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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2003

OR

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

For the transition period from       to

Commission File Number 0-25995

NEXTERA ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                   
|----------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 95-4700410
(I.R.S. Employer
Identification Number)

4 Cambridge Center, 3rd Floor, Cambridge, Massachusetts 02142
(Address of principal executive office, including zip code)

(617) 715-0200
(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 and 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
filing requirements for the past 90 days.

Yes   [X]   No  [  ]

Indicate by check mark whether
registrant is an accelerated filer (as defined in rule 12b-2 of
the Exchange Act).

Yes  
[  ]   No  [X]

As of April 30, 2003 there were 30,025,441 shares of $.001 par value Class A
Common Stock outstanding and 3,844,200 shares of $.001 par value Class B Common
Stock outstanding.



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TABLE OF CONTENTS



|                               |                                                                                               |                                                                |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Condensed Consolidated Balance Sheets                         
|                               |                                                                                               | Condensed Consolidated Statements of Operations               
|                               |                                                                                               | Condensed Consolidated Statements of Cash Flows               
|                               |                                                                                               | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                               | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION   
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|EXHIBIT 10.1                  
|EXHIBIT 10.2                  
|EXHIBIT 99.1                  
|EXHIBIT 99.2                  



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NEXTERA ENTERPRISES, INC.
Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 2003

INDEX

|                              |  |                                                                                                       |  |         
|----------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                       |  | Page No.
|                              |  |                                                                                                       |  |         
|PART I. FINANCIAL INFORMATION |  |                                                                                                      
|Item 1.                       |  | Financial Statements                                                                                  |  |         
|                              |  | Condensed Consolidated Balance Sheets as of March 31, 2003
  and December 31, 2002                    |  | 3       
|                              |  | Condensed Consolidated Statements of Operations for the
   Three Months Ended March 31, 2003 and 2002 |  | 4       
|                              |  | Condensed Consolidated Statements of Cash Flows for the
  Three Months Ended March 31, 2003 and 2002  |  | 5       
|                              |  | Notes to Condensed Consolidated Financial Statements                                                  |  | 6       
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition
  and Results of Operations               |  | 13      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                            |  | 24      
|Item 4.                       |  | Controls and Procedures                                                                               |  | 24      
|PART II. OTHER INFORMATION    |  |                                                                                                      
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                      |  | 25      
|                              |  | Signatures                                                                                            |  | 25      

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PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

Nextera Enterprises, Inc.




Condensed Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)

|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |          |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------- | -------- | ---- | - | ------------ | -------- | -
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   | December 31,
|                                                         |                                                                                                                                                                                                                         |   | March 31, 2003 |          | 2002
|                                                         |                                                                                                                                                                                                                         |   |                |          |     
|                                                         |                                                                                                                                                                                                                         |   | (unaudited)    |          |      |   |             
|Assets                                                   |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Current assets:                                          |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|                                                         | Cash and cash equivalents                                                                                                                                                                                               |   | $              | 631      |      |   | $            | 1,606    |  
|                                                         | Restricted cash                                                                                                                                                                                                         |   |                |         |      |   |              | 2,650    |  
|                                                         | Accounts receivable, net of allowance for doubtful accounts of
$2,498 and $2,306 at March 31, 2003 and December 31, 2002,
respectively                                                                                  |   |                | 24,138   |      |   |              | 20,344   |  
|                                                         | Due from affiliates                                                                                                                                                                                                     |   |                | 21       |      |   |              | 25       |  
|                                                         | Prepaid expenses and other current assets                                                                                                                                                                               |   |                | 979      |      |   |              | 1,051    |  
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Total current assets                                     |                                                                                                                                                                                                                         |   | 25,769         |          |      |   | 25,676       |         
|Property and equipment, net                              |                                                                                                                                                                                                                         |   | 2,063          |          |      |   | 2,316        |         
|Goodwill                                                 |                                                                                                                                                                                                                         |   | 77,504         |          |      |   | 77,504       |         
|Other assets                                             |                                                                                                                                                                                                                         |   | 4,115          |          |      |   | 1,722        |         
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Total assets                                             |                                                                                                                                                                                                                         | $ | 109,451        |          |      | $ | 107,218      |         
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Liabilities and Stockholders Equity                     |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Current liabilities:                                     |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|                                                         | Accounts payable and accrued expenses                                                                                                                                                                                   |   | $              | 12,368   |      |   | $            | 14,019   |  
|                                                         | Accrued restructuring costs, current portion                                                                                                                                                                            |   |                | 1,966    |      |   |              | 1,037    |  
|                                                         | Senior credit facility                                                                                                                                                                                                  |   |                | 4,735    |      |   |              | 4,735    |  
|                                                         | Current portion of long-term debt and capital lease obligations                                                                                                                                                         |   |                | 565      |      |   |              | 689      |  
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Total current liabilities                                |                                                                                                                                                                                                                         |   | 19,634         |          |      |   | 20,480       |         
|Long-term debt and capital lease obligations             |                                                                                                                                                                                                                         |   | 743            |          |      |   | 783          |         
|Senior credit facility                                   |                                                                                                                                                                                                                         |   | 27,465         |          |      |   | 22,465       |         
|Debentures due to affiliates, including accrued interest |                                                                                                                                                                                                                         |   | 48,928         |          |      |   | 47,748       |         
|Accrued restructuring costs, net of current portion      |                                                                                                                                                                                                                         |   | 80             |          |      |   | 427          |         
|Other long-term liabilities                              |                                                                                                                                                                                                                         |   | 3,199          |          |      |   | 3,408        |         
|Commitments and contingencies                            |                                                                                                                                                                                                                         |   |               |          |      |   |             |         
|Stockholders equity:                                    |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|                                                         | Preferred Stock, $0.001 par value, 10,000,000 shares
authorized, 600,000 authorized shares designated Series A,
40,375 and 39,630 Series A issued and outstanding at March 31,
2003 and December 31, 2002, respectively |   |                | 4,037    |      |   |              | 3,963    |  
|                                                         | Class A Common Stock, $0.001 par value, 95,000,000 shares
authorized, 30,025,441 and 31,911,266 shares issued at March
31, 2003 and December 31, 2002, respectively                                                     |   |                | 30       |      |   |              | 32       |  
|                                                         | Class B Common Stock, $0.001 par value, 4,300,000 shares
authorized, 3,844,200 shares issued and outstanding at March
31, 2003 and December 31, 2002                                                                    |   |                | 4        |      |   |              | 4        |  
|                                                         | Additional paid-in capital                                                                                                                                                                                              |   |                | 161,550  |      |   |              | 161,055  |  
|                                                         | Retained earnings (deficit)                                                                                                                                                                                             |   |                | (155,995 | )    |   |              | (152,932 | )
|                                                         | Accumulated other comprehensive income (loss)                                                                                                                                                                           |   |                | (224     | )    |   |              | (215     | )
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Total stockholders equity                               |                                                                                                                                                                                                                         |   | 9,402          |          |      |   | 11,907       |         
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         
|Total liabilities and stockholders equity               |                                                                                                                                                                                                                         | $ | 109,451        |          |      | $ | 107,218      |         
|                                                         |                                                                                                                                                                                                                         |   |                |          |      |   |              |         

See Notes to Condensed Consolidated Financial Statements

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Nextera Enterprises, Inc.




Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share amounts; unaudited)

|                                                    |  |                             |        |      |  |   |        |  
|--------------------------------------------------- |  | --------------------------- | ------ | ---- |  | - | ------ | -
|                                                    |  | Three Months Ended March 31
|                                                    |  | 2003                        |        | 2002
|                                                    |  |                             |        |     
|Net revenues                                        |  | $                           | 18,757 |      |  | $ | 20,849 |  
|Cost of revenues                                    |  |                             | 11,879 |      |  |   | 12,455 |  
|                                                    |  |                             |        |      |  |   |        |  
|Gross profit                                        |  |                             | 6,878  |      |  |   | 8,394  |  
|Selling, general and administrative expenses        |  |                             | 4,028  |      |  |   | 5,177  |  
|Amortization expense                                |  |                             | 1,941  |      |  |   |       |  
|Special charges                                     |  |                             | 1,921  |      |  |   |       |  
|                                                    |  |                             |        |      |  |   |        |  
|Income (loss) from operations                       |  |                             | (1,012 | )    |  |   | 3,217  |  
|Interest expense, net                               |  |                             | (2,011 | )    |  |   | (1,439 | )
|                                                    |  |                             |        |      |  |   |        |  
|Income (loss) before income taxes                   |  |                             | (3,023 | )    |  |   | 1,778  |  
|Provision for income taxes                          |  |                             | 40     |      |  |   | 50     |  
|                                                    |  |                             |        |      |  |   |        |  
|Net income (loss)                                   |  |                             | (3,063 | )    |  |   | 1,728  |  
|Preferred stock dividends                           |  |                             | (74    | )    |  |   | (395   | )
|                                                    |  |                             |        |      |  |   |        |  
|Net income (loss) applicable to common stockholders |  | $                           | (3,137 | )    |  | $ | 1,333  |  
|                                                    |  |                             |        |      |  |   |        |  
|Net income (loss) per common share, basic           |  | $                           | (0.09  | )    |  | $ | 0.04   |  
|                                                    |  |                             |        |      |  |   |        |  
|Net income (loss) per common share, diluted         |  | $                           | (0.09  | )    |  | $ | 0.03   |  
|                                                    |  |                             |        |      |  |   |        |  
|Weighted average common shares outstanding, basic   |  |                             | 34,038 |      |  |   | 35,654 |  
|                                                    |  |                             |        |      |  |   |        |  
|Weighted average common shares outstanding, diluted |  |                             | 34,038 |      |  |   | 62,373 |  
|                                                    |  |                             |        |      |  |   |        |  

See Notes to Condensed Consolidated Financial Statements

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Nextera Enterprises, Inc.




Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands, unaudited)

|                                                                                     |                                             |                                       |        |                             |        |      |         |     |        |  
|------------------------------------------------------------------------------------ | ------------------------------------------- | ------------------------------------- | ------ | --------------------------- | ------ | ---- | ------- | --- | ------ | -
|                                                                                     |                                             |                                       |        | Three Months Ended March 31
|                                                                                     |                                             |                                       |        | 2003                        |        | 2002
|                                                                                     |                                             |                                       |        |                             |        |     
|Operating
activities                                                                 |                                             |                                       |        |                             |        |      |         |    
|Net income (loss)                                                                    |                                             | $                                     | (3,063 | )                           |        | $    | 1,728   |    
|Adjustments to reconcile net income (loss) to net cash
used in operating activities: |                                             |                                       |        |                             |        |      |         |    
|                                                                                     | Depreciation and amortization               |                                       |        | 2,227                       |        |      |         | 496 |       
|                                                                                     | Provision for doubtful accounts             |                                       |        | 631                         |        |      |         | 870 |       
|                                                                                     | Non-cash equity charges                     |                                       |        | 1,134                       |        |      |         |    |       
|                                                                                     | Non-cash interest Paid in Kind              |                                       |        | 1,180                       |        |      |         | 573 |       
|                                                                                     | Change in operating assets and liabilities: |                                       |        |                             |        |      |         |     |       
|                                                                                     |                                             | Accounts receivable                   |        |                             | (4,425 | )    |         |     | (3,654 | )
|                                                                                     |                                             | Due from affiliate                    |        |                             | 4      |      |         |     | 65     |  
|                                                                                     |                                             | Prepaid expenses and other assets     |        |                             | (5,054 | )    |         |     | (265   | )
|                                                                                     |                                             | Accounts payable and accrued expenses |        |                             | (1,651 | )    |         |     | (7,521 | )
|                                                                                     |                                             | Restructuring costs                   |        |                             | 582    |      |         |     | 102    |  
|                                                                                     |                                             | Other                                 |        |                             | 16     |      |         |     | (6     | )
|                                                                                     |                                             |                                       |        |                             |        |      |         |    
|Net cash used in operating activities                                                |                                             |                                       | (8,419 | )                           |        |      | (7,612  | )  
|Investing activities                                                                 |                                             |                                       |        |                             |        |      |         |    
|Purchase of property and equipment                                                   |                                             |                                       | (33    | )                           |        |      | (157    | )  
|Proceeds from sale of business                                                       |                                             |                                       |       |                             |        |      | 14,720  |    
|Changes in restricted cash                                                           |                                             |                                       | 2,650  |                             |        |      |        |    
|                                                                                     |                                             |                                       |        |                             |        |      |         |    
|Net cash provided by investing activities                                            |                                             |                                       | 2,617  |                             |        |      | 14,563  |    
|Financing activities                                                                 |                                             |                                       |        |                             |        |      |         |    
|Borrowings (repayments) under Senior Credit Facility                                 |                                             |                                       | 5,000  |                             |        |      | (8,000  | )  
|Repayments of long-term debt and capital lease obligations                           |                                             |                                       | (164   | )                           |        |      | (2,256  | )  
|                                                                                     |                                             |                                       |        |                             |        |      |         |    
|Net cash provided by (used in) financing activities                                  |                                             |                                       | 4,836  |                             |        |      | (10,256 | )  
|Effects of exchange rates on cash and cash equivalents                               |                                             |                                       | (9     | )                           |        |      | 37      |    
|                                                                                     |                                             |                                       |        |                             |        |      |         |    
|Net decrease in cash and cash equivalents                                            |                                             |                                       | (975   | )                           |        |      | (3,268  | )  
|Cash and cash equivalents at beginning of period                                     |                                             |                                       | 1,606  |                             |        |      | 4,465   |    
|                                                                                     |                                             |                                       |        |                             |        |      |         |    
|Cash and cash equivalents at end of period                                           |                                             | $                                     | 631    |                             |        | $    | 1,197   |    
|                                                                                     |                                             |                                       |        |                             |        |      |         |    

See Notes to Condensed Consolidated Financial Statements

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
Nextera Enterprises, Inc. (Nextera or the Company) have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31,
2003 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2003.

The balance sheet as of December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

These financial statements should be read in conjunction with the financial
statements and notes thereto, together with managements discussion and
analysis of financial condition and results of operations, contained in the
Companys Annual Report on Form 10-K filed by the Company with the Securities
and Exchange Commission on March 31, 2003.

Reclassification

Certain reclassifications were made to the 2002 financial statements in order
that they may be consistent with the 2003 presentation.

Restricted Cash

Restricted cash relates to cash deposits held by the Companys senior lenders,
in accordance with the Second Amended and Restated Credit Agreement dated
December 31, 2002 (Senior Credit Facility), to finance working capital
requirements related to employment compensation that was paid in December 2002
and January 2003. The terms of the Senior Credit Facility require the Company
to restrict such amounts on a monthly basis based on earned bonus amounts so
that a certain percentage of the projected earned bonus is escrowed or paid at
specific times. At December 31, 2002, $2.7 million was escrowed in a
restricted account for bonuses earned. The Company will continue to escrow
funds for bonus payments for 2003 beginning in the second quarter.

Concentration of Credit Risk

The Company provides its services to customers in diversified industries,
primarily in the United States. The Company performs ongoing credit evaluations
of its customers and generally does not require collateral. The Company
maintains reserves for potential credit losses and such losses have been within
managements expectations. No customer accounted for more than 10% of net
revenues for the three months ended March 31, 2003 and 2002. One customer
represented more than 5% of accounts receivable as of March 31, 2003.

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Recent Accounting Pronouncements

In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148, Stock-Based Compensation  Transition and Disclosure- an amendment of
FASB Statement No 123 (SFAS No. 148), which provides optional guidance for
those companies electing to voluntarily adopt the accounting provisions of SFAS
No. 123. In addition, the statement mandates certain new disclosures that are
incremental to those required by SFAS No. 123. Since the Company will continue
to record stock-based compensation in accordance with APB No. 25, no material
impact on the condensed Consolidated financial position or results of
operations is expected. The Company has adopted the disclosure provisions of
this statement.

Note 2. Other Assets

On December 31, 2002, the Company entered into employment and non-compete
agreements with the Companys two key service providers: Daniel Fischel, the
Companys Chief Executive Officer, and Dennis Carlton. These agreements
contain covenants not to compete over specified periods in return for cash
compensation. The agreements became effective on January 7, 2003 upon payment
of the first installment. Under the terms of the agreements, Nextera made
aggregate payments of $5.0 million on January 7, 2003 to extend these
agreements through July 15, 2003. Messrs. Fischel and Carlton surrendered
approximately 1.8 million shares of the Companys Class A Common Stock worth
approximately $0.8 million in connection with the extension of the non-compete
provisions. Accordingly, an asset of approximately $4.2 million was recorded
in 2003 to recognize the non-compete agreements and is being amortized through
July 15, 2003. Amortization expense of $1.9 million was recorded in the first
quarter of 2003.

The Company has the option of extending the non-compete provisions through
January 15, 2004 by paying Messrs. Fischel and Carlton an aggregate payment of
$3.5 million, including interest, on or before July 15, 2003 and approximately
$1.6 million, plus interest at 3.5% per annum from January 15, 2003 through the
date paid, within 5 business days of the collection of a specified accounts
receivable, but in no event later than December 31, 2003, whether or not the
receivable is collected by that date. The Company has the option of extending
these agreements from January 15, 2004 to December 31, 2008 by making an
additional aggregate payment of $20.0 million to Messrs. Fischel and Carlton on
or before January 15, 2004.

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Note 3. Income (Loss) per Share

Basic net income (loss) per share (Basic EPS) is computed by dividing net
income (loss) available to common stockholders by the weighted average number
of common shares outstanding. Diluted net income (loss) per common share
(Diluted EPS) is computed by dividing net income available to common
stockholders by the weighted average number of common shares and dilutive
common share equivalents then outstanding.

Basic and diluted income (loss) per share were calculated as follows:

|                                                   |  |                             |        |      |  |   |        |  
|-------------------------------------------------- |  | --------------------------- | ------ | ---- |  | - | ------ | -
|                                                   |  | Three Months Ended March 31
|(Amounts in thousands, except per share amounts)   |  | 2003                        |        | 2002
|                                                   |  |                             |        |     
|                                                   |  | (unaudited)                
|Basic net income (loss) per Common Share           |  |                             |        |      |  |   |        |  
|Net income (loss)                                  |  | $                           | (3,063 | )    |  | $ | 1,728  |  
|Preferred stock dividends                          |  |                             | (74    | )    |  |   | (395   | )
|                                                   |  |                             |        |      |  |   |        |  
|Net income (loss) available to common stockholders |  | $                           | (3,137 | )    |  | $ | 1,333  |  
|Weighted average common shares outstandingbasic   |  |                             | 34,038 |      |  |   | 35,654 |  
|                                                   |  |                             |        |      |  |   |        |  
|Basic net income (loss) per common share           |  | $                           | (0.09  | )    |  | $ | 0.04   |  
|                                                   |  |                             |        |      |  |   |        |  
|Diluted net income (loss) per Common Share         |  |                             |        |      |  |   |        |  
|Net income (loss)                                  |  | $                           | (3,063 | )    |  | $ | 1,728  |  
|Preferred stock dividends                          |  |                             | (74    | )    |  |   |       |  
|                                                   |  |                             |        |      |  |   |        |  
|Net income (loss) available to common stockholders |  | $                           | (3,137 | )    |  | $ | 1,728  |  
|Weighted average common shares outstandingbasic   |  |                             | 34,038 |      |  |   | 35,654 |  
|Dilutive effect of convertible preferred stock     |  |                             |       |      |  |   | 26,371 |  
|Dilutive effect of options and warrants            |  |                             |       |      |  |   | 348    |  
|                                                   |  |                             |        |      |  |   |        |  
|Weighted average common shares outstandingdiluted |  |                             | 34,038 |      |  |   | 62,373 |  
|                                                   |  |                             |        |      |  |   |        |  
|Diluted net income (loss) per common share         |  | $                           | (0.09  | )    |  | $ | 0.03   |  
|                                                   |  |                             |        |      |  |   |        |  

Note 4. Senior Credit Facility

Effective March 29, 2002, the Company entered into an Amended and Restated
Credit Agreement (Prior Credit Agreement) with the senior lenders. Under the
Prior Credit Agreement, the Company agreed to permanently reduce the borrowings
outstanding under the facility by $6.5 million in 2002 and by $8.0 million in
2003. The Prior Credit Agreement was scheduled to mature on January 2, 2004.
Borrowings under the facility bore interest at the lenders base rate plus
2.0%, with the potential for the borrowing rate to be reduced 100 basis points
upon achieving certain financial and operational milestones. In connection with
the Prior Credit Agreement, the Company paid annual administrative fees of $0.3
million, payable monthly, and was scheduled to pay $0.9 million in aggregate
fees upon maturity of the Prior Credit Agreement. Additionally, the senior
lenders were issued warrants to purchase 400,000 shares of the Companys Class
A Common Stock at an exercise price of $0.60 per share, exercisable at the
senior lenders sole discretion at any time prior to 18 months after payment in
full of all of the Companys obligations due under the Prior Credit Agreement.
The senior lenders can elect in their sole discretion to require the Company to
redeem the warrants for a $0.2 million cash payment after December 31, 2004. An
affiliate of Knowledge Universe, an entity that indirectly controls Nextera,
agreed to guarantee $2.5 million of the Companys obligations under the Prior
Credit Agreement. The Prior Credit Agreement also contained covenants related
to the maintenance of financial ratios, operating restrictions, restrictions on

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

the payment of dividends and disposition of assets. The revised covenants were
based on the Companys operating plan for 2002 and 2003.

Effective December 31, 2002, the Company entered into a Second Amended and
Restated Credit Agreement (Senior Credit Facility), which amended the Prior
Credit Agreement. As part of the Senior Credit Facility, Knowledge Universe,
Inc. purchased a $5.0 million junior participation in the Senior Credit
Facility. On January 7, 2003, the Company borrowed $5.0 million under the
Senior Credit Facility to fund the first payment required under the employment
and non-compete agreements entered into with Messrs. Fischel and Carlton. The
Companys outstanding liability under the Senior Credit Facility after the
borrowing of the above mentioned $5.0 million was $32.2 million. The Senior
Credit Facility requires that $4.7 million of outstanding borrowings be
permanently reduced in each of 2003 and 2004. The maturity of the Senior
Credit Facility was extended to January 1, 2005. Borrowings bear interest at
the lenders base rate plus 1.5%, which was 5.7% at
March 31, 2003. The Company will continue to pay annual
administrative fees of $0.3 million, payable monthly, and the $0.9 million in
aggregate back-end fees will continue to be payable upon the maturity of the
Senior Credit Facility. The back-end fees can be waived if the Company repays
the Senior Credit Facility prior to maturity. All administrative fees paid to
the senior lenders are recorded by the Company as interest expense. An
affiliate of Knowledge Universe has agreed to continue to guarantee $2.5
million of the Companys obligations under the Senior Credit Facility. The
Senior Credit Facility also contains covenants related to the maintenance of
financial ratios, operating restrictions, restrictions on the payment of
dividends and disposition of assets. The revised covenants were based on the
Companys operating plan for 2003 and 2004. As of March 31, 2003, the Company
was in compliance with all of its financial covenants.

Note 5. Stock-Based Compensation and Other Equity Instruments

As allowed under Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation(SFAS 123) the Company has elected
to follow Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and related Interpretations in accounting for
its employee stock options. Under APB 25, because the exercise price of the
Companys employee stock options equals or exceeds the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

The Company accounts for equity instruments issued to non-employees in exchange
for goods or services using the fair value method. Accordingly, warrants issued
to Knowledge Universe, Inc. in connection with an acquisition and warrants
issued to the senior lenders and other creditors have been recorded at their
fair value on the date of grant.

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

If the Company had adopted the optional recognition provisions of SFAS 123 for
its stock option plans, net income (loss) and net income (loss) per common
share would have been changed to the pro forma amounts indicated below:

|                                            |  |                                         |        |      |  |   |        |  
|------------------------------------------- |  | --------------------------------------- | ------ | ---- |  | - | ------ | -
|                                            |  | Three months ended March 31            
|                                            |  | 2003                                    |        | 2002
|                                            |  |                                         |        |     
|                                            |  | (Amounts in thousands, except per share
|                                            |  | data)                                  
|Net income (loss)as reported                |  | $                                       | (3,063 | )    |  | $ | 1,728  |  
|Compensation expense under SFAS 123         |  |                                         | (403   | )    |  |   | (1,302 | )
|                                            |  |                                         |        |      |  |   |        |  
|Pro forma net income (loss)                 |  | $                                       | (3,466 | )    |  | $ | 426    |  
|                                            |  |                                         |        |      |  |   |        |  
|Net income (loss) per basic common share:   |  |                                         |        |      |  |   |        |  
|As reported                                 |  | $                                       | (0.09  | )    |  | $ | 0.04   |  
|                                            |  |                                         |        |      |  |   |        |  
|Pro forma                                   |  | $                                       | (0.10  | )    |  | $ | 0.00   |  
|                                            |  |                                         |        |      |  |   |        |  
|Net income (loss) per diluted common share: |  |                                         |        |      |  |   |        |  
|As reported                                 |  | $                                       | (0.09  | )    |  | $ | 0.03   |  
|                                            |  |                                         |        |      |  |   |        |  
|Pro forma                                   |  | $                                       | (0.10  | )    |  | $ | 0.00   |  
|                                            |  |                                         |        |      |  |   |        |  

The weighted average fair value of options granted during 2003 and 2002 was
$0.36 and $0.54, respectively, at the date of the grants. As recommended by
SFAS No. 123, the fair values of options were estimated using the Black-Scholes
option pricing model assuming expected volatility of 120% in 2003 and 130% in
2002, a risk free interest rate of 4.70% in 2003 and 2002, and an expected life
of 6 years in 2003 and 2002.

Other Equity

In conjunction with the non-compete agreements with certain key service
providers entered into December 31, 2002, the key service providers surrendered
1,885,827 shares of Class A Common Stock to the Company. The closing bid price
on the Nasdaq SmallCap Market on January 7, 2003, the date the shares were
surrendered, was $0.42 per share. As a result, stockholders' equity
decreased $0.8 million.

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Note 6. Special Charges

The restructuring charges and their utilization as of March 31, 2003 are
summarized as follows (in thousands):

|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |   |       | 
|--------------------------- |  | ------------ | ----- | ------- |  | -------- | --- | ---- |  | ---------------- | - |  |  | - | --- |  |  | - | ----- | 
|                            |  |              |       |         |  |          |     |      |  | Utilized         |   |  |  |  
|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |  
|                            |  | Balance at   |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |  
|                            |  | December 31, |       | Q1 2003 |  |          |     |      |  | Balance at March
|                            |  | 2002         |       | charge  |  | Non-Cash |     | Cash |  | 31, 2003        
|                            |  |              |       |         |  |          |     |      |  |                 
|Severance                   |  | $            |      |         |  | $        | 785 |      |  | $                |  |  |  | $ | 125 |  |  | $ | 660   | 
|Facilities                  |  |              | 1,380 |         |  |          |    |      |  |                  |  |  |  |   | 45  |  |  |   | 1,335 | 
|Operating lease
obligations |  |              | 84    |         |  |          |    |      |  |                  |  |  |  |   | 33  |  |  |   | 51    | 
|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |   |       | 
|                            |  | $            | 1,464 |         |  | $        | 785 |      |  | $                |  |  |  | $ | 203 |  |  | $ | 2,046 | 
|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |   |       | 

In connection with the resignation of the Companys former chief executive
officer in 2003, the Company incurred a $1.9 million charge in the first
quarter of 2003. Approximately $0.8 million relates to salary continuance
until February 2004 and approximately $1.1 million relates to a non-cash charge
for fully vested options, with an exercise price of $2.00 per share, which was
previously being expensed over the anticipated service period. In accordance
with the original employment agreement, the former chief executive officer was
to be granted a bonus, if and only if the above mentioned options vested and
became exercisable, equal to the exercise price of the options at the time of
the exercise of the options. The portion of the option exercise price bonus
not expensed at the time of the resignation of the former chief executive
officer is required to be expensed immediately and recorded in equity due to
the accelerated vesting of the options which occurred as a result of the
resignation.

Approximately $1.7 million of cash is expected to be expended over the next
twelve months, primarily related to real estate rental obligations and
employment contracts, and the remainder is expected to be paid through December 2005.

Note 7 Comprehensive Income (Loss)

Comprehensive income combines net income (loss) and other comprehensive
items, which represents certain amounts, substantially foreign currency
translation adjustments, that are reported as components of stockholders
equity in the accompanying balance sheet. During the first quarter of 2003
comprehensive loss totaled $3.1 million and during the first quarter ended 2002
comprehensive income was $2.7 million.

Note 8. Income Taxes

No federal tax benefit was recorded for the three months ended March 31, 2003
due to the Companys uncertainty associated with utilizing its net operating
losses. The Company did record de minimis state tax expense. No federal tax
expense was recorded during the three months ended March 31, 2002 due to the
existence of net operating losses available to be carried forward to offset
taxable income.

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NEXTERA ENTERPRISES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Note 9. Commitments and Contingencies

The Company is subject to certain asserted claims arising in the ordinary
course of business. The Company intends to vigorously assert its rights and
defend itself in any litigation that may arise from such claims. While the
ultimate outcome of these matters could affect the results of operations of any
one quarter or year when resolved in future periods, and while there can be no
assurance with respect thereto, management believes that after final
disposition, any financial impact to the Company would not be material to the
Companys financial position and results of operations or liquidity.

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NEXTERA ENTERPRISES, INC.




Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The disclosure and analysis in this quarterly report contain forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. These statements can be identified by the fact that
they do not relate strictly to historic or current facts. They use words such
as anticipate, estimate, expect, project, intend, plan, believe,
and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance. In particular, these
forward-looking statements include statements relating to future actions or the
outcome of financial results. From time to time, we also may provide oral or
written forward-looking statements in other materials released to the public.
Any or all of the forward-looking statements in this quarterly report and in
any other public statements may turn out to be incorrect. They can be affected
by inaccurate assumptions or by known or unknown risks and uncertainties.
Consequently, no forward-looking statement can be guaranteed. Actual results
may vary materially.

Forward-looking statements are based on many factors that may be outside our
control, causing actual results to differ materially from those suggested.
These factors include, but are not limited to, those disclosed below under the
heading Factors That May Affect Our Future Performance. New factors emerge
from time to time, and it is not possible for us to predict all these factors
nor can we assess the impact of these factors on our business or the extent to
which any factor or combination of factors may cause actual results to differ
materially from those contained in any forward-looking statements. Given these
risks and uncertainties, you should not place undue reliance on forward-looking
statements as a prediction of actual results.

Overview

Nextera Enterprises exited the technology consulting business during the latter
half of 2001 and sold its human capital consulting business (Sibson) on January
30, 2002. After the January 30, 2002 sale, Nextera Enterprises consists of
Lexecon (economic consulting business), one of the worlds leading economics consulting firms. For more than
25 years, Lexecon has provided law firms, corporations and regulatory agencies
with expert analysis of complex economic issues in connection with legal and
regulatory proceedings, strategic planning and other business activities.

Lexecon was founded in 1977. Lexecons clients include major law firms and the
corporations that they represent, government and regulatory agencies, public
and private utilities and national and multinational corporations.

Lexecons services involve the application of economic, financial and public
policy principles to marketplace issues in a large variety of industries. The
firms services fall into three broad areas: litigation support, public policy
studies, and business consulting.

Litigation Support: Lexecon provides expert witness testimony, economic
analyses, and other litigation-related services in adversarial proceedings in
courts and before regulatory bodies, arbitrators and international trade
organizations. The firm applies economic principles in understanding the
specific features of its clients business and the competitive and regulatory
context in which it operates. Antitrust is Lexecons traditional area of
expertise within the litigation support arena where it provides expert advice
and written and live testimony in antitrust proceedings. Litigation support
also encompasses financial litigation where the analysis focus ranges from
securities fraud to market manipulation and other areas as well. Litigation
support is Lexecons most significant practice area in terms of total revenue,
earnings and personnel.

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Public Policy Studies: Lexecon has performed numerous public policy studies on
behalf of individual companies, trade associations and governmental agencies in
the United States and internationally. Lexecons studies have been submitted to
such agencies as the U.S. Department of Transportation, the Securities and
Exchange Commission, the National Association of Securities Dealers, the
Federal Communications Commission, and the U.S. Department of Commerce.

Business Consulting: Lexecon assists corporate clients in analyzing business
and strategic issues outside the context of litigation or regulation. Lexecon
consults on the likely competitive impact of proposed mergers, assessing the
possible reaction of regulatory agencies, competitors and customers to possible
business combinations. Lexecon also advises on pricing and other strategic
decisions, such as entry into new business areas, addition of new production
capacity, and by helping firms assess how competitors are likely to react and
how these events would affect the nature of future competition.

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2003 AND THREE MONTHS ENDED
MARCH 31, 2002

Net Revenues.Net revenues decreased $2.0 million, or 10.6%, to $18.8
million for the three months ended March 31, 2003 from $20.8 million for the
three months ended March 31, 2002. Approximately $1.9 million of this decrease
was attributable to the sale of our human capital consulting business in
January 2002. Net revenues from our economic consulting business were $18.9
million for the quarter ended March 31, 2002, $0.1 million higher than the
first quarter of 2003. Utilization of professionals in the economic consulting
business was 67.2% for the quarter ended March 31, 2003 compared to 74.6% in
the first quarter of 2002. The drop in utilization from the prior year was
offset in part by a 6.4% increase in billing rates. Annualized revenue per
professional in the quarter ended March 31, 2003 was $504,000 compared to
$488,000 for the quarter ended March 31, 2002.

Gross Profit.Gross profit decreased 17.9% to $6.9 million for the three
months ended March 31, 2003 from $8.4 million for the three months ended March
31, 2002. The decrease in gross profit was due to the sale of the human
capital consulting business in January 2002 and an increase in the cost of
services for the economic consulting business. The human capital consulting
business gross profit in the first quarter of 2002 was $0.8 million. Gross
profit as a percentage of net revenues decreased to 36.6% for the three months
ended March 31, 2003 from 40.3% for the three months ended March 31, 2002. The
economic consulting business gross profit as a percent of net revenues for the
three months ended March 31, 2002 was 40.0%. The drop in economic consulting
business gross profit as a percentage of net revenues is primarily attributed
to an increase in overall compensation due to yearly annual base compensation
increases and, to a lesser extent, recently hired consultants who have not
achieved targeted utilization.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses decreased 23.1% to $4.0 million for the three months
ended March 31, 2003 from $5.2 million for the three months ended March 31,
2002. As a percentage of revenues, such expenses decreased to 21.5% for the
three months ended March 31, 2003 from 24.8% for the three months ended March
31, 2002. The decrease in selling, general and administrative expenses from the
first quarter of 2002 is primarily attributed to the following components: a
decrease of $0.5 million in compensation expenses and a decrease of $0.4
million in facility cost, both attributed to the absence of the human capital
consulting business, which was sold in January 2002, and lower corporate costs.

Amortization Expense. The Company recorded $1.9 million of amortization
expense related to the amortization of non-compete agreements entered into with
certain key service providers in conjunction with employment agreements dated
December 31, 2002.

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Special Charges.The restructuring charges and their utilization as of March
31, 2003 are summarized as follows (in thousands):

|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |   |       | 
|--------------------------- |  | ------------ | ----- | ------- |  | -------- | --- | ---- |  | ---------------- | - |  |  | - | --- |  |  | - | ----- | 
|                            |  |              |       |         |  |          |     |      |  | Utilized         |   |  |  |  
|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |  
|                            |  | Balance at   |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |  
|                            |  | December 31, |       | Q1 2003 |  |          |     |      |  | Balance at March
|                            |  | 2002         |       | charge  |  | Non-Cash |     | Cash |  | 31, 2003        
|                            |  |              |       |         |  |          |     |      |  |                 
|Severance                   |  | $            |      |         |  | $        | 785 |      |  | $                |  |  |  | $ | 125 |  |  | $ | 660   | 
|Facilities                  |  |              | 1,380 |         |  |          |    |      |  |                  |  |  |  |   | 45  |  |  |   | 1,335 | 
|Operating lease
obligations |  |              | 84    |         |  |          |    |      |  |                  |  |  |  |   | 33  |  |  |   | 51    | 
|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |   |       | 
|                            |  | $            | 1,464 |         |  | $        | 785 |      |  | $                |  |  |  | $ | 203 |  |  | $ | 2,046 | 
|                            |  |              |       |         |  |          |     |      |  |                  |   |  |  |   |     |  |  |   |       | 

In connection with the resignation of the Companys former chief executive
officer in 2003, the Company incurred a $1.9 million charge in the first
quarter of 2003. Approximately $0.8 million relates to salary continuance
until February 2004 and approximately $1.1 million relates to a non-cash charge
for fully vested options, with an exercise price of $2.00 per share, which was
previously being expensed over the anticipated service period. In accordance
with the original employment agreement, the former chief executive officer was
to be granted a bonus, if and only if the above mentioned options vested and
became exercisable, equal to the exercise price of the options at the time of
the exercise of the options. The portion of the option exercise price bonus
not expensed at the time of the resignation of the former chief executive
officer is required to be expensed immediately and recorded in equity due to
the accelerated vesting of the options which occurred as a result of the
resignation.

Approximately $1.7 million of cash is expected to be expended over the next
twelve months, primarily related to real estate rental obligations and
employment contracts, and the remainder is expected to be paid over the next
two years.

Interest Expense, Net.Interest expense, net increased to $2.0 million
for the three months ended March 31, 2003 from $1.4 million for the three
months ended March 31, 2002. The increase is primarily a result of a higher
principal amount of debentures outstanding in the quarter. The average balance
of debentures outstanding for the quarter ended March 31, 2003 was $47.7
million compared to $23.1 million for the quarter ended March 31, 2002 due
primarily to the exchange of preferred stock to debentures in July of 2002.

Income taxes. No federal tax benefit was recorded for the three months
ended March 31, 2003 due to the Companys uncertainty associated with utilizing
its net operating losses. The Company did record de minimis state tax expense.
No federal tax expense was recorded during the three months ended March 31,
2002 due to the existence of net operating losses available to be carried
forward to offset taxable income.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated working capital was $6.1 million on March 31, 2003, compared to a
working capital of $5.2 million on December 31, 2002. Included in working
capital were cash and cash equivalents of $0.6 million and $1.6 million on
March 31, 2003 and December 31, 2002, respectively.

Net cash used in operating activities was $8.4 million for the three months
ended March 31, 2003. The primary components of net cash used in operating
activities was an increase of $5.0 million of prepaid and other assets
(relating to Messrs. Fischel and Carltons non-compete agreements), an increase
of $4.4 million of accounts receivable, a $1.6 million decrease of accounts payables and
accrued expenses (primarily bonus payments), and a net loss of $3.1 million.
These cash outflows were offset in part by $5.2 million of non-cash items
relating to depreciation, provision for doubtful accounts, amortization of
non-compete agreements, non-cash compensation charges, and interest
paid-in-kind.

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Net cash provided by investing activities was $2.6 million for the three months
ended March 31, 2003, almost entirely representing decreases in restricted
cash.

Net cash provided by financing activities was $4.8 million for the three months
ended March 31, 2003. The primary component of net cash provided by financing
activities was $5.0 million of borrowings under the Companys Senior Credit
Facility.

The Companys primary sources of liquidity are cash on hand, restricted cash
(for bonus payments only) and cash flow from operations. The Company believes
that if it is successful in reducing its current days sales outstanding level
and achieving its forecasted profitability, it will have sufficient cash to
meet its operating and capital requirements for the next twelve months.
However, there can be no assurances that the Companys actual cash needs will
not exceed anticipated levels, that the Company will generate sufficient
operating cash flows, by reducing its current days sales outstanding level and
achieving its forecasted profitability, to fund its operations in the absence
of other sources or that acquisition opportunities will not arise requiring
resources in excess of those currently available. In particular, the Company
has the option of extending the employment and non-compete agreements with
Messrs. Fischel and Carlton from their current expiration of July 16, 2003 to
January 15, 2004. In order to exercise such option, the Company must pay
Messrs. Fischel and Carlton an aggregate amount of approximately $3.5 million,
including interest, on or before July 15, 2003 and an aggregate amount of
approximately $1.6 million, plus interest at 3.5% per annum from January 15,
2003 through the date paid, within five days of collection of a specified
receivable but in no case later than December 31, 2003, whether or not the
receivable is collected by that date. The Company hopes to exercise such
option from cash flows from operations, however, such funding from operations
is dependent upon reducing current days sales outstanding and achieving
forecasted profitability. To the extent that cash flows from operations are
not sufficient, the Company will need to obtain alternative financing sources. In
order for the Company to further extend these agreements from January 16, 2004
through December 31, 2008, the Company will need to make aggregate payments to
Messrs. Fischel and Carlton of $20.0 million by January 15, 2004. We will
require additional financing in amounts that we cannot determine at this time
in order to make all of the payments required to extend these agreements to
December 31, 2008. We expect that we will need to raise funds through one or
more public or private financing transactions.

Effective December 31, 2002, the Company entered into a Second Amended and
Restated Credit Agreement (Senior Credit Facility), which amended the Prior
Credit Agreement. As part of the Senior Credit Facility, Knowledge Universe,
Inc. purchased a $5.0 million junior participation in the Senior Credit
Facility. On January 7, 2003, the Company borrowed $5.0 million under the
Senior Credit Facility to fund the first payment required under the employment
and non-compete agreements entered into with Messrs. Fischel and Carlton. The
Companys outstanding liability under the Senior Credit Facility after the
borrowing of the above mentioned $5.0 million was $32.2 million. The Senior
Credit Facility requires that $4.7 million of outstanding borrowings be
permanently reduced in each of 2003 and 2004. The maturity of the Senior
Credit Facility was extended to January 1, 2005. Borrowings bear interest at
the lenders base rate plus 1.5%. The Company will continue to pay annual
administrative fees of $0.3 million, payable monthly, and the $0.9 million in
aggregate back-end fees will continue to be payable upon the maturity of the
Senior Credit Facility. The back-end fees can be waived if the Company repays
the Senior Credit Facility prior to maturity. All administrative fees paid to
the senior lenders are recorded by the Company as interest expense. An
affiliate of Knowledge Universe has agreed to continue to guarantee $2.5
million of the Companys obligations under the Senior Credit Facility. The
Senior Credit Facility contains covenants related to the maintenance of
financial ratios, operating restrictions, restrictions on the payment of
dividends and disposition of assets. The covenants are measured quarterly and
have been set at varying rates, the most restrictive at approximately 15% below
the Companys projected operating results. If the results of operations
significantly decline below projected results and we are unable to obtain a
waiver from the Companys senior lenders, the Companys debt would be in
default and callable by the senior lenders. If our projections of future
operating results are not achieved and our debt is placed in default, we would
experience a material adverse impact on our reported financial position and
results of operations.

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Critical Accounting Policies

Our condensed Consolidated financial statements have been prepared with
accounting principles generally accepted in the United States of America.
Preparation of these financial statements requires management to make judgments
and estimates. Some accounting policies have significant impact on amounts
reported in these financial statements. A summary of significant accounting
polices and a description of accounting policies that are considered critical
may be found in our 2002 Annual Report on Form 10-K, filed on March 31, 2003,
in the Notes to the Consolidated Financial Statements, Note 2 and the Critical
Accounting Policies Section.

Factors That May Affect Our Future Performance

You should carefully consider the following risk factors in your evaluation of
our company. If any of the following risks actually occur it could materially
harm our business and impair the price of our stock.

We heavily depend on a small number of senior consulting executives and other
key personnel, and the loss of any of them may damage or result in the loss of
client relationships and cause our business and reputation to suffer.

Our success is highly dependent upon the efforts, abilities, business
generation capabilities and project execution skills of a limited number of
senior consulting executives and other key personnel. This dependence is
particularly important to our business because personal relationships and
reputations are a critical element of obtaining and maintaining client
engagements. The loss of the services of any of these persons for any reason
could have a material adverse effect on our reputation and our ability to
secure and complete engagements. Several of our senior consulting executives
that are responsible for substantially all of our business are subject to
employment and/or non-compete agreements. Additionally, there are some senior
consulting executives whose contracts have already expired or will expire
during 2003. We may not be able to retain these persons or to attract suitable
replacements or additional personnel if necessary. We generally do not maintain
key person life insurance coverage for our employees other than certain key
management and consulting personnel.

In addition, if any of these key employees joins a competitor or forms a
competing business, some of our clients might choose to use the services of
that competitor or new company. Further, in the event of the loss of any such
personnel, we may not be able to prevent the unauthorized disclosure or use of
our technical knowledge, practices or procedures by these personnel. As a
result, we might lose existing or potential clients.

We may not be able to obtain the additional capital necessary for us to fund
the payments necessary for us to be able to extend the employment and
non-compete agreements with two key service providers, including our Chief
Executive Officer. In addition, if we are able to raise additional capital,
the terms of any additional capital may be unfavorable to Nextera or our stockholders.

We have entered into employment and non-compete agreements with two of our key
service providers: Daniel Fischel, our Chief Executive Officer, and Dennis
Carlton. These agreements currently expire on July 15, 2003. In order for us
to extend these agreements through January 15, 2004, we will need to make
aggregate payments to Messrs. Fischel and Carlton of approximately $3.5 million
(including interest) by July 15, 2003 and approximately $1.6 million, plus
interest at 3.5% per annum beginning January 15, 2003 though the date paid,
within five days of collection of a specified receivable but in no case later
than December 31, 2003, whether or not the receivable is collected by that
date. In order for us to further extend these agreements from January 16, 2004
through December 31, 2008, we will need to make aggregate payments to Messrs.
Fischel and Carlton of $20.0 million by January 15, 2004. We will require
additional financing in amounts that we cannot determine at this time in order
to make all of the payments required to extend these agreements to December 31,
2008. We expect that we will need to raise funds through one or more public or
private financing transactions.

17



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If funds are raised through the issuance of equity securities, the percentage
ownership of our then-current stockholders may be reduced and the holders of
new equity securities may have rights, preferences or privileges senior to
those of the holders of our common stock. If additional funds are raised
through a bank credit facility or the issuance of debt securities, the holder
of this indebtedness would have rights senior to the rights of the holders of
our common stock and the terms of this indebtedness could impose restrictions
on our operations. If we need to raise additional funds, we may not be able to
do so on terms favorable to us, or at all. If we cannot raise adequate funds
on acceptable terms, we may be unable to extend the employment and non-compete
agreements and lose the continued services of Messrs. Fischel and Carlton. In
such event, our operations and financial condition would be materially and
adversely affected.

High levels of debt could adversely affect our business and financial condition

We have very high levels of debt in relation to the size of our business. As
of March 31, 2003, we had $32.2 million of outstanding indebtedness under our
Senior Credit Facility, $4.7 million of which was classified as a current
liability. In addition, as of March 31, 2003, we had $48.9 million of
outstanding indebtedness under debentures payable to affiliates.

Our high leverage could have important consequences, including the following:



| |  |  | a substantial portion of our future cash flows from operations must be
dedicated to the servicing of our debt, thus reducing the funds available
for operations and investments;     
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to obtain additional financing may be impaired;                                                                                                                          
|
| |  |  | our leverage may reduce our ability to adjust rapidly to changing
market conditions and may make us more vulnerable to future downturns in
the general economy; and                  
|
| |  |  | high levels of debt may reduce the value of stockholders investments
in Nextera because debt holders have priority regarding our assets in the
event of a bankruptcy or liquidation.

We may not have sufficient future cash flows to meet our debt payments, or
other obligations such as payments to employees, and may not be able to
refinance any of our debt at maturity.

We may be unable to comply with certain covenants under our Senior Credit
Facility which could result in an acceleration of amounts due and the
commencement of foreclosure proceedings

The Company entered into the Second Amended and Restated Credit Agreement
(Senior Credit Facility) on December 31, 2002, with its senior lenders. Under
the Senior Credit Facility, the Company is required to make principal payments
of $4.7 million in each of 2003 and 2004. The debt is due in full on January
1, 2005. Additionally, the Company is required to comply with certain
financial and operational covenants. Borrowings under the Senior Credit
Facility currently bear interest at the lenders base rate plus 1.5%. If the Company
fails to comply with the covenants contained in the Senior Credit Facility, the
interest rate could increase 200 basis points. Additionally, such an event may
permit the senior lenders to accelerate the maturity of the Senior Credit
Facility and foreclose on the assets of the Company.

We face possible delisting from the Nasdaq SmallCap Market, which would result
in a limited public market for our Class A Common Stock, and may adversely
affect the price and trading volume of our Class A Common Stock.

There are several requirements for the continued listing of our Class A Common
Stock on the Nasdaq SmallCap Market including, but not limited to, a minimum
stock bid price of $1.00 per share. On February 14, 2002, we received
notification from the Nasdaq National Market (Nasdaq) that we had failed to
maintain a minimum bid price of $1.00 for 30 consecutive days and would be
delisted from the Nasdaq National Market unless by May 15, 2002 we complied
with the minimum bid price requirement for at least 10 consecutive days. Prior
to May 15, 2002, we submitted an application to trade on the Nasdaq SmallCap
Market, and on June 3, 2002, we began trading on the Nasdaq SmallCap Market.

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The Nasdaq SmallCap Market extended us a 180-day grace period to comply with
the $1.00 minimum bid price requirement, which expired on August 13, 2002. We
received a further 180-day grace period to comply with the $1.00 minimum bid
price requirement from the Nasdaq SmallCap Market, which extension expired on
February 13, 2003. On March 19, 2003, we received a further 90-day extension,
or until May 12, 2003, to regain compliance with the minimum bid price
requirement. Nasdaq announced a proposal on January 30, 2003 that would extend
the time for companies listed on the Nasdaq SmallCap Market to comply with the
$1.00 minimum bid price requirement from 180 days to up to 540 days, provided
that compliance with other listing requirements is maintained. This proposal
is subject to the review and approval of the Securities and Exchange
Commission.

The Company believes that it may qualify for a further 270-day extension beyond
May 12, 2003 to comply with the $1.00 minimum bid price requirement if the
Nasdaq proposal is approved. However, there are no assurances that this
proposal will be approved by the SEC or, if approved, that it will not be
modified by the SEC in a manner that would shorten the proposed extension or
prevent Nextera from qualifying for any extension. Additionally, even if the
extension is approved and we are able to qualify for it, we may be unable to
comply with the other requirements for continued listing. If we are unable to
satisfy the $1.00 minimum bid price requirement within the time set by Nasdaq
or if we are unable to meet the other requirements for continued listing, our
common stock will be subject to delisting by Nasdaq. If our common stock is
delisted, trading our stock may become more difficult and our stock price could
decrease even further. If our common stock is not listed on Nasdaq, many
potential investors will not purchase our common stock, which would further
limit the trading market for our common stock.

The Company currently believes that it is in the interest of shareholders to
maintain listing on Nasdaq and to increase the share price of our common stock
to potentially increase its trading liquidity stock and attract investment by
institutional funds and investors that are currently prevented from investing
in our common stock at current price levels. Accordingly, we will ask our
shareholders to authorize a reverse stock split of the Companys common stock at the next annual meeting of shareholders in June, 2003.
However, our shareholders may not approve the reverse stock split, or if the
reverse stock split is approved and completed, it may not result in a sustained
minimum bid price for our common stock sufficient to prevent delisting nor can
there be any assurances that the price of our common stock after a reverse
stock split will rise in proportion to the reduction in the number of shares of
our common stock outstanding after the reverse stock split becomes effective.
Additionally, even if a reverse stock split has the effect of increasing the
price of our common stock, a broader or more liquid market for our stock may
not develop. The lasting effects of a reverse stock split are unknown and the
effects of reverse stock splits for companies in similar situations as ours is
varied.

We may not successfully compete with our competitors, including the retention
of our professional consultants, which could result in reduced revenues and
operating profits.

The economic and business consulting industry has a large number of competitors
comprised of economic consulting firms, individual academics, accounting firm
consulting practices, and general management consulting firms. We believe the
principal competitive factors in our industry are reputation, the analytical
ability of our professional staff, client service, and industry expertise. We
believe that we compete favorably with respect to these factors, however, some
of our competitors have greater financial and marketing resources and greater
name recognition than Lexecon. Because our business involves the delivery of
professional services, our success depends upon our ability to attract, retain,
motivate and train highly skilled consultants. We also face competition in our
efforts to recruit and retain professional staff. If Lexecon is not successful
in competition with its rivals, including the retention of consultants, it
could impair our ability to effectively manage and complete our client projects
and secure future client engagements, and as a result our reputation could
suffer and our future revenues and operating profits could decline.

Even if we are able to retain our current consultants and expand the number of
our qualified consultants, the resources required to attract, retain, motivate
and train these consultants could adversely affect our operating profits

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Nextera Enterprises Holdings owns 71.5% of our voting stock and can control
matters submitted to our stockholders and its interests may be different from
yours.

Nextera Enterprises Holdings owns 8,810,000 shares of Class A Common Stock,
3,844,200 shares of Class B Common Stock, and 40,375 shares of our Series A
Preferred Stock, which combined represents approximately 71.5% of the voting
power of our outstanding common stock. The Class A Common Stock entitles its
holders to one vote per share, and the Class B Common Stock entitles its
holders to ten votes per share, on all matters submitted to a vote of our
stockholders, including the election of the members of the Board of Directors.
Holders of Series A Preferred Stock are entitled to 145 votes per share, which
equals the number of whole shares of Class A Common Stock into which one share
of Series A Preferred Stock is convertible at March 31, 2003. Accordingly,
Nextera Enterprises Holdings will be able to determine the disposition of all
matters submitted to a vote of our stockholders, including mergers,
transactions involving a change in control and other corporate transactions and
the terms thereof. In addition, Nextera Enterprises Holdings will be able to
elect all of our directors. This control by Nextera Enterprises Holdings could
materially adversely affect the market price of the Class A Common Stock or
delay or prevent a change in control of our company.

Nextera Enterprises Holdings is indirectly controlled by Knowledge Universe,
Inc. Knowledge Universe, Inc. was formed by Lawrence J. Ellison, Michael R.
Milken and Lowell J. Milken to build, through a combination of internal
development and acquisitions, leading companies in a broad range of areas
relating to career management, technology and education and the improvement of
individual and corporate performance. Knowledge Universe, Inc. may form, invest
in or acquire other businesses which are involved in these and related areas,
among others, which businesses may be operated under the control of Knowledge
Universe, Inc. independently of us. Potential conflicts of interest between
Knowledge Universe and us may arise and may not be resolved in our favor. These
potential conflicts of interest include competitive business activities,
indemnity arrangements, registration rights, sales or distributions by Nextera
Enterprises Holdings of our Class A and Class B Common Stock and the exercise
by Nextera Enterprises Holdings of its ability to control our management and
affairs. This control and the potential conflicts of interest it creates could
limit our future independence and harm our reputation.

We were formed in February 1997 by entities which were under the direct or
indirect control of Lawrence J. Ellison, Michael R. Milken and Lowell J.
Milken. After our formation, ownership of our common stock originally held by
our founding entities was transferred to Nextera Enterprises Holdings. Lawrence
J. Ellison, Michael R. Milken and Lowell J. Milken may each be deemed to have
the power to control Knowledge Universe, Inc. As a result, Lawrence J. Ellison,
Michael R. Milken and Lowell J. Milken may each be deemed to have the power to
direct the voting and disposition of, and to share beneficial ownership of, any
shares of common stock owned by Nextera Enterprises Holdings. On February 24,
1998, without admitting or denying any liability, Michael R. Milken consented
to the entry of a final judgment in the U.S. District Court for the Southern
District of New York in Securities and Exchange Commission v. Michael R. Milken
et al., which judgment was entered on February 26, 1998, restraining and
enjoining Michael R. Milken from associating with any broker, dealer,
investment advisor, investment company, or municipal securities dealer and from
violating Section 15(a) of the Exchange Act.

We have a history of losses and there is no assurance that we can achieve or
sustain profitability in the future.

Since our inception in February 1997, we have incurred, on an historical basis,
net losses of $3.0 million and $17.2 million for the years ended December 31,
1997 and 1998, respectively, and net losses of $24.0 million and $117.5 million
for the years ended December 31, 2000 and 2001, respectively.

It is possible that we may not obtain net income in the future.

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If we fail to meet our clients expectations, we could damage our reputation
and have difficulty attracting new business and our engagements may result in
professional liability.

Our client engagements often involve projects that are complex and critical to
the operation of a clients business and involve difficult analytical
assignments that carry risks of professional and other liability. Many of our
engagements involve matters that could have a severe impact on the clients
business, cause the client to lose significant amounts of money, or prevent the
client from pursuing desirable business opportunities. Our failure or
inability to meet either our clients expectations or those of law firms that
engage us in the performance of our services could result in litigation against
us and damage to our reputation, which could adversely affect our ability to
attract new business from that client or others. In addition, if we fail to
perform adequately on a project, a client could refuse to pay or sue us for
economic damages which could further damage our reputation or cause a reduction
in future revenues and operating profits. Litigation alleging that we
performed negligently or otherwise breached our obligations to the client could
expose us to significant liabilities and tarnish our reputation.

We have relied and may continue to rely on a limited number of clients and
industries for a significant portion of our revenues and, as a result, the loss
of or a significant reduction in work performed for any of them could result in
reduced revenues.

We have in the past derived, and may in the future derive, a significant
portion of our net revenues from a relatively limited number of clients. To the
extent that any client or industry uses less of our services or terminates its
relationship with us, our revenues could decline accordingly. Our 10 largest
clients accounted for approximately 33% of our net revenues for the three
months ended March 31, 2003. No client represented greater than 10% of net
revenues for the three months ended March 31, 2003.

The volume of work we perform for a specific client is likely to vary from year
to year, and a significant client in one year may not use our services in
another year. Further, the failure to collect a large account receivable from
any of these clients could result in significant financial exposure. In
addition, any economic conditions or other factors adversely affecting any of
the industries or any increase in the size or number of competitors within the
industries we service could cause our revenues to decline.

Our quarterly revenues and operating results have varied significantly and, if
they continue to do so, the market price of our stock could decline.

Our operating results have varied significantly from quarter to quarter and may
continue to do so in the future. Our quarterly financial results could be
impacted significantly by the timing, mix and number of active client projects
commenced and completed during a quarter, the variations in utilization rates
and average billing rates for our consultants and the accuracy of our estimates
of resources required to complete our ongoing projects. Our operating expenses
are based on anticipated revenue levels in the short-term, are relatively
fixed, and are incurred throughout the quarter. As a result, if expected
revenues are not realized as anticipated, our quarterly and yearly financial
results could be materially harmed.

Government regulation and legal uncertainty relating to our markets could
result in decreased demand for our services, increased costs or otherwise harm
our business causing a reduction in revenues and operating income.

We derive a substantial amount of our net revenues from economic and litigation
consulting services related to antitrust matters, public policy and regulatory
matters, mergers and acquisitions, and securities matters. A substantial
portion of these net revenues were derived from engagements relating to United
States antitrust and securities laws. Changes in these laws, changes in
judicial interpretations of these laws or less vigorous enforcement of these
laws by the United States Department of Justice, the United States Federal
Trade Commission or other federal agencies as a result of changes in
philosophy, political decisions, priorities or other reasons could materially
reduce the magnitude, scope, number or duration of engagements available to us
in these areas.

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In addition, adverse changes in general economic conditions or conditions
influencing merger and acquisition activity could have a continued adverse
impact on engagements in which we assist clients in connection with these types
of transactions. Any reductions in the number of our securities, antitrust and
mergers and acquisitions consulting engagements could cause a reduction in our
revenues and operating income.

If a large client project or a significant number of other client projects are
terminated or reduced, or if we do not attract a sufficient number of new
projects, we may have a large number of employees who are not generating
revenue.

Our clients engage us on a project-by-project basis, primarily without a
written contract, and a client can generally terminate an engagement with
little or no notice to us and without penalty. When a client defers, modifies
or cancels a project, we must be able to rapidly deploy our consultants to
other projects in order to minimize the underutilization of our employees. In
addition, our operating expenses are relatively fixed and cannot be reduced on
short notice to compensate for unanticipated variations in the number or size
of projects in progress. Thus, any termination, significant reduction or
modification of our business relationships with any of our significant clients
or with a number of smaller clients would have an adverse impact on our ability
to generate revenue. As a result, we believe that the number of our clients or
the number and size of our existing projects may not be reliable indicators or
measures of future net revenues.

Loss of or limitations on our net operating loss carryforward.

We have a substantial net operating loss carryforward that may be used in the
future to reduce our federal tax liability. We established a full valuation
allowance against the net operating loss carryforward, along with all other
deferred tax assets, to reflect the uncertainty of the recoverability of this
asset. The utilization of this asset in the future is dependent upon the
Company having positive earnings. Furthermore, the likelihood of an annual
limitation on our ability to utilize our net operating loss carryforward to
offset future U.S. federal taxable income is increased by (i) the issuance of
certain convertible preferred stock, options, warrants, or other securities
exercisable for common stock, (ii) changes in our equity ownership occurring in
the last three years and (iii) potential future changes in our equity
ownership. The amount of an annual limitation can vary significantly based on
certain factors existing at the date of an ownership change. If such
limitations were imposed, they could have a material adverse impact on our
results of operations and cash flows.

Potential conflicts of interests reduce the number of both potential clients
and engagements.

We provide economic and litigation consulting services primarily in connection
with significant or complex transactions, disputes or other matters that are
usually adversarial or that involve sensitive client information. Our
engagement by a client to provide such services frequently precludes us from
accepting engagements with other entities involved in the same matter. In
addition, we may decide to decline engagements due to clients expectations of
loyalty, perceived conflicts of interests or other reasons. Furthermore,
potential clients may decline to request our services due to perceptions of
loyalty, perceived conflicts of interests or other reasons based on matters we
may be currently working on or may have worked on in the past. Accordingly,
the number of both potential clients and potential engagements is limited,
particularly in the economic consulting and litigation services markets.

Potential write-off of goodwill and other intangible assets relating to
personnel could reduce our operating results and stockholders' equity.

As of March 31, 2003, our intangible assets were approximately $77.5 million
and included $77.0 million of goodwill and $0.5 million for intangibles
relating to personnel. Intangible assets had been amortized prior to 2002 on a
straight-line basis principally over 40 years for goodwill and over five years
for intangibles relating to personnel. We ceased amortizing goodwill and
intangible assets relating to personnel commencing January 1, 2002 in
accordance with Statements of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets".

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In accordance with accounting guidelines, we are required to evaluate the
recoverability of goodwill on an annual basis as well as when indications of
possible impairment are present by reviewing the fair value of the goodwill and
comparing such fair value to the carrying value of the associated goodwill. If
goodwill becomes impaired, we will be required to write down the carrying value
of the goodwill and incur a related charge to our operations. A write down of
goodwill would result in a reduction in our operating results.

Our stock price may be volatile and you could lose all or part of your
investment.

We expect that the market price of our common stock will be volatile. Stock
prices in our and similar industries have risen and fallen in response to a
variety of factors, including:



| |  |  | quarter-to-quarter variations in operating results;                                  
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | entering into, or failing to enter into or renew, a material contract;               
|
| |  |  | acquisitions of, or strategic alliances among, companies within our industry;        
|
| |  |  | changes in investor perceptions of the acceptance or profitability of consulting; and
|
| |  |  | market conditions in the industry and the economy as a whole.                        

The market price for our common stock may also be affected by our ability to
meet investors or securities analysts expectations. Any failure to meet these
expectations, even slightly, may result in a decline in the market price of our
common stock. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
prices of securities issued by many companies for reasons unrelated to the
operating performance of these companies. In the past, following periods of
volatility in the market price of a companys securities, securities class
action litigation has often been instituted against that company. If similar
litigation were instituted against us, it could result in substantial costs and
a diversion of our managements attention and resources.

Provisions in our charter documents and Delaware law may delay or prevent an
acquisition of us, which could decrease the value of our common stock.

Provisions of our certificate of incorporation and bylaws and provisions of
Delaware law could delay, defer or prevent an acquisition or change of control
of us or otherwise decrease the price of our common stock. These provisions
include:



| |  |  | authorizing our board of directors to issue additional preferred stock;                                                                                                               
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | prohibiting cumulative voting in the election of directors;                                                                                                                           
|
| |  |  | limiting the persons who may call special meetings of stockholders;                                                                                                                   
|
| |  |  | prohibiting stockholder actions by written consent; and                                                                                                                               
|
| |  |  | establishing advance notice requirements for nominations for election
to the board of directors or for proposing matters that can be acted on
by stockholders at stockholder meetings.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company is exposed to changes in interest rates primarily from our Senior
Credit Facility. We do not currently use interest rate derivative instruments
to manage exposure to interest rate changes. A hypothetical 100 basis point
adverse move in interest rates along the interest rate yield curve would not
have a material adverse effect on interest sensitive financial instruments at
March 31, 2003.

Foreign Currency Risk

Currently, substantially all of the Companys sales and expenses are
denominated in U.S. dollars and as a result we have not experienced significant
foreign exchange gains and losses to date.




Item 4. 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 and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. 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.

Within 90 days prior to the filing date of this Quarterly Report on Form 10-Q,
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 and the Companys 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 management, including
the Chief Executive Officer and Chief Financial Officer, concluded that the
Companys disclosure controls and procedures were effective.

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 of the evaluation referred to above.

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PART II  OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits



| | 10.1* |  | Amendment to Agreement among Nextera Enterprises, Inc.,
Lexecon, Inc. and Daniel R. Fischel dated as of April 24, 2003.
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------
|
| | 10.2* |  | Amendment to Agreement among Nextera Enterprises, Inc.,
Lexecon, Inc. and Dennis W. Carlton dated as of April 18, 2003.
|
| | 99    |  | Additional Exhibits                                                                                                    

| |   |  |                                                                  |  |  |                                                                                                                                                                                                              
| | - |  | ---------------------------------------------------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |  | 99.1                                                             |  |  | Certification of Daniel Fischel, Chief Executive
Officer, furnished pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, and not incorporated by reference
into any 1933 Act registration statement.   
| |   |  |                                                                  |  |  |                                                                                                                                                                                                              
| |   |  | 99.2                                                             |  |  | Certification of Michael Muldowney, Chief
Financial Officer, furnished pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, and not incorporated by reference
into any 1933 Act registration statement.
|
| | * |  | Indicates
a management plan or compensatory plan or arrangement. |  |  |                                                                                                                                                                                                              

(b) Reports on Form 8-K



| | 1. |  | A Current Report on Form 8-K filed on January 3, 2003
disclosing the Second Amended and Restated Credit Agreement, Service
Agreements with key employees and related documents.      
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | A Current Report on Form 8-K filed on February 6, 2003
regarding a press release announcing management changes within the
Company and the resignation of the chief executive officer.
|
| | 3. |  | A Current Report on Form 8-K filed on February 11, 2003
regarding a press release issued with earnings information for the
year ended December 31, 2002.                             




SIGNATURES

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

|      |  |              |  |                                                                                                                                         
|----- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------
|      |  |              |  | NEXTERA ENTERPRISES,
INC.
(Registrant)                                                                                                  
|      |  |              |  |                                                                                                                                         
|Date: |  | May 12, 2003 |  | By:
 /s/ Daniel R. Fischel

Daniel R. Fischel
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
|      |  |              |  |                                                                                                                                         
|Date: |  | May 12, 2003 |  | By:
 /s/ Michael P. Muldowney

Michael P. Muldowney                                                                                     

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|      |  |              |  |                                                                                                                             
|----- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------
|      |  |              |  | Chief Operating
Officer and Chief Financial Officer
(Principal Financial Officer)                                           
|      |  |              |  |                                                                                                                             
|Date: |  | May 12, 2003 |  | By:
 /s/ Michael J. Dolan

Michael J. Dolan
Chief Accounting Officer and Corporate Controller
(Principal Accounting Officer)

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I, Daniel R. Fischel, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Nextera Enterprises,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  | a)designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b)evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| |  | c)presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the
equivalent function):



| |  | a)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003

| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | By: /s/ Daniel R. Fischel

Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)

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##### Table of Contents



I, Michael P. Muldowney, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Nextera Enterprises,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  | a)designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b)evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| |  | c)presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the
equivalent function):



| |  | a)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003

| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | By: /s/ Michael P. Muldowney

Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)

28