This paper presents the model equations governing the mutual nonlinear interaction between two small but finite amplitude kinetic Alfven waves using two fluid models when the ¿ of the plasma is less than unity (for high-¿ cases one has to use the Boltzmann equation). The source of nonlinearity is the nonlinear electron heating and ponderomotive force-driven nonlinear modification in the background density. The solutions of these model equations have been obtained by using analytical and numerical methods to study the effect of their mutual interaction on filament (hot spot) formation. It is concluded that the threshold field required for filament formation and their critical size is significantly affected by the mutual nonlinear interaction. Its effect on solar wind turbulence and coronal heating is also pointed out.