Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-72618
KANAKARIS WIRELESS
PROSPECTUS SUPPLEMENT DATED DECEMBER 10, 2001
TO PROSPECTUS DATED NOVEMBER 1, 2001
The prospectus of Kanakaris Wireless dated November 1, 2001 is
supplemented to include updated information based on our 1-for-20 reverse common
stock split and symbol change that occurred effective as of December 7, 2001.
THE COVER PAGE OF THE PROSPECTUS IS REVISED TO REFLECT THE FOLLOWING:
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The 16,417 shares of Kanakaris Wireless common stock being offered
under this prospectus are being offered by Kevin Welch for his own account. Our
common stock trades on the NASD's OTC Bulletin Board under the symbol "KKRW." On
December 7, 2001, the high and low sale prices for a share of our common stock
were $.20 and $.10, respectively.
THE FOLLOWING RISK FACTORS ARE REVISED:
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WE NEED AND MAY BE UNABLE TO OBTAIN ADDITIONAL FUNDING ON SATISFACTORY TERMS,
WHICH COULD DILUTE OUR STOCKHOLDERS OR IMPOSE BURDENSOME FINANCIAL RESTRICTIONS
ON OUR BUSINESS.
Historically, we have relied upon cash from financing activities and
revenues generated from operations to fund all of the cash requirements of our
activities. We have not been able to generate any significant cash from our
operating activities in the past and cannot assure you that we will be able to
do so in the future. We require new financing. Deteriorating global economic
conditions and the effects of ongoing military actions against terrorists may
cause prolonged declines in investor confidence in and accessibility to capital
markets. 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 debt financing or other financing of securities senior
to common stock will likely include financial and other covenants that will
restrict our flexibility. At a minimum, we expect these covenants to include
restrictions on our ability to pay dividends on our common stock. Any failure to
comply with these covenants would have a material adverse effect on our
business, prospects, financial condition and results of operations because we
could lose our existing sources of funding and impair our ability to secure new
sources of funding.
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 and warrants 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 November 7, 2001, taking into account the 1-for-20
reverse common stock split that subsequently occurred on December 7, 2001, we
had a total of 6,296,026 shares of common stock outstanding, the closing price
of a share of our common stock on the OTC Bulletin Board was $.30, and the
debentures and warrants with the variable conversion and exercise prices were
convertible or exercisable into approximately 20,259,098 shares of common stock.
The number of shares that those debentures 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. Further, to the extent the
security holders convert those debentures and exercise those warrants and then
sell the underlying shares of common stock into the market, the price of our
common stock may decline due to the additional shares available in the market.
This decline could allow the security holders to convert their remaining
debentures and exercise their remaining warrants into a greater number of
shares of common stock, the sale of which would further depress the stock price.
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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.
OUR STOCK PRICE IS SUBJECT TO SIGNIFICANT VOLATILITY, WHICH COULD RESULT IN
LITIGATION AGAINST US.
There is currently an extremely limited trading market for our common
stock. Our common stock trades on the OTC Bulletin Board under the symbol
"KKRS." There can be no assurance that any regular trading market for our common
stock will develop or, if developed, will be sustained. The trading prices of
our common stock have fluctuated significantly over time. In fact, for the
quarter ended September 30, 2001, taking into account the 1-for-20 reverse
common stock split that subsequently occurred on December 7, 2001, the high
and low closing bid prices for a share of our common stock were $2.16 and $.46,
respectively. The trading prices of our common stock could experience wide
fluctuations in the future in response to:
o quarter-to-quarter variations in our operating results;
o material announcements of technological innovations;
o significant customer orders or establishment of strategic
partnerships by us or our competitors or providers of
alternative products and services;
o general conditions in the Internet, e-commerce and data
control console industries; or
o other events or factors, many of which are beyond our control.
In addition, the stock market as a whole and individual stocks have
experienced extreme price and volume fluctuations, which have often been
unrelated to the performance of the related corporations. Our operating results
in future quarters may be below the expectations of market makers, securities
analysts and investors. In any such event, the price of our common stock will
likely decline, perhaps substantially. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has occurred against the issuing company. There can be no
assurance that such litigation will not occur in the future with respect to our
company. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
on our business, prospects, financial condition and results of operations. Any
adverse determination in such litigation could also subject us to substantial
liabilities.
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THE SELLING SECURITY HOLDER TABLE IS REPLACED WITH THE FOLLOWING:
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SELLING SECURITY HOLDER
The following table sets forth information as of November 29, 2001 with
respect to the beneficial ownership of our common stock both before and
immediately following the offering by the selling security holder. The following
calculations of the percent of outstanding shares are based on 7,860,957 shares
of our common stock outstanding as of the date of the table, taking into
account the 1-for-20 reverse common stock split that subsequently occurred on
December 7, 2001. Beneficial ownership and, accordingly, percent of class
ownership, are calculated according to Securities and Exchange Commission Rule
13d-3.
The shares of common stock being offered under this prospectus may be
offered for sale from time to time during the period the registration statement
of which this prospectus is a part remains effective, by or for the account of
the selling security holder. All of the shares being offered under this
prospectus were issued in a private placement transaction under the terms of a
Consulting Agreement dated as of October 26, 2001 by and between us and the
selling security holder.
We will not receive any of the proceeds from the sale of the shares of
common stock offered by the selling security holder.
Shares of Class Shares of
Beneficially Class Being Shares of Class
Name and Address of Title of Owned Prior Offered Under Beneficially Owned
Beneficial Owner Class to this Offering this Prospectus After this Offering (1)
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Number Percent Number Percent
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Kevin Welch
468 North Camden Drive, Suite 200
Beverly Hills, California 90210.......Common 1,723,779(2) 20.76% 16,417(3) 1,707,362 20.56%
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(1) Assumes all shares of class being offered are sold.
(2) Consists of (i) 1,281,360 shares of common stock issued and
outstanding, (ii) 425,000 shares of common stock issuable upon
exercise of warrants, (iii) 17,419 shares of common stock issuable
upon exercise of options.
(3) Consists of 16,417 shares of common stock issued and outstanding.
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