                   16

Item 2.  Changes in Securities.                                               16

Item 3.  Defaults Upon Senior Securities.                                     17

Item 4.  Submission of Matters to a Vote of Security Holders                  17

Item 5.  Other Information                                                    17

Item 6.  Exhibits and Reports on Form 8-K.

Signatures                                                                    18



                                       2

<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements-

                         REALITY WIRELESS NETWORKS, INC.
                           CONSOLIDATED BALANCE SHEET

                                                                      JUNE 30,
                                                                       2004
                                                                    (UNAUDITED)
                                                                   ------------
                                     ASSETS
Current assets:
  Cash                                                             $          0
                                                                   ------------
    Total current assets                                                      0

Fixed Assets, less accumulated depreciation of $78,345                    6,782
Debt Issuance Cost, net                                                  19,390
Note receivable                                                         320,300
Deposit                                                                  99,500
Accrued interest receiveable                                              7,035
                                                                   ------------
                                                                   $    453,007
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Accounts payable                                                 $    534,863
  Accrued payroll                                                       195,550
  Accrued payroll taxes                                                 225,906
  Accrued interest                                                      210,270
  Accrued expenses                                                       18,633
  Current portion of notes and capital leases payable                 1,249,328
                                                                   ------------
    Total current liabilities                                         2,434,550
                                                                   ------------

Convertible Debentures                                                  140,000

Stockholders' deficit:
  Preferred stock, no par value, 100,000,000 shares
    authorized: none issued and outstanding                                   0
  Common stock, $.001 par value, 500,000,000 shares
    authorized: 499,792,931 shares issued and
    423,959,828 outstanding                                             423,960
  Common stock receivable                                                  (797)
  Common stock issuable (100 shares)                                         --
  Additional paid in capital                                         11,594,638
  Deferred Expense                                                   (1,704,472)
  Accumulated deficit                                               (12,434,872)
                                                                   ------------
    Total stockholders' deficit                                      (2,121,543)
                                                                   ------------
                                                                   $    453,007
                                                                   ============


See accompanying summary of accounting policies and notes to financials

                                        3
<PAGE>

                         REALITY WIRELESS NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                    NINE MONTHS ENDED
                                            --------------------------------      --------------------------------
                                            JUNE 30, 2004      JUNE 30, 2003      JUNE 30, 2004      JUNE 30, 2003
                                            -------------      -------------      -------------      -------------
<S>                                         <C>                <C>                <C>                <C>
Revenue                                     $      12,296      $      34,948      $      56,512      $      94,699
Cost of sales                                      12,296             24,646             55,228             80,556
                                            -------------      -------------      -------------      -------------

Gross margin                                           --             10,302              1,284             14,143

Engineering and development                           787             12,261              2,360             48,043
Selling and marketing expenses                         --                 --                 --                 --
General and administrative                      2,452,043            883,035          5,615,028          1,511,345
                                            -------------      -------------      -------------      -------------
                                                2,452,830            895,296          5,617,388          1,559,388
                                            -------------      -------------      -------------      -------------

Loss from operations                           (2,452,830)          (884,994)        (5,616,104)        (1,545,245)

Other income (expense):
Gain on sale of asset                                  --                 --              3,989                 --
Settlement Loss                                   (23,667)                --            (55,452)                --
Interest income                                     3,085                 --              7,035                 --
Interest expense                                 (197,983)           (25,902)          (435,137)           (76,162)
                                            -------------      -------------      -------------      -------------
                                                 (218,565)           (25,902)          (479,565)           (76,162)
                                            -------------      -------------      -------------      -------------

Income (Loss)                               $  (2,671,395)     $    (910,896)     $  (6,095,669)     $  (1,621,407)
                                            =============      =============      =============      =============

Basic and diluted loss per common share     $       (0.01)     $       (0.08)     $       (0.03)     $       (0.14)
                                            =============      =============      =============      =============

Weighted Average Shares                       294,572,005         11,834,504        188,729,100         11,834,504
                                            =============      =============      =============      =============
</TABLE>


See accompanying summary of accounting policies and notes to financials


                                       4
<PAGE>

                         REALITY WIRELESS NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      FOR THE NINE MONTHS ENDED JUNE 30,
                                                            2004            2003
                                                         ----------     ----------
<S>                                                      <C>            <C>
Cash flows from operating activities:
  Net loss                                               (6,095,669)    (1,621,407)
    Adjustments to reconcile net income to net cash
      used in operating activities:
    Depreciation and amortization                             2,360         17,416
    Beneficial conversion expense                           348,278             --
    Common stock issued for services                      5,307,896      1,174,500
    Loss on debt settlement                                  55,451             --
    Company expenses paid by Directors                       78,266             --
  Changes in operating assets and liabilities
    Accounts receivable                                          --          4,399
    Inventory                                                    --          6,747
    Prepaids and other current assets                       (19,390)       (26,667)
    Accounts payable                                        101,992         13,205
    Accrued expenses                                         88,932        171,861
                                                         ----------     ----------
        Net cash used in operating activities              (131,884)      (259,946)
                                                         ----------     ----------

Cash flows from investing activities:
  Loan disbursement on note receivable                     (320,300)            --
  Disbursement of deposit                                   (99,500)
  Proceeds from sale of assets                                   --         (2,195)
                                                         ----------     ----------
        Net cash used in investing activities              (419,800)        (2,195)
                                                         ----------     ----------

Cash flows from financing activities:
  Stock issued for cash

  Proceeds from issuance of debt                            550,000        261,000
  Proceeds from capital infusion from directors              50,000             --
  Principal payments notes payable and capital leases       (50,464)        (2,152)
                                                         ----------     ----------
        Net cash provided by financing activities           549,536        258,848
                                                         ----------     ----------

Net increase in cash and cash equivalents                    (2,148)        (3,293)
Cash and cash equivalents at beginning of period              2,148          3,400
                                                         ----------     ----------
Cash and cash equivalents at end of period                       --            107
                                                         ==========     ==========

Cash paid for:
  Interest                                                       --             --
</TABLE>


See accompanying summary of accounting policies and notes to financials

                                       5
<PAGE>

                            REALITY WIRELESS NETWORKS
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note 1 - Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements of Reality Wireless
Networks, Inc. ("Reality") have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Annual Report filed with the SEC on Form 10-KSB for the year ended
September 30, 2003. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim periods presented have
been reflected herein. The results of operations for interim are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for fiscal year end September 30,
2003 as reported in the 10-KSB have been omitted.

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the revenues stream of the
Company: Revenues are recognized pro-rata over the service period. A customer's
credit card is charged at the first of the month and revenue is earned by the
end of the month. Therefore, no deferred revenue is recorded as of month end.

Note 2 - Going Concern

The financial statements have been prepared assuming that Reality will continue
as a going concern. Reality has a significant accumulated deficit and working
capital deficiency at June 30, 2004 and is unable to meet its obligations as
they come due; all of which raise substantial doubt about Reality's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or to the amounts and classification of liabilities that might be
necessary should Reality be unable to continue as a going concern.

The continued support of Reality's creditors, lenders and shareholders is
required in order for Reality to continue as a going concern. Management's plans
to support Reality's operations include borrowing additional funds and raising
additional capital. Reality currently has certain amounts available under a
convertible debenture agreement (see Note 4). Reality's inability to obtain
additional capital or obtain such capital on favorable terms could have a
material adverse effect on its financial position, results of operations and its
ability to continue operations.

Note 3 - Note Receivables, Advances and Commitments

In December 2003, Reality issued IElement (an affiliate of the "acquiree"- see
below) 6,333,000 shares valued at $189,990 for consulting services (see Note 5).
IElement is assisting in running day-to-day operations; including accounting,
customer support, and troubleshooting network and service issues.

A July 18, 2003 non-binding letter of intent with a potential merger candidate,
Integrated Communications Consultants Corporation (the "Acquiree"), contains a
binding clause committing the Company to provide $500,000 of bridge financing to
the Acquiree as follows: (a) $150,000 upon earlier of July 31, 2003 or public
announcement of the proposed merger and (b) $350,000 no later than August 15,
2003. The bridge loans are to be evidenced by promissory notes. If within 90


                                       6
<PAGE>

days the merger occurred, the notes would have been cancelled. If within 90 days
the merger has not occurred then the notes become due and payable with a
36-month term amortization at a rate of prime plus 3% less any legal costs
incurred by the Acquire. As of June 30, 2004 the merger had not been consummated
and the Company has advanced $419,800 of which $148,000 is evidenced by a
promissory note. (Funding has occurred in three traunches of $147,500, $100,000
and $172,300 in October 2003, January 2004 and May 2004, respectively.) These
amounts are reflected as notes receivable of $148,000 and deposit of $99,500 in
the accompanying balance sheet. In addition accrued interest receivable
calculated at 5% totalling $7,035 has been recorded. The Company is committed
for any additional $80,200 of bridge financing at June 30, 2004. As of June 30,
2004, Reality has not provided all of $350,000 due on August 15, 2003

Note 4 - Debt

Convertible Debentures

On October 28, 2003, the Company entered into an Agreement and Plan of Merger
with Orange Soda, Inc. (a Delaware corporation). This merger is in effect a
financing transaction and accounted for as a recapitalization. No accounting
entry was made due to the fractional amount to be posted based on 100 shares of
the Company to be issued to the shareholders of Orange Soda. Per the acquisition
agreement which is considered to have been closed by the parties to the
agreement, 100 shares are issuable to Orange Soda. Pursuant to agreement,
Reality Wireless also assumed, jointly and severally with Orange Soda, all of
the obligations and responsibilities of Orange Soda in connection with five 1%
convertible debentures in the maximum aggregate face amount of $1,000,000 that
would mature October 2008, if executed. The Debentures are to be funded in five
traunches as follows: $194,000, $150,000, $300,000, $350,000 and $6,000. The
$300,000 traunch was amended in April 2004 to three lesser traunches of
$140,000, $100,000 and $60,000. In order to execute any debenture Reality is
required to issue common stock to an escrow account with a minimum number of
shares in escrow at any point in time equal to 200% of the full conversion
shares. Debentures, once issued, are convertible immediately.

The $194,000 and $6,000 debenutures were executed and funds, net of debt issue
cost of $32,500 were received in November 2003. An interest expense of $27,796
was recognized immediately in 2003 for the imbedded beneficial conversion
feature. As of June 30, 2004 all of these $200,000 of debenutures had been
converted to common stock and the debt issue costs of $32,500 were charged to
operations. On January 21, 2004, Reality executed the $150,000 traunch and
received net proceeds of $129,400. An interest expense of $150,000 was
recognized immediately for the imbedded beneficial conversion feature. As of
June 30, 2004 the $150,000 of debenutures had been converted to common stock and
the debt issue cost of $20,600 was charged to operations. On May 10, 2004 the
$140,000 and $60,000 debentures were executed and Reality received net proceeds
of $172,300. An interest expense of $115,446 was recognized immediately for the
imbedded beneficial conversion feature. Reality paid fees and expenses totaling
$27,700 related to the debentures. These fees are capitalized and amortized over
the debt term or proportionally as the debenture is converted to stock. At June
30, 2004 $140,000 remained left to be converted and $19,390 of debt issuance
cost to be amortized. This debenture matures October 27, 2008 and accrues
interest at 1% per annum, however in the event of default interest will accrued
at 15% retroactive to date of issuance. Conversion price will be the lesser of
150% of fixed conversion price or 100% of the average of the three lowest
closing bid prices during the forty trading days immediately preceding
conversion.

Reality issued 41,000,000 shares on October 27, 2003 and an additional
120,000,000 on May 6, 2004 to an escrow account related to this agreement. As of
June 30, 2004, $410,000 had been converted into 85,166,897 shares of common
stock, leaving 75,833,103 shares held in escrow, see Note 5 for more detail. The
shares held in escrow at June 30, 2004 are considered issued but not outstanding
and therefore not included in the computation of loss per share.

If, any of the debentures are outstanding and Reality is funded an amount equal
to or exceeding $5,000,000, Reality is required to pay an amount equal to 150%
of the then outstanding Debentures.

Settled Notes Payable


                                       7
<PAGE>

In February 2004, four notes payable totaling $75,000 with related accrued
interest of $11,882, were settled with the issuance of 5,933,333 common stock
shares with a fair market value at the date of issuance of $.02/share. The
issuance of shares and settlement of debt resulted in an additional settlement
loss expense of $31,785 recorded under Other Expense on consolidated statements
of operations.

In April 2004, one note payable totaling $20,000 with related accrued interest
of $3,667 was settled with the issuance of 2,366,700 common stock shares with a
fair market value at the date of issuance of $.02/share. The issuance of shares
and settlement of debt resulted in an additional settlement loss expense of
$23,667 recorded under Other Expense on consolidated statement of operations.

In May 2004, two notes payable were settled. One totaling $65,186 was settled to
be paid over fifteen months. The other was in the amount of $25,000 of which a
former director and officer of the Company assumed personally in exchange for
the Company issuing to him a note payable in the amount of $209,251 (see below
Note 4 "Notes Payable".
In January and February 2004, $40,000 and $10,000 were paid, respectively, to a
single note holder.

Notes Payable

In May 2004, the Company issued a convertible secured promissory note in the
amount of $209,252 to a former director and officer of the Company. The note was
issued to transfer liability of one note payable and several leases personally
guaranteed by former director/officer from the Company to the guarantor in
exchange for note. Note is to be paid in 24 monthly installments commencing June
30, 2004. To date one payment in the amount of $464 has been made.

Of the outstanding $1,249,297 in notes payable; $821,141 are, upon an equity
funding, as stipulated in the notes, convertible at holder option, and the
remaining $428,156 are automatically converted

Note 5 -Common Stock

On October 8, 2003 14,820,000 shares of common stock were issued for consulting
services and legal work. The value of the stock on that date for these shares
was at $.08/share or $1,185,600, of which $160,000 was expensed for legal work
and $909,600 was expensed year to date for consulting services. The remaining
$116,000 is deferred on the balance sheet as a contra-equity. These shares are
registered pursuant to the Company's Registration Statement on Form S-8.

On October 23, 2003 1,000,000 shares of common stock were issued for consulting
services. The value of the stock on that date for these services was at
$.06/share or $60,000, of which to date $40,000 has been expensed to consulting
services. The remaining $20,000 is deferred on the balance sheet as a
contra-equity.

On December 3, 2003 45,333,000 shares of common stock were issued for consulting
services and legal work. The value of the stock on that date for these shares
was at $.04/share or $1,813,320 of which $400,000 was expensed for legal work
and $929,987 was expensed to date for consulting services. The remaining
$483,333 is deferred on the balance sheet as a contra-equity. These shares are
registered pursuant to the Company's Registration Statement on Form S-8.
Included in the 45,333,000 were 12,000,000 shares valued at $270,000 issued to
the President of IElement for consulting services.

On December 9, 2003 2,000,000 shares of common stock were issued for consulting
services. The value of the stock on that date for these services was at
$.03/share or $60,000, of which $35,000 to date has been expensed to consulting
services. The remaining $25,000 is deferred on the balance sheet as a
contra-equity.

On February 5, 2004, 42,713,000 shares of common stock were issued for
consulting services, employment agreements and legal work. The value of the
stock, based on the quoted trading price on date of grant which was $.02-$.03,
was $1,190,530 in total of which $80,000 was expensed for legal work and
$722,935 was expensed for consulting and employment services. The remaining
$387,595 is on the balance sheet as a contra-equity deferred expense and will be


                                       8
<PAGE>

expensed over the life of the various consulting agreements. These shares are
registered pursuant to the Company's Registration Statement on Form S-8.

On February 5, 2004, 8,375,000 treasury section 144 shares were issued for
consulting services, valued at grant date at $.02/share and totaling $167,500.
Entire amount was expensed.

On February 5 and 24, 2004, 5,933,333 shares of treasury section 144 were issued
as settlement of outstanding note payable. See "Settled Notes Payable" in Note 4
for more detail.

On March 17, 2004, 47,500,000 shares of common stock were issued for consulting
services and employment agreements. The value of the stock, based on the price
on date of grant which was $.02-$.03/share, was $1,375,000 in total of which
$816,667 was expensed for consulting and employment services. The remaining
$558,333 is deferred on the balance sheet as a contra-equity deferred expense
and will be expensed over the life of the various consulting agreements. These
shares are registered pursuant to the Company's Registration Statement on Form
S-8.

On April 21, 2004, 2,366,700 shares of treasury section 144 were issued as
settlement of outstanding note payable. See "Settled Notes Payable" in Note 4
for more detail.

On April 21, 2004, 43,000,000 shares of common stock were issued for consulting
services and legal work. The value of the stock, based on the price on date of
grant which was $.02/share, was $860,000 in total of which $300,000 was expensed
for legal work and $445,789 was expensed for consulting services. The remaining
$114,210 is deferred on the balance sheet as a contra-equity deferred expense
and will be expensed over the life of the various consulting agreements. These
shares are registered pursuant to the Company's Registration Statement on Form
S-8.

On May 19, 2004, 60,000,000 shares of common stock were issued for consulting
services and legal work. The value of the stock, based on the price on date of
grant which was $.0076/share, was $456,000 in total of which $190,000 was
expensed for legal work and $266,000 was expensed for consulting services. These
shares are registered pursuant to the Company's Registration Statement on Form
S-8. Included in the 60,000,000 were 12,500,000 shares valued at $95,000 issued
to the President of IElement for consulting services

On June 25, 2004, 13,729,060 shares of common stock were issued for consulting
services and legal work. The value of the stock, based on the price on date of
grant which was $.0035/share, was $48,052 in total of which $24,026 was expensed
for legal work and $24,026 was expensed for consulting services. These shares
are registered pursuant to the Company's Registration Statement on Form S-8.

From October 1, 2003 through June 30, 2004, 161,000,000 shares have been issued
to escrow for convertible debenture discussed in Note 4. In the first quarter
9,704,021 shares were taken out of escrow upon the conversion of $106,997debt to
equity. In the second and third quarter 8,633,911 and 66,828,965 shares were
taken out of escrow upon the conversion of $148,003 and $155,000 respectively.
Of the 161,000,000 shares, 85,166,897 have been converted and 75,833,103 remain
in escrow account to be issued upon conversion at a later date.

Note 6 - Related Party Transactions

Beginning August 2003, all receivables were processed and collected by a company
owned by a then director and stockholder of Reality. All proceeds from revenues
generated were received by this related company and were used to cover the
expenses associated with the cost of revenue and administrative functions
performed by the related party. The amounts billed in current fiscal year were
$6,710, $6,650, $7,410 and $7,463 for October 2003 through January 2004,
respectively. Effective February 1, 2004, IElement took over from related party
the services provided to Company, under the same billing and fee arrangement.


                                       9
<PAGE>

Note 7 - Concentration

The Company has one party, IElement, who is responsible for not only all network
and customer maintenance but also all customer billing. IElement is a potential
acquiree, but inherent risks are involved when core company functions are
controlled by one entity. In addition, all current financing is coming through
one party. As the Company is not yet operating with in a positive cash flow,
financing is critical to the success of the Company, and all financing is
currently concentrated under debenture agreement described in Note 4.

Note 8 - Subsequent Events

On July 12, and July 19, 2004 $64,474 of the remaining $140,000 convertible
debenture was converted into 23,067,316 common shares in three transactions.
$8,930 of deferred issuance cost will be expensed in the fourth quarter on these
three conversions. Convertible debenture is described in more detail in Note 4
"Convertible Debentures".
In August 2004, the Company converted $366,000 of it's note receivables from
IElement into 71,154 shares in IElement, Inc., see Note 3 for further detail of
notes receivable.




                                       10
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Forward-looking Statements

Certain statements in this Quarterly Report on Form 10-QSB, as well as
statements made by Reality Wireless Networks, Inc. ("Reality" or "the Company")
in periodic press releases, oral statements made by the company's officials to
analysts and shareholders in the course of presentations about the company,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors that may cause
the actual results, performance or achievements of the company to be materially
different from any future results, performance or achievements expressed or
implied by the forward looking statements. Such factors include, among other
things, (1) general economic and business conditions; (2) interest rate changes;
(3) the relative stability of the debt and equity markets; (4) competition; (5)
demographic changes; (6) government regulations; (7) required accounting
changes; and (8) other factors over which Reality has little or no control.

GENERAL OVERVIEW

Reality was incorporated in the state of Nevada on March 17, 1999. On March 5,
2002 the Company entered into an asset purchase agreement with Reality Networks,
Inc. a Delaware corporation. The Company is a service provider of fixed,
wireless, high-speed, broadband Internet access to principally residential homes
and small businesses. The Company provides this service as an alternative to
digital subscriber line ("DSL") or cable Internet access service. The Institute
of Electrical and Electronics Engineers ("IEEE") "802.11a" and "802.11b" radio
frequencies, on which no license is required for a broadcaster, such as the
Company, to broadcast, is the medium by which the Company provides its service.
The Company provides its service primarily in geographical areas of northern
California where DSL and cable services are not available and intends to expand
its service to geographical areas outside of northern California.

Company focus and strategy to raise needed financing has shifted away from
acquiring additional capital from investors for a proposed investment through
private placement in the equity and equity related securities of the Company
started on August 26, 2002. The Company is now actively pursuing a growth
strategy targeting acquisitions possessing assets to compliment current business
model, with a solid revenue or customer base. This strategy will be financed
through additional shares issued by the Company. As of June 30, 2004, $550,000
had been raised through convertible debentures and all but $140,000 had been
converted into 85,166,897 shares of common stock.

On February 1, 2004 the Company and IElement (privately held national
communications service provider) began exchanging services among their clients
and began to provide their joint venture services to current and new business
and household customers. Besides leveraging infrastructure assets, Reality
Wireless began to leverage IElement's management and billing resources.

IElement is a subsidiary of Integrated Communications Consulants Internet
("ICCI") with whom Reality Wireless entered into a non-binding letter of intent
to merge announced the beginning of August 2003. ICCI and IElement are used
throughout 10QSB interchangeably; ICCI is the parent company with whom the LOI
is signed and the promissory note referred to in the LOI (see Note 3 to the
financials) is executed with IElement. Until the completion of their merger, the
Company will market IElement's products and services, and IElement will market
and deploy Reality Wireless' fixed wireless solution to its customers. IElement
will also use its resources to strengthen the services offered existing and new
Reality Wireless Networks' customers with an eye toward expanding into new
territories in the next 18 months. As of June 30, 2004 the Company is in default
per the binding clause of the letter of intent for Reality to provide to
IElement $500,000 on or before August 15, 2003. IElement as of June 30, 2004 had
received $419,800 of the $500,000.

RESULTS OF OPERATIONS

Retail sales for the three months ended June 30, 2004 and 2003 were $12,296 and
$34,948, respectively. Retail sales for the nine months ended June 30, 2004 and
2003 were $56,512 and $94,699, respectively. The majority of the difference in


                                       11
<PAGE>

revenue from prior year to current year is in the monthly service fee, as there
has been a decline in the number of customers from prior year. IElement is
currently providing not only billing services and network maintenance, but
consulting on improving and stabilizing network to prepare for attracting new
customers. The Company was open in two markets at the end of the quarter. Both
markets were in Northern California. The Company plans to expand outside of
Northern California upon funding.

The Company's cost of sales for the three months ended June 30, 2004 and 2003
were $12,296 and $24,646, respectively and for the nine months ended June 30,
2004 and 2003 were $55,228 and $80,556. All cost of sales in this fiscal year
have been invoiced to Reality by Wavepipe and now, IElement for the same amount
as monthly customer billing revenue received. Beginning August 2003, the Company
retained Wavepipe Networks, LLC, a related party, to manage customers and
network operations. Wavepipe established new relationships with vendors and pays
all invoices for running network out of fees they receive from the Company.
Wavepipe is owned by a former board member and director of Reality Wireless. On
February 1, 2004 Wavepipe turned over day to day operations, including
accounting and customer support to IElement. The cost of sales charged does not
cover actual expenses incurred by IElement, however, IElement has agreed to
perform services at a loss to them for 12 months.

Gross margin for the three months ended June 30, 2004 and 2003 was $0 and
$10,302, respectively and for the nine months ended June 30, 2004 and 2003 was
$1,284 and $14,143. Until the merger with IElement is closed, gross margin will
be close to $0, as cost of sales is being billed to the Company by 3rd party
service provider, IElement, for the same amount as IElement collects on monthly
revenue billed, as they are 3rd party billing provider as well.

Engineering and development costs for the three months ended June 30, 2004 and
2003 were $787 and $12,261, respectively and for the nine months ended June 30,
2004 and 2003 were $2,360 and $48,043, respectively. 2004 costs were exclusively
depreciation of node head end and bandwidth software. 2003 expenses included IT
salaries and approximately $10,000 more of depreciation, as assets were impaired
and written down in the quarter ending June 30, 2003.

There were no sales and marketing costs for the three and nine months ended June
30, 2004 and 2003, as the Company preserved cash necessary to service current
customer base.

General and administrative expenses for the three months ended June 30, 2004 and
2003 were $2,452,043 and $883,035, respectively. 116,729,060 shares valued at
$1,364,052, fair market value on grant date of $.02-$.03/share, were issued in
the three months ended June 30, 2004 of which as of June 30, 2004 $1,249,841 has
been expensed and the remaining $114,210 will be expensed over life of contracts
and is recorded on balance sheet as a contra-equity. In addition, an expense of
$1,114,830 was recorded on stock issued in prior quarters and earned in current
quarter. The prior year consulting expenses recorded on issuance of stock
totaled $759,300.

General and administrative expenses for the nine months ended June 30, 2004 and
2003 were $5,615,028 and $1,511,345. Consulting, legal and employment expense
from contracts paid with common stock was $5,511,530 for the nine months ended
June 30, 2004 and $1,174,500 for the nine months ended June 30, 2003.

Interest expense for the three months ended June 30, 2004 and 2003 was $197,983
and $25,902, respectively. Current year expense included $170,482 for beneficial
conversion recognition on the $140,000 and $60,000 convertible debentures issued
in May 2004. It also included $4,797 accrual for interest on outstanding payroll
taxes. The remaining $22,704 was accrual of interest on outstanding notes
payable. For the three months ended June 30, 2003 the majority was accrued
interest on outstanding notes payable.

Interest expense for the nine months ended June 30, 2004 and 2003 was $435,137
and $76,162. The difference for the nine months ended June 30. 2004 included
$348,278 for beneficial conversion recognition on the $200,000, $150,000 and
$200,000 convertible debentures issued in November 2003, January 2004 and May
2004, respectively. It also included $14,391 accrual for interest on outstanding
payroll taxes. The remaining amount was accrual of interest on outstanding notes
payable.


                                       12
<PAGE>

Settlement loss for the three months ended June 30, 2004 and 2003 was $23,667
and $0, respectively. $23,667 was recorded in April 2004 as one outstanding
notes payable were settled in full for the issuance of 2,366,700 common stock
shares valued at $.02/share. The difference between the outstanding note plus
accrued interest and fair market value of shares at date of grant was posted to
Other Expense account, "Settlement Expense."

Settlement loss for the nine months ended June 30, 2004 and 2003 was $55,452 and
$0, respectively. The $55,452 represented five outstanding notes payable settled
in full for the issuance of 8,300,033 common stock shares valued at $.02/share.
The difference between the outstanding note plus accrued interest and fair
market value of shares at date of grant was posted to Other Expense account,
"Settlement Expense."

Net loss for the three months ended June 30, 2004 and 2003 was $2,671,395 and
$910,896, respectively. Net loss for the nine months ended June 30, 2004 and
2003 was $6,095,669 and $1,621,407.

Liquidity and Capital Resources

At June 30, 2004, the Company had negative working capital of $2.4 million.
$1.25 million of this is attributable to bridge financing short-term notes, of
which the Company hopes the majority will convert into equity upon funding.

Net cash used in investing activities was $419,800 and $2,195 for the nine
months ended June 30, 2004 and 2003, respectively. The $419,800 represents a
note receivable and deposit from IElement, a privately held corporation, in
conjunction with potential merger that was subsequently in August 2004 converted
into 71,154 shares.

Net cash provided by financing activities was $549,536 and $258,848 for the nine
months ended June 30, 2004 and 2003, respectively. The Company has been funding
business operations through bridge financing. Management is actively pursuing
significant funding to allow for execution of business plan. The Company hopes
the majority of bridge loans will convert to equity at time of funding.

Critical Accounting Policies

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the revenues stream of the
Company: Revenues are recognized pro-rata over the service period. A customer's
credit card is charged at the first of the month and revenue is earned by the
end of the month. Therefore, no deferred revenue is recorded as of month end.

Impairment

The Company records impairment losses on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount.

Accounting for Stock-Based Compensation

We account for stock-based compensation based on the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," as
amended by the Financial Accounting Standards Board Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock Compensation." Accounting
Principles Board Opinion No. 25 and Financial Accounting Standards Board
Interpretation No. 44 state that no compensation expense is recorded for stock
options or other stock-based awards to employees that are granted with an
exercise price equal to or above the estimated fair value per share of the
company's common stock on the grant date. We adopted the disclosure requirements


                                       13
<PAGE>

of Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," which requires compensation expense to be disclosed
based on the fair value of the options granted at the date of the grant.

In December 2002, the Financial Accounting Standards Board issued its Statement
No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure--an amendment of Financial Accounting Standards Board Statement No.
123." This Statement amends Statement of Financial Accounting Standards No. 123,
to provide alternative methods of transition for an entity that voluntarily
changes to the fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of Statement of Financial
Accounting Standards No. 123 to require prominent disclosure about the effects
on reported net income of an entity's accounting policy decisions with respect
to stock-based employee compensation. The transition and annual disclosure
provisions of Statement of Financial Accounting Standards No. 148 are effective
for fiscal years ending after December 15, 2002, and the interim disclosure
provisions were effective for the first interim period beginning after December
15, 2002. We did not voluntarily change to the fair value based method of
accounting for stock-based employee compensation, therefore, the adoption of
Statement of Financial Accounting Standards No. 148 did not have a material
impact on our operations and/or financial position.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Competition: The broadband internet access industry is highly competitive and
requires constant investment in research and development expenditures in order
to keep pace with technology and competitors' products. The success of the
Company depends upon its ability to go into markets and establish a base level
of customers that will cover costs of opening and maintaining a market. If the
Company is unable to compete effectively or acquire additional financing to fund
future research and development and deployment expenditures, it would have a
materially adverse effect on the company's business operations and the Company
would not be unable to continue marketing and developing products

Dependence Upon External Financing: The Company has been building its business
through revenues generated from operations supplemented by the sale of its
common stock. The ability of the Company to continue its growth and expand its
business is dependent upon the ability of the Company to raise additional
financing either through the issuance of additional stock or the incurrence of
debt.

ITEM 3.  CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer/Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

At the end of the period covered by this Quarterly Report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer/Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief \Financial Officer concluded that
the Company's disclosure controls and procedures were effective to ensure that
all material information required to be filed in this Quarterly Report has been
made known to them in a timely fashion.

There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation.


                                       14
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

On April 22, 2004, counsel to Reality received Notices of Hearing and Amended
Complaints from the State of California, Department of Industrial Relations,
Division of Labor Standards Enforcement, for State Case Number 12-54419 JM, in
which Ms. Chun-Lan Lin ("Ms. Lin") claims that Reality owes (1) unpaid wages in
the amount of $2,646.00, (2) unpaid commissions in the amount of $1,000.00, and
(3) additional wages accrued as a penalty of $144.00 per day for "an
indeterminate number of days not to exceed thirty days" (the "Lin Penalty").

On April 22, 2004, counsel to Reality received Notices of Hearing and Amended
Complaints from the State of California, Department of Industrial Relations,
Division of Labor Standards Enforcement, for State Case Number 12-54065 JM, in
which, Mr. William J. Paul ("Mr. Paul") claims that Reality owes (1) unpaid
wages in the amount of $2,308.00, (2) unpaid reimbursable business expenses of
$100.00, and (3) additional wages accrued as a penalty of $230.77 per day for
"an indeterminate number of days not to exceed thirty days" (the "Paul
Penalty"). The Lin Penalty and the Paul Penalty shall hereafter be referred to
collectively as the "Penalties").

On May 26, 2004, Reality reached settlement agreements individually with Ms. Lin
and Mr. Paul, settling the aforementioned claims for cash payments of $3,646.00
and $2,408.00, respectively. On June 2, 2004, the Hearing Officer for the Labor
Commissioner of the Sate of California, Department of Industrial Relations,
Division of Labor Standards Enforcement, accepted Reality's request for
dismissal of the aforementioned claims and served notice of the dismissals on
June 23, 2004.

On July 16, 2004 counsel to Reality received Notices of Hearing and Amended
Complaints from the State of California, Department of Industrial Relations,
Division of Labor Standards Enforcement, for State Case Number 12-54273 JM, in
which, Mr. Arnaud Guerrand ("Mr. Guerrand") claims that Reality owes (1) unpaid
wages in the amount of $1,240, (2) unpaid reimbursable business expenses of
$950.00, and (3) additional wages accrued as a penalty of up to $155.00 per day
for "an indeterminate number of days not to exceed thirty days." Reality
subsequently failed to reach a settlement and, at hearing on July, 16, 2004,
judgment was entered against Reality in an amount that has not yet been
disclosed but is expected to be approximately $6,840.00.

Item 2.  Changes in Securities.

For the period ended June 30, 2004, the Company sold the following securities of
the Company that were not registered:

On or around February 24, 2004 the Registrant issued 833,333 shares of its
common stock to Tim Kelley pursuant to 4(2) of the Securities Act of 1933 in
connection with the $25,000 debt owed to Mr. Kelley and the full settlement
thereof.

On or around April 21, 2004, the Registrant issued 2,366,700 shares of its
common stock to the Kassouf Family Trust pursuant to Regulation D, Rule 506 and
4(2) of the Securities Act of 1933 in connection the settlement of a dispute
regarding a convertible promissory note executed by RWNT, as maker, in the
aggregate amount of $20,000 dated May 31, 2002 and a Preferred Stock and Warrant
Purchase Agreement with RWNT dated June 20, 2002.

On October 1, 2003, the Company entered into agreements with HEM Mutual
Assurance, LLC to secure certain financing for the Company: (i) Agreement and
Plan of Merger, (ii) Convertible Debenture Purchase Agreement, and (iii) 1%
Convertible Debentures in the aggregate amount of Nine Hundred Ninety Four
Thousand Dollars ($994,000). The Company chose to amend the Agreements to
provide for the issuance of an additional 60,000,000 shares, thereby increasing
the number of shares from 60,000,000 to 120,000,000 to HEM Mutual Assurance, LLC
and to secure additional financing for the Company (the "Amendments"). Copies of
the Amendments are made exhibits to the 10-QSB filed May 24, 2004.These
securities were issued on May 6, 2004, pursuant to the exemption provided by
section 3(a)(9) of the Securities Act of 1933.


                                       15
<PAGE>

Item 3.  Defaults Upon Senior Securities.

None

Item 4.  Submission of Matters to a Vote of Security Holders.

None

Item 5.  Other Information.

The following actions were taken by the Board of Directors of the Company (the
"Board") during the period ended June 30, 2004. Where agreements are referenced,
such agreements are incorporated herein by reference.

On April 12, 2004, the Board authorized the issuance of 1,500,000 shares common
stock of the Company to Donald Schwall, Michael Park, and Shai Stern of Vintage
Filings, LLC on Form S-8 as payment for consulting services. Further, the Board
authorized the amendment of existing consulting agreements and related issuance
of 15,000,0000 shares common stock of the Company to Terry Byrnes of Bartholomew
International Investments Limited, Inc., and 5,000,000 shares of common stock of
the Company to Devin Bosch of Capital Group International, LLLP on Form S-8 as
payment for additional consulting services. Further, the Board authorized the
issuance of 15,000,000 shares of common stock of the Company to David M. Otto of
the Otto Law Group, PLLC on Form S-8 for legal services rendered.

On April 19, 2004 the Board approved a settlement agreement with the Kassouf
Family Trust ("Kassouf") to cannel the Company's debt to Kassouf in the amount
of $20,000 plus $3,667 in accrued interest in exchange for 2,366,700 restricted
shares of common stock of the Company and concurrently authorized such the
issuance of such common stock. Additionally, the Board approved cancellation of
$209,251.57 in debt owed to Brent Haines in exchange for a Convertible
Promissory Note to Mr Haines in the amount of $209,251.57 payable over 24 months
commencing June 30, 2004 with an annual interest rate of 8%.

On April 29, 2004, the Board accepted resignation of Malone & Bailey as auditor
of the Registrant and engaged Salberg & Co. as its new auditor.

In resolutions dated May 3, 2004 and May 5, 2004, the Board took separate but
related actions and thereby approved an amendment to the October 1, 2003
Convertible Debenture Agreement to increase the number of shares of common stock
of the Company issued to HEM Mutual Assurance, LLC from 60,000,000 to
120,000,000 shares and to authorize the issuance of such shares pursuant to the
exemption provided by section 3(a)(9) of the Securities Act of 1933. On May 14,
2004, the Board ratified prior amendments to consulting agreements and
authorized issuance of 20,000,000 shares common stock of the Company to Terry
Byrne of Bartholomew International Investments, Limited, Inc., 12,500,000 shares
of common stock of the Company to Ivan Zweig of I-Element, and 2,500,000 shares
of common stock of the Company to I-Element on Form S-8. Additionally, the Board
authorized the issuance of 25,000,000 of common stock in the Company to David M.
Otto of The Otto Law Group, PLLC, for legal services rendered to the company, on
form S-8.

On June 23, 2004, the Board ratified prior amendments to consulting agreements
and authorized issuance of 6,864,530 shares common stock of the Company to Terry
Byrne of Bartholomew International Investments Limited, Inc., on Form S-8.


                                       16
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K.

(a) Exhibits.

<TABLE>
<CAPTION>
---------------- --------------------------------------- -------------------------------------------
Exhibit Number   Title of Document                       Location of Document
---------------- --------------------------------------- -------------------------------------------
<S>              <C>                                     <C>
3                Articles of Incorporation               Incorporated by reference to the 10-SB
                                                         Filed on June 15, 1999
---------------- --------------------------------------- -------------------------------------------
3.1              Bylaws                                  Incorporated by reference to the 10-SB
                                                         Filed on June 15, 1999
---------------- --------------------------------------- -------------------------------------------
3.2              Certificate of Amendment to Articles    Incorporated by reference to the 10-KSB
                 of Incorporation                        Filed on April 15, 2002
---------------- --------------------------------------- -------------------------------------------
3.3              Certificate of Amendment to Articles    Incorporated by reference to the 8-K
                 of Incorporation                        Filed on May 3, 2002
---------------- --------------------------------------- -------------------------------------------
3.4              Certificate of Amendment to Articles    Incorporated by reference to the 10-QSB
                 of Incorporation                        filed on August 25,2003
---------------- --------------------------------------- -------------------------------------------
10.1             Employment Agreement for Moshe Vidal    Incorporated by reference to the 10-QSB
                                                         filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.2             Settlement and Release Agreement with   Incorporated by reference to the 10-QSB
                 Richard Scardigli                       filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.3             Sunrise Securities Corp. Investment     Incorporated by reference to the 10-QSB
                 Banking and Financial Advisory          filed on May24, 2004
                 Agreement
---------------- --------------------------------------- -------------------------------------------
10.4             Settlement and Release Agreement with   Incorporated by reference to the 10-QSB
                 Bob Madia                               filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.5             Settlement and Release Agreement with   Incorporated by reference to the 10-QSB
                 Ron Straight                            filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.6             Employment Agreement with Steve         Incorporated by reference to the Form S-8
                 Careaga                                 filed on March 17, 2004
---------------- --------------------------------------- -------------------------------------------
10.7             Settlement and Release Agreement with   Incorporated by reference to the 10-QSB
                 the Kassouf Family Trust                filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.8             Amendments to Promissory Notes with     Incorporated by reference to the 10-QSB
                 HEM Mutual Assurance LLC                filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.9             Amendment to Convertible Debenture      Incorporated by reference to the 10-QSB
                 Purchase Agreement by and between       filed on May24, 2004
                 Orange Soda, Inc., and HEM Mutual
                 Assurance LLC
---------------- --------------------------------------- -------------------------------------------
10.10            Amended Convertible Debentures with     Incorporated by reference to the 10-QSB
                 HEM Mutual Assurance LLC                filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
10.11            Settlement and Release Agreement with   Incorporated by reference to the 10-QSB
                 Merrill Communications, Inc.            filed on May24, 2004
---------------- --------------------------------------- -------------------------------------------
31.1             Certification by Principal Executive    Attached
                 Officer
---------------- --------------------------------------- -------------------------------------------
31.2             Certification by Principal Financial    Attached
                 Officer
---------------- --------------------------------------- -------------------------------------------
32               Certification Pursuant to 906           Attached
---------------- --------------------------------------- -------------------------------------------
</TABLE>


                                       17
<PAGE>

(b) Reports on Form 8-K.

During the period ended Jube 30, 2004, the Company filed the following reports
on Form 8-K:

------------------------------------------ -------------------------------------
Date of Event Reported                     Items Reported
------------------------------------------ -------------------------------------
4/26/04                                    Items 4 and 7
------------------------------------------ -------------------------------------
5/10/04                                    Items 4 and 7
------------------------------------------ -------------------------------------
6/14/04                                    Items 4 and 7
------------------------------------------ -------------------------------------



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.


                                        REALITY WIRELESS NETWORKS, INC.


Dated:  August 23, 2004                 /s/ Steve Careaga
                                        ----------------------------------------
                                        By: Steve Careaga
                                        Its:  Chief Executive Officer, Principal
                                        Financial Officer/Acting Chief Financial
                                        Officer, Director



                                       18