page 3
<PAGE>
PROSPECTUS SUMMARY
This is a brief summary of the information and Financial Statements (and their
Notes) in this Prospectus. We encourage you to read the entire Prospectus before
you decide whether and how much to invest in our Shares.
THE COMPANY
We market and provide downloadable media through the Internet. Our services
include the design and hosting of Web sites, proprietary Web sites, Internet
content and commerce. We also have a division named Desience which
manufacturers and sells computer command centers and which had been operating
for over two decades as a closely held corporation prior to the time we
acquired it. Our Internet services include the design and hosting of Web
shows, corporate web sites, digital book publishing, themed content commerce
sites, downloadable music Web sites and online advertising. Our Command
center solutions from our Desience division include the design, manufacture
and installation of ergonomic solutions for the utilization of computers and
peripherals in governmental agency and Fortune 500 company environments.
BACKGROUND
Our history includes a series of acquisitions. Our predecessor, Internetworks,
Inc. ("KIW"), was incorporated in the State of Delaware on February 25, 1997. On
October 10, 1997, KIW entered an agreement to purchase all of the common stock
of the Desience Corporation in exchange for a royalty to the owners of Desience.
The royalty payable to the prior owners of Desience is based upon a percentage
of gross sales. As of the effective date of the acquisition, Desience became a
wholly-owned subsidiary of KIW.
On November 25, 1997, KIW finalized an acquisition agreement with Big Tex
Enterprises, Inc. ("Big Tex"), by which all stock of KIW was transferred to Big
Tex in exchange for stock of Big Tex. Big Tex was incorporated in Nevada on
November 1, 1991, but had been an inactive company for a considerable period of
time before the KIW acquisition. KIW, along with its Desience subsidiary, became
wholly-owned subsidiary corporations of Big Tex upon the exchange of stock, at
which time the name "Big Tex Enterprises, Inc." was changed to Kanakaris
Communications, Inc. Kanakaris Communications, Inc. (the "Company" "we" "our"
"us") is the surviving entity after the acquisition. Aside from our Desience
division, we have only recently been operating as an entity. The Company's
common stock is traded on the OTC Bulletin Board under the symbol "KKRS."
<PAGE>
SELECTED FINANCIAL DATA
The following financial information summarizes the more complete
historical financial information at the end of this Prospectus. Our independent
public accountants have audited it. You should read the information below along
with all other financial information and analysis in this Prospectus. Please
don't assume that the results below indicate results which we will achieve in
the future.
<TABLE>
<CAPTION>
FISCAL YEAR END INTERIM PERIOD ENDING
SEP. 30, 1997 SEP. 30, 1998 MAR. 31, 1999
-------------- ------------- ---------------------
<S> <C> <C> <C>
Statement of
Operations Data:
Net Sales $8,475 $919,905 $356,199
Gross Profit $8,475 $438,556 $153,357
Operating Expenses $282,818 $1,094,760 $569,373
Income (Loss) from
Operations ($274,343) ($656,204) ($416,016)
Earnings (Loss)
Per Common Share ($0.0961) ($0.0449) ($0.0201)
Balance Sheet Data:
Current Assets $98,099 $194,812 $311,437
Total Assets $309,763 $787,970 $866,498
Current Liabiities $18,773 $606,796 $712,695
Long-Term Debt - $20,753 -
Total Stockholder's
Equity $290,990 $160,421 153,803
</TABLE>
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR SHARES INVOLVES A HIGH DEGREE OF RISK. THE SHARES SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
THEREFORE, PRIOR TO PURCHASE, YOUR SHOULD CONSIDER VERY CAREFULLY THE FOLLOWING
RISK FACTORS AMONG OTHER THINGS, AS WELL AS ALL OTHER INFORMATION SET FORTH IN
THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS. THESES STATEMENTS RELATE TO
FUTURE EVENTS OR FUTURE FINANCIAL PERFORMANCE. IN SOME CASES, YOU CAN IDENTIFY
FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY", "WILL," "SHOULD",
"PREDICTS," "PREIDCTS," "POTENTIAL", OR "CONTINUE" OR THE NEGATIVE OF SUCH
PREDICTIONS. IN EVALUATING THESE STATEMENTS, YOU SHOULD SPECIFICALLY CONSIDER
VARIOUS FACTORS, INCLUDING THE RISKS OUTLINED BELOW. THESE FACTORS MAY CAUSE OUR
ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING STATEMENT. SEE
"SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS."
THE OFFERING PRICE OF OUR SHARES WAS DETERMINED ARBITRARILY
The offering price of our Shares bears no relation to our book value, assets or
earnings and was calculated in accordance with SEC Rule 457(g)(3). We cannot
assure that the Shares will maintain a market value that is similar to the
offering price. See "Determination of Offering Price."
OUR BOARD OF DIRECTORS DETERMINED OUR OFFERING PRICE
Our Board of Directors is responsible for the valuation of our investments and
assisting us in selecting viable prospects and clients for our corporate
portfolio. There are a wide range of values which are reasonable for an
investment or in the selection of potential claims for our services. The Board
of Directors can adopt several methods for an accurate evaluation. Ultimately,
the determination of fair value involves subjective judgment not capable of
substantiation by auditing standards. Accordingly, in some instances, it may not
be possible to substantiate by auditing standards the value of our investment.
Our Board of Directors will serve as the valuation committee which is
responsible for valuing each of our investments. In connection with any future
distributions which we may make, the value of the securities received by
investors as determined by the Board may not be the actual value that the
investors would be able to obtain even if they sought to sell such securities
immediately after a distribution. In addition, the value of the distribution may
decrease or increase significantly subsequent to the distributee shareholders
receipt thereof not withstanding the accuracy of the Board's evaluation.
THIS IS A SHELF OFFERING WHERE SOME OF THE SHARES ARE OFFERED ON A DELAYED BASIS
TO A CERTAIN SHAREHOLDER
Our Management is directly offering the Shares to the public. A certain portion
of the Shares are being offered on a delayed basis pursuant to certain
conversion rights of debenture held by one of our creditors. This creditor is
Alliance Equity, Inc. Alliance Equity, Inc. may decide to convert a portion of
principal in the debenture into the offered Shares being registered in this
Offering. We
<PAGE>
cannot assure that any or all of the Shares will be issued beyond those which
have already been elected for conversion by Alliance Equity, Inc. No
broker-dealer has been retained as an underwriter and no broker-dealer is
under any obligation to purchase any of the Shares. In addition, our officers
and directors, collectively, have limited experience in the offer and sale of
securities. See "Plan of Distribution."
WE MAY BE UNABLE TO SELL ALL THE SHARES IN THIS OFFERING
We are attempting to sell a maximum of 5,000,000 Shares under this Offering. The
sale of all the Shares would allow us to receive gross proceeds from this
Offering of $___________ less offering costs. We cannot assure that the maximum
proceeds from this offering will be received. As a result, we cannot assure that
we will have sufficient funds to implement our proposed business strategy. Also,
we may be forced to seek additional capital which may not be available on terms
favorable or acceptable to us in the future. The funds received from Alliance
Equity, Inc. through the debenture and converted from debt to equity by this
offering have already been used for the purposes identified in the "Use of
Proceeds" table. See "Use of Proceeds" and "Business."
WE MAY HAVE TO FIND ADDITIONAL CAPITAL
We may be forced to seek additional capital. Our ability to become competitive,
achieve future growth and expand operations depends on our access to capital
since we have yet to achieve profitable operations. We cannot assure that
profitable operations will be attained in the near future, if at all. In
addition, we will need to spend more money on our intended business strategies
than the amount previously financed through the Convertible Debenture Agreement.
To date, we have financed capital expenditures primarily through debt and equity
placements and will continue to do so for the foreseeable future. To implement
our growth strategy and meet capital needs, we plan to sell equity in the
Company during each phase of our business plan and take loans in the future. The
result will be further dilution to you and other investors. We cannot assure
that cash will be available on terms acceptable to us, or at all. Our failure to
obtain sufficient additional capital in the future could force us to slow our
growth or delay capital expenditures, which could have a significant negative
effect on our business, financial condition, results of operations or prospects.
See "Business -- Growth Strategy."
OUR NEW INVESTORS IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL
DILUTION
The offering price of the Shares is substantially higher than the book value per
Share of our Common Stock. This Offering will result in immediate and
substantial dilution for you and all those investors purchasing Shares at the
Offering price. Accordingly, if you purchase our Shares under this Offering and
assuming the maximum offering amount, you will immediately experience dilution
of $_____ or __% in the pro forma net tangible book value per share from the
price you pay for the Shares. See "Dilution". |
