SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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


                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                             -----------------

                          COMMISSION FILE NO.: 0-26322


                        EAGLE BUILDING TECHNOLOGIES, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)

               Nevada                                    88-0303769
   ---------------------------------                 -------------------
    (State or other jurisdiction                        (IRS Employer
   of incorporation or organization)                 Identification No.)


             700 East Palmetto Park Road, Boca Raton, Florida 33432
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

                                 (561) 391-7899
                           ---------------------------
                           (Issuer's telephone number)

           225 N.E. Mizner Boulevard, Suite 502, Boca Raton, FL 33432
              -----------------------------------------------------
              (Former name, former address, and former Fiscal Year,
                          if changed since last report)

           Securities registered pursuant to Section 12(b) of the Act:

            None                                                None
    ---------------------                              ----------------------
    (Title of Each Class)                              (Name of Each Exchange
                                                         on which Registered)

               Securities registered pursuant to 12(g) of the Act:

                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of Class)

Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Issuer was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.    Yes { }     No  {x}

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  (X)

State issuer's revenues for fiscal year ended December 31, 2002:    $2,928,164

The aggregate market value of the Registrant's voting stock held by non-
affiliates, based upon the closing sales price for the common stock of $1.40 per
share as reported in the Pink Sheets LLC on June 30, 2003, was approximately
$8,950,000 based on a total of 6,388,731 shares, which total excludes shares of
Common Stock held by each officer and director and by each person known to the
Company to own 5% or more of the outstanding Common Stock. Such shares have been
excluded and such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.


<PAGE>
                        EAGLE BUILDING TECHNOLOGIES, INC.



                               TABLE OF CONTENTS

                                                                         Page
PART I
------

Item 1.  Business......................................................... 3

Item 2.  Properties....................................................... 6

Item 3.  Legal Proceedings................................................ 7

Item 4.  Submission of Matters to a
           Vote of Security Holders....................................... 13

PART II
-------

Item 5.  Market for Company's Common Equity
           And Related Stockholder Matters................................ 13

Item 6.  Management's Discussion and
           Analysis or Plan of Operations................................. 14

Item 7.  Financial Statements and Supplementary Data...................... 16

Item 8.  Change in and Disagreements
           with Accountants on Accounting
           and Financial Disclosure....................................... 16

PART III
--------

Item 9.  Directors, Executive Officers, Promoters
           and Control Persons; Compliance with
           Section 16(a) of the Exchange Act.............................. 17

Item 10. Executive Compensation........................................... 18

Item 11. Security Ownership of Certain
           Beneficial Owners and Management............................... 20

Item 12. Certain Relationships and Related Transactions................... 22

Item 13. Exhibits, Financial Statement
           Schedules and Reports on Form 8-K.............................. 23

SIGNATURES ............................................................... 27


                                       1
<PAGE>
                                     PART I

                           Forward Looking Statements

         The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The forward-looking statements
contained in this Form 10-KSB are subject to certain assumptions, risks and
uncertainties. Actual results could differ materially from current expectations.
Among the factors that could affect the Company's actual results and could cause
results to differ from those contained in the forward-looking statements
contained herein is the Company's ability to implement its business strategy
successfully, which will depend on business, financial, and other factors beyond
the Company's control, including, among others, prevailing changes in consumer
preferences, access to sufficient quantities of raw materials, availability of
trained labor and changes in industry regulation. There can be no assurance that
the Company will continue to be successful in implementing its business
strategy. Other factors could also cause actual results to vary materially from
the future results covered in such forward-looking statements. Words used in
this Form 10-KSB, such as "expects", "believes", "estimates", and "anticipates"
and variations of such words and similar expressions are intended to identify
such forward- looking statements.

         On February 14, 2002, the Company informed the Securities and Exchange
Commission and requested that trading in the Company's common stock be suspended
because the Company believed that its financial statements for prior years had
to be restated. The Company consented to the entry of a preliminary injunction
brought against it by the Securities and Exchange Commission ("SEC") enjoining
further violations of the Securities laws and proceeded to revise its financial
reports. These events were brought about by the Company's discovery in February
2002 that its CEO, Anthony D'Amato, had falsified reports of its earnings from
operations in India for the years 2000-2001 and that these earnings were
intentionally fabricated by Mr. D'Amato.

         Trading in the Company's stock was allowed to resume on March 1, 2002.



                                       2
<PAGE>

ITEM 1.   BUSINESS
          --------

General

         Eagle Building Technologies, Inc. (the "Company") is a Nevada
corporation involved in several facets of the concrete masonry products
industry, including 1) the manufacture of concrete products manufacturing
equipment, plants, and accessories; 2) the wholesale manufacture of masonry
materials for the construction trade; and 3) the development of affordable
housing projects utilizing proprietary masonry construction methods. The Company
also has a holding in an allied building materials business which fabricates
specialty doors and entrance systems.

         The Company has certain rights to market the Integrated Masonry
Systems, Inc. ("IMSI") patented technology and trademarks in Mexico, India,
China and Puerto Rico. The Company is attempting to establish itself in the
masonry products and real estate markets by offering a unique high strength
insulated masonry wall system that affords significant advantages in terms of
thermal efficiency, strength, ease of construction and overall cost savings.
(See below "Mortarless Wall Systems")

Operations

Masonry Products Manufacturing Systems

Fleming Manufacturing Company

         As of October 2000, the Company acquired all of the issued and
outstanding securities of Fleming Manufacturing Company, Inc. ("Fleming
Manufacturing"), a Missouri corporation located in Cuba, Missouri, from William
M. Fleming ("Fleming") for an aggregate purchase price of $3,875,000. The
Company is financing the acquisition via a Note and purchase money security
interest in favor of Fleming. The Company has negotiated a restructure of the
Fleming Note.

         Fleming Manufacturing has been in business for almost 60 years. It is
one of the leading U.S. companies principally engaged in the manufacture of
concrete masonry products machinery, plant systems, components and accessories
and is the leader in the manufacture of mobile block equipment and related
products to the concrete products industry. Fleming Manufacturing makes a mobile
block plant for the production of mortarless block and pavers on site.

Affordable Housing

Eagle Building Technologies of Puerto Rico, Inc.

         Eagle Building Technologies of Puerto Rico, Inc. ("EPR") is a
wholly-owned subsidiary of the Company organized and existing under the laws of
the Commonwealth of Puerto Rico in January 2002, for the purpose of producing
the components of high quality advanced mortarless wall systems and delivering
on site erection of the wall systems. EPR is currently producing wall components
under license from IMSI at a five (5) acre facility located in Salinas, Puerto
Rico. The entire production of this facility will be dedicated to facilitating
the Law 124{1} development in Salinas that is contiguous to the production
facility.

                                       3
<PAGE>

Salinas Developers Group, Inc.

         Salinas Developers Group, Inc. ("SDI"), is a Puerto Rican corporation
of which seventy-five percent (75%) is owned by the Company. The Company agreed
to purchase its seventy-five percent (75%) stock position from existing
shareholders in 2001 and finished paying for its shares in the first quarter of
2002.

         SDI is authorized to build approximately 170 Law 124 homes(1) on real
property it owns in Salinas, Puerto Rico. These homes will sell for
approximately $70,000 each. SDI is currently negotiating construction and
permanent take-out financing with Doral Bank in Puerto Rico. SDI has contracted
with JRC Construction, a well respected builder in Puerto Rico to be the General
Contractor for the project and anticipates that JRC Construction will be its
general contractor for subsequent projects.

         The Company has identified several projects in addition to the one at
Salinas and the Company has strong expressions of interest from Doral Bank to
provide the required financing for those projects. The demand for durable, cost
efficient, low and moderate income housing in Puerto Rico is very high and the
government of Puerto Rico is committed to increasing the supply of such housing
with a goal of 60,000 units over the next three years.

Concrete Masonry Products

Great Wall New Building Systems

         Through its wholly-owned subsidiary, Great Wall New Building Systems,
Inc., the Company controls a concrete products operation in Beijing China under
the auspices of a 55-45 joint venture with a Beijing municipally-owned real
estate development company, Beijing- Mi Yun Real Estate Development Company
("MYRE"). (See MYRE web site HTTP://WWW.FDCMY.COM )

         The joint venture facility is situated on a 15 acre site approximately
45 miles northeast of the Beijing Capital International Airport in Beijing Mi
Yun County which is one of several new "satellite cities" under the control of
the Beijing municipality. The area has benefited from over $2 billion in
infrastructure development and is a new center for light industry, higher
education and municipal administration. Thus, Beijing Mi Yun supplies a ready
market for the Company's joint venture products and services, with over 100,000
new housing units planned for new construction in the next several years and
with MYRE involved in a major portion of the construction and development work.

         The heart of the operation is a state of the art Fleming "Eagle"
concrete products casting machine capable of producing more than 3 million
concrete masonry units annually per 8 hour shift. In addition the plant
manufactures local product using traditional Chinese "wet cast" methods and is
presently producing pavers for several MYRE projects using this method pending
the shipment of molds and accessories for high-speed mass production of such
products starting in mid Summer 2003.

         The market for concrete masonry products in Beijing is especially
promising given the anticipated spike in residential construction prior to the
2008 Olympics and in light of governmental policies to prohibit the use of red
clay masonry due to the deleterious effect of the harvesting of this clay upon
agricultural topsoil.

         Given the relative assuredness of the local market, the Company's main
challenge is to install sufficient production capacity to meet known and
anticipated demand and maximize output. To this end, the Company is coordinating
supply arrangement for the China operation among its Great Wall subsidiary,
Fleming and the Chinese joint venture.

----------------
(1) Law 124 is a Puerto Rican housing program that subsidizes the down payment
and financing of homes for low and moderate income families.

                                       4
<PAGE>

Specialty Systems

Master Holdings

         The Company has concluded arrangements in the acquisition of a minority
interest (16%) of Master Srl ("Master") of Italy (HTTP://WWW.MASTERDOOR.IT),
through Master Holdings LLC, which was formed for the purpose of completing the
Company's previously reported planned acquisition of Master. Master is a
fabricator of advanced design armored doors. Master started designing and
manufacturing armored doors in 1978. Continuous investments in technology and
the development of new products have allowed Master to consolidate its ranking
amongst the leading manufacturers in the Italian market and to successfully
penetrate major European and International markets.

Mortarless Wall Systems

         The Company owns an interest in the stock of IMSI, Inc. which owns
patent rights to the IMSI Wall System. The investment in IMSI has been included
in intangible assets as part of the Company's overall plan to secure rights to
the related patents and licenses. This system features insulated reinforced
masonry that is dry-stacked. IMSI blocks have cavities in which insulation is
embedded to provide thermal stability without sacrificing structural integrity.
Mortarless wall systems do not require mortar between the individual blocks but
rather use a system of interlocking materials and an internal reinforcement grid
of cement and rebar in combination with a surface- bonding compound composed of
cement, chopped fiberglass and other materials to provide a weather resistant,
structurally sound and impermeable surface. Other mortarless wall systems
available to the Company vary in some degree from the IMSI system with the
primary deviation being in the quality of thermal insulation.

         The advantages of the mortarless wall systems delivered by the Company
are:

     *   Cost competitive
     *   Airtight
     *   Engineered for seismic conditions * Engineered for hurricane conditions
     *   Low maintenance costs * Environmentally friendly * Quick installation
     *   Ease of installation; semiskilled workers can be quickly and easily
         trained
     *   Flexibility of use; commercial, industrial, residential,
         institutional, and governmental construction

Other Subsidiaries

         As previously reported, the Company has divested its ownership in
Business Dimensions Inc. and has ceased all connection with Eagle Fuller
International and Eagle Building Technologies, Private Ltd. of India and Jayant
Tipnis Consultants, PL (JTCPL). In addition, the company's subsidiary, Bullhide
Corporation ceased operations in the first quarter of 2002. The Company has
closed Eagle Italia Srl, which was formed to acquire Master. In lieu thereof,
the Company, as noted above, is an investor in Master Holdings.

Employees

         As of December 31, 2002, the Company, inclusive of wholly-owned
subsidiaries had a total of 45 employees broken down as follows: 3 employees at
the corporate headquarters, 2 employees for the China subsidiary and 40
employees for Fleming Manufacturing Corp.


                                       5
<PAGE>

Competition

         The Company's operations are all specialized niche activities in the
building materials and industrial machinery production sectors. As a result, the
Company believes that competitive risks are fairly low and that its main
challenge is to ensure adequate capacity to respond to specialized market demand
for its products and services. For example, Fleming Manufacturing is one of
three U.S. manufacturers of concrete masonry products manufacturing machinery
and within its sector, total market demand exceeds industrial capacity. Similar
circumstances pertain in China. In Puerto Rico, the Company's development rights
are exclusive at its operating sites.

Government Regulation

         The Company's use of proprietary masonry construction methods is
subject to local building code approval and/or compliance and governmental
inspections. The Company's sale of homes in Puerto Rico is also subject to the
requirements of Public Law 124 which defines certain aspects of eligibility for
subsidized housing.

         In China, the Company's joint venture operations are subject to The Law
Of The People's Republic Of China On Joint Ventures Using Chinese and Foreign
Investment and Beijing municipal laws and regulations based thereon. In
addition, all products produced in China are subject to various quality control
standards, certifications and quality inspections.

ITEM 2.   PROPERTIES
          ----------

         The Company currently manufactures products at two (2) facilities,
leases two (2) separate facilities for administrative and manufacturing
purposes, and utilizes one (1) office maintained by joint venture partners at no
cost, as follows:

         Boca Raton, Florida - The Company maintains its principal
administrative offices via a sublease from M.A. Berman Company. M.A. Berman
Company is owned and controlled by Meyer A. Berman, the Company's Chairman and
largest shareholder. The sublease is based upon an oral month-to-month
understanding whereby the Company pays M.A. Berman Company $20,000 per month for
the space, telephone and internet connections, office equipment, and the
services of four (4) M.A. Berman Company staff members for administrative
support

         Salinas, Puerto Rico - Salinas Developers Group, Inc. owns twenty (20)
acres of developmental real property in Salinas, Puerto Rico. The twenty (20)
acres is subject to a note and purchase money mortgage in the approximate amount
of $500,000. The note has matured and the Company has agreed to pay this note at
the closings of the first 23 homes sold anticipated to be in July of 2003.
Additionally, the twenty (20) acres is subject to liens filed by general
contractors for services rendered in connection with improvements to the real
property.

         Salinas, Puerto Rico - Eagle Building Technologies of Puerto Rico, Inc.
owns five (5) acres of real property in Salinas, Puerto Rico. The real property
is free and clear of all liens and encumbrances. The property is improved and
suitable to house EPR's administrative offices and production facilities.

         Cuba, Missouri - The Company owns a 20,000 square foot manufacturing
and warehouse facility located in Cuba, Missouri (outside St. Louis). The
facility is approximately 35 years old. The facility encompasses the
manufacturing operation of Fleming Manufacturing Company, a wholly-owned
subsidiary of the Company. The facility is used to manufacture mobile block
plants. The facility has no room for expansion as demand may necessitate;
however, the Company also leases an additional 32,000 square foot manufacturing
facility conveniently located adjacent to the owned facility at a cost of $4,000


                                       6
<PAGE>

per month. The lease is for a ten (10) year term commencing January 1, 2001. The
Company has a right of first refusal to acquire the leased premises and an
option to purchase the leased premises during the initial ten (10) year term of
the lease for the appraised value of the premises. The facilities leased by the
Company are well maintained. Both facilities are adequately insured and in
substantial compliance with environmental laws and regulations.

         Mi Yun, China - The Mi Yun joint venture owns its land and improvements
including a factory building and on-site administrative offices and various
other adjacent buildings used for an in-house materials laboratory and employee
cafeteria.


ITEM 3.   LEGAL PROCEEDINGS
          -----------------

         From time to time, the Company may be involved in litigation that
arises in the normal course of business operations.

Securities and Exchange Commission

         SEC v. Eagle Building Technologies, Inc. and Anthony D'Amato (Civil
Action No. 1:02CV397ESH D.D.C.) The SEC and the Company agreed to settle the
lawsuit in May 2002. The Court signed the settlement papers on or about May 30,
2002, entering a permanent injunction against the Company for any future
violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the
Securities Exchange Act of 1934, and Rules 10b-5, 12b- 20, 13a-1, 13a-13, and
13b2-1. The Company made no admission or denial of liability in connection with
the settlement.

         In March 2003, Anthony D'Amato was ordered to forfeit $56,623 in
trading profits plus prejudgment interest of $5,637, and agreed to cancel
367,742 shares of Eagle Building stock, including 286,500 shares of stock he
received as compensation for acting as an officer and director of the Company
and an additional 81,242 shares to satisfy the requirement that he repay his
trading profits and prejudgment interest that had been given as part of his
compensation.

         In October 2002, D'Amato consented to entry of a permanent injunction
that prohibits him from making false statements in press releases and reports
made to the SEC, creating false business records, and providing false
information to the Company's auditors in violation of the anti-fraud, periodic
reporting and internal record-keeping provisions of Sections 10(b) and 13(b)(5)
of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13b2-1, and
13b2-2. D'Amato is also barred from serving as an officer or director of any
publicly traded company.

         Mr. D'Amato pleaded guilty in a criminal case to one count of
securities fraud in the Southern District of Florida before United States
District Judge Jose E. Martinez, and is scheduled to be sentenced criminally for
his conduct in relation to the Company in July. Pursuant to the Victims Recovery
Act, the Company intends to file a claim for restitution.

Class Actions

         As previously reported, the Company has been named as a defendant in
various class action suits alleging securities violations by Eagle pursuant
generally to Section 10(b) and 20(a) of the Exchange Act and Sec Rule 10b-5
promulgated thereunder. The complaints generally allege that Eagle intentionally
perpetrated a fraud upon the public by the dissemination of false and misleading
information.

         By order dated July 31, 2002, the United States District Court for the
Southern District of Florida consolidated all of the class action cases,
appointed certain parties as lead plaintiffs and the attorneys for the
plaintiffs as lead co-counsel for the class. The new case is styled In Re Eagle
Building Technologies, Inc., Securities Litigation, Case Number
02-80294-CIV-RYSKAMP.

                                       7
<PAGE>

         Kelso Capital et al. v. Eagle Building Technologies, Inc., Anthony
D'Amato, Paul-Emile Desrosiers and Tanner + Co. (Southern District of Nevada,
Civil Case No. CV-S-02-0367-PMP-PAL, filed March 15, 2002)

         Alan Davidson and Victor Kashner v. Eagle Building Technologies, Inc.
(United States District Court, Southern District of Florida, Case No.
02-80323-CIV-RYSKAMP, filed March 26, 2002)

         Marc Newman, Kenneth Wait, Dr. Anthony Roberts and Dana Davis, et al.
v. Eagle Building Technologies, Inc., Anthony D'Amato, Dr. Ralph Thomson, Andros
Savvides, Wilfred G. Mango, Jr., Donald Pollock, Robert Kornahrens, Charles A.
Gargano, Samuel Gejedson, Meyer A. Berman and Tanner + Co. (United States
District Court, Souther, District of Florida, Case No. 02-80294-CIV-RYSKAMP,
filed April 5, 2002)

         Inglewood Holdings, Ltd. V. Eagle Building Technologies, Inc., and
Anthony D'Amato (United States District Court, Southern District of Florida,
Case No. 02-80340-CIV-MIDDLEBROOKS, filed April 16, 2002)

         David D. Pain v. Eagle Building Technologies, Inc. and Anthony D'Amato
(United States District Court, Southern District of Florida, Case No.
02-80372-CIV-HURLEY, filed April 24, 2002)

         Jeff Gass v. Eagle Building Technologies, Inc., Anthony D'Amato,
Paul-Emile Desrosiers and Tanner + Co. (United States District Court, District
of Nevada, Case No. CV-S-02-0640-PMP-RJJ, filed May 6, 2002)

         [Robert Gluck v. Eagle Building Technologies, Inc. et al. (United
States District Court, Southern District of Florida, Case No. 02-CV- 80302,
filed April 8, 2002{2})]

         Guerrilla IRA Partners, L.P. v. Eagle Building Technologies, Inc. and
Anthony D'Amato (United States District Court, Southern District of Florida,
Case No. 02-CV-80403, filed May 3, 2002)


                                       8
<PAGE>

Additional Securities Litigation
--------------------------------

         Deborah Donoghue v. Eagle Building Technologies, Inc., U.S. District
Court for the Southern District of New York Case 03CV2472. This stockholder's
derivative suit seeks to recover alleged "short swing" profits realized by
certain beneficial owners of the Company's common stock in violation of Section
16(b) of the Securities Exchange Act of 1934. The Company's position is that the
claims are satisfied because the proceeds of such sales in excess of any
imputable profits were given over to the Company and/or, in any case, many of
the transactions identified in the claims are exempt transactions. A pre-trial
conference has been scheduled in the case.

         Mark Neuman v. Anthony D'Amato, et al. and Eagle Building Technologies,
Inc. (as a nominal defendant) (15th Judicial Circuit in and for Palm Beach
County, Florida, Case No. CA 02-05560-AG). This complaint was filed on May 9,
2002, as a shareholders derivative action alleging breach of fiduciary duty,
misappropriation of confidential information, and contribution and
indemnification. The Plaintiff is seeking damages in excess of $15,000. The
Company filed a motion to dismiss the complaint on July 3, 2002. The Court has
not yet issued a ruling on the motion. No discovery has occurred and no trial
date has been set. We are unable to express an opinion regarding the outcome of
this litigation or as to any potential loss or range of loss to the Company in
the event that either a favorable or unfavorable outcome results. Co-Defendant
Robert Kornahrens recently filed a cross-claim for legal fees against the
Company.

         Anthony I. Bentley, James Bruce Whiting and Beverly D. Whiting v. Eagle
Building Technologies, Inc. (Third Judicial District Court, Salt Lake City,
Utah, Case No. CA 02-0901808). The complaint alleges breach of contract, unjust
enrichment and conversion for failure to issue securities to the Plaintiffs.

         Trust #191190MAN(A) v. Eagle Building Technologies, Inc. et al. (US
District Court, District of Utah, Central Division, Case No. 02-CV-202CV-
0502ST). This is an action brought by a Trust whose agent is Clealon B. Mann.
The Trust's sole cause of action is brought under RICO and alleges that Eagle
failed to remove the Rule 144 legend from 8,333 shares of Eagle stock, claimed
the shares were attached pursuant to a pending lawsuit, and titling shares in
the name of Clealon Mann. Plaintiff's claimed damages are the amount of the
Eagle shares at the time it would have sold them. However, Plaintiff does not
indicate when such a sale would have occurred. As with the McConkie lawsuit,
General Securities Transfer Agency (GSTA) and Iverna Morgan, GSTA's president,
were named as defendants and Eagle has agreed to indemnify them. The Company is
defending this action based upon the following grounds: (a) the shares were
titled in the name of the trust, and listed Mann only as trustee; (b) the shares
were issued without restriction in August 2000; and (c) at least two writs of
execution were issued in 2001, both of which specifically attached the Trust's
shares and prevented the sale of said shares. The Company has filed an answer to
the Complaint denying all allegations.

         F. Briton McConkie and Stephen R. Fey v. Eagle Capital International,
and General Securities Transfer Agency, Inc. (United States District Court for
the Central Division of Utah, Civil Case No. 2:01-CV0-0950 ST). This is an
action brought by Brinton McConkie and Stephen Fey on the grounds of breach of
contract. The plaintiffs allege that Eagle wrongfully refused to transfer
200,000 shares, represented by certificates number 432114 and 432119. Plaintiffs
have produced affidavits of Doug Dent and Ralph Thompson, former members of the
Eagle Board of Directors, in which both men state that the shares were properly
issued. The potential damages in this matter would likely be the value of the
shares in April 2001, when Plaintiffs initially requested the shares
transferred. The Company's asserted defense is that the shares in question were
never properly issued and there was a lack or failure of consideration.
Discovery has just begun. Additionally, GSTA, the agency handling Eagle's stock
certificates, was named as a defendant. Eagle has agreed to indemnify GSTA in
this matter.

                                       9
<PAGE>

Other Litigation
----------------

         Polysolutions Corp. and Bullhide Liner of Broward County, Inc. v. Eagle
Capital International, Inc. (14th Judicial Circuit Court in and for Palm Beach
County, Florida, Civil Case No. CA-01-9017AB). The complaint was filed on
September 4, 2001. On or about April 23, 2002, Plaintiffs sought to amend the
complaint to name Anthony D'Amato, Ralph Thomson, Richard Lahey, Andros
Savvides, Wilfred Mango, Donald Pollack, Robert Kornahrens, Charles Gargano,
Samuel Gejdenson, Meyer Berman, Howard Ash, and Bruce Mauldin as individual
defendants. The Amended Complaint alleges counts for breaches of contract, fraud
in the inducement and breach of fiduciary duty. The Company is presently
substituting the law firm of Adorno and Yoss, located in Miami, West Palm Beach,
Boca Raton and Fort Lauderdale, and Naples Florida, as counsel in this matter. A
cross claim was recently filed by former Director Kornahrens in this matter,
complaining that the Company was failing to honor its obligations to defend him.
The Company believes that this cross claim will be withdrawn in light of the
substitution of new counsel.

         Actionable Intelligence Technologies, Inc. v. Eagle Building
Technologies, Inc. (15th Judicial Circuit in and for Palm Beach County, Florida,
Civil Case No. CA 02-03197 AB). A complaint was filed on March 12, 2002, by a
company based in San Diego, California, arising out of the Company's alleged
breach of a contract between the parties, and seeking damages in excess of
$15,000. The plaintiff claims that the Company owes more than $820,000.00 for
consulting services rendered, and up to $5,000,000.00 for services that were to
be performed in the future. On April 30, 2002, the Company filed an answer to
the complaint denying liability and asserting several affirmative defenses.
Discovery is in its preliminary stages. No trial date has been set, but the case
is subject to mandatory mediation. Failing settlement, the Company intends to
defend this action vigorously. We are unable to express an opinion regarding the
outcome of this litigation or as to any potential loss or range of loss to the
Company in the event that either a favorable or unfavorable outcome results. The
Company is presently substituting the law firm of Adorno and Yoss, located in
Miami, West Palm Beach, Boca Raton and Fort Lauderdale, and Naples Florida, as
counsel in this matter.

         Taskin Ticaret, LTD. v. Fleming Manufacturing Company, Inc. (Circuit
Court for Crawford County, Missouri, Case No. CV100-269CC). A judgment of
$119,215 was entered into against Fleming on May 29, 2002 following a two day
jury trial. Because all of the assets of Fleming serve as collateral to lending
institutions or other secured creditors, Fleming does not have the authority or
ability to pay the judgment. The matter is on appeal.

         J.C. Group Corp. and Jose A. Camacho v. Salinas Developers, Inc., Eagle
Building Technologies (Civil No. G-CD2002-0109; Sala 302) On April 18, 2002,
Plaintiffs J.C. Group, Inc. ("J.C. Group") and Jose A. Camacho ("Camacho") filed
a complaint against Salinas Development Group, Inc. ("SDG"), a Puerto Rico
corporation controlled by the Company and Eagle Building Technologies, of Puerto
Rico, Inc. ("Eagle-PR"), a wholly-owned subsidiary of the Company in the Federal
District Court of the Commonwealth of Puerto Rico claiming $1,260,299 plus
damages and legal fees. SDG timely filed the Answer to the Complaint and a
Counterclaim. SDG alleges in its Counterclaim that Plaintiffs owe $4,110,000 to
SDG on account of fund deviation, false and excessive invoicing and damages.
Eagle-PR filed a motion for summary judgment based on the fact that it is not
liable for the acts of SDG and that Eagle-PR is not the stockholder of SDG. In
addition, SDG filed a Third Party Complaint against Camacho for $5,910,000
claiming: 1) poor performance as project manager; 2) fund deviation; 3) false
invoicing; 4) purchase of land in his own name with SDG funds; 5) breach of
fiduciary duty; 6) interference with SDG's business; and 7) failure to make
capital contributions. On June 20, 2002, Plaintiffs filed an Amended Complaint
against SDG and Eagle-PR, and increased the amount claimed to $2,872,857.29,
including the lost profits of Camacho. As of the date of this filing, because of
the complex nature of the matters involved, the outcome of this case cannot be
predicted.


                                       10
<PAGE>

         Paul-Emile Desrosiers v. Eagle Building Technologies, Inc. (15th
Judicial Circuit in and for Palm Beach County, Florida, Civil Case No. CA
02-03431 AA). This is an action filed against the Company on April 1, 2002, by
the former President and Chief Executive Officer of the Company seeking damages
in excess of $15,000 for allegedly owed compensation and reinstatement as an
officer and director. The Company filed a motion to dismiss five of the six
counts in the complaint; the Court heard oral argument on June 28, 2002. On July
25, 2002, the Court dismissed without prejudice the counts seeking declaratory
relief and damages for retaliation, while dismissing with prejudice the counts
requesting injunctive relief. The only count remaining at the time of this
Report is Desrosiers's claim for Breach of Contract. Discovery is in its
preliminary stages. The Company is presently substituting the law firm of Adorno
and Yoss, located in Miami, West Palm Beach, Boca Raton and Fort Lauderdale, and
Naples Florida, as counsel in this matter.

         Jennifer Nina v. Eagle Building Technologies, Inc. (15th Judicial
Circuit in and for Palm Beach County, Florida, Civil Case No. CA 02- 4297AE).
This complaint was filed April 10, 2002, alleging claims for unlawful
termination, retaliation, breach of contract and unpaid wages, and seeking
damages in excess of $15,000.00. On or about May 6, 2002, the Company filed a
motion to dismiss certain claims, which alleged retaliatory discharge. The
Court, by order entered June 26, 2002, granted that motion, dismissing those
claims without prejudice. Discovery is in the preliminary stages. A trial date
is set, but the case is subject to mandatory mediation. Failing settlement, the
Company intends to defend this action vigorously. We are unable to express an
opinion regarding the outcome of this litigation or as to any potential loss or
range of loss to the Company in the event that either a favorable or unfavorable
outcome results. The Company is presently substituting the law firm of Adorno
and Yoss, located in Miami, West Palm Beach, Boca Raton and Fort Lauderdale, and
Naples Florida, as counsel in this matter

         Julio Cruz, Jr. v Eagle Building Technologies, Inc. ((15th Judicial
Circuit in and for Palm Beach County, Florida, Civil Case No. CA 02- 005668-AF).
This is an action filed on May 15, 2002, by a former employee of the Company
seeking damages in excess of $15,000 for wrongful termination, retaliation,
unpaid wages, and breach of contract. The Company filed a motion to dismiss
certain claims, which alleged retaliatory discharge. The Court has not yet ruled
on that motion, although Plaintiff's counsel has agreed to entry of an order
dismissing these claims without prejudice. Discovery is in the preliminary
stages. No trial date has been set. A trial date is set, but the case is subject
to mandatory mediation. Failing settlement, the Company intends to defend this
action vigorously. We are unable to express an opinion regarding the outcome of
this litigation or as to any potential loss or range of loss to the Company in
the event that either a favorable or unfavorable outcome results. The Company is
presently substituting the law firm of Adorno and Yoss, located in Miami, West
Palm Beach, Boca Raton and Fort Lauderdale, and Naples Florida, as counsel in
this matter.

         Gina Nicoleau v. Eagle Building Technologies, Inc. (15th Judicial
Circuit in and for Palm Beach County, Florida, Civil Case No. CA-02- 05675-AH).
This complaint was filed on June 14, 2002, by a former employee of the Company
seeking damages in excess of $15,000 for wrongful termination, retaliation,
unpaid wages, and breach of contract. Plaintiff's counsel has advised us that he
intends to amend the complaint to drop the retaliatory discharge claims.
Discovery is in the preliminary stages. A trial date is set, but the case is
subject to mandatory mediation. Failing settlement, the Company intends to
defend this action vigorously. We are unable to express an opinion regarding the
outcome of this litigation or as to any potential loss or range of loss to the
Company in the event that either a favorable or unfavorable outcome results. The
Company is presently substituting the law firm of Adorno and Yoss, located in
Miami, West Palm Beach, Boca Raton and Fort Lauderdale, and Naples Florida, as
counsel in this matter.


                                       11
<PAGE>

         A.R.H. Family et al. v. Eagle Building Technologies, Inc., Cause Number
GN203813, 345th Judicial District, Travis County, Texas.; La Petrona Ltd. v.
Eagle Building Technologies, GN300161, 250th Judicial District, Travis County
Texas. These suits allege that the Company fraudulently solicited investment
monies from a syndicate of individual investors organized by their investment
advisor Lee Urbina. The Company takes the position that the fraud was
perpetrated on these investors by Anthony D'Amato on his own account and without
the knowledge of the Company through the creation of an investment vehicle
entirely under his personal control, without authorization of the Company, and
for his own purposes.

         Eagle Building Technology Inc., v. Zurich American Insurance Comapany,
02-22611-CIV-Ryskamp, U.S. District Court for the Southern District of Florida.
This case approved a settlement between the Company and its insurance carrier
whereby certain funds were released to the Company pursuant to a binder for D&O
and liability coverage. Under the terms of the Settlement, the former officers
are barred from claiming coverage under the binder and the funds are available
to the Company for the costs of defending liability claims asserted against the
Company.

         IMSI, Inc. v. Eagle Building Technologies, Inc., U.S. District Court,
Central Division, Utah. The suit seeks damages and an injunction for alleged
infringement of IMSI patents related to the Company's use of the IMSI system in
Puerto Rico. The Company is of the view that the claims have no merit. The
Plaintiff has not moved for specific relief in connection with the Company's
projects in Puerto Rico.

Threatened Litigation

         Claims by Cheryl Ray. Ms. Ray is the surviving spouse of Herbert Ray, a
founding member of IMSI. Upon Herbert's death, Ms. Ray received 2,000,000 IMSI
shares. In January 1999, Ms. Ray agreed to exchange her IMSI shares for Eagle
Shares. Ms. Ray alleges that in June 2000, Anthony D'Amato, then President and
CEO of Eagle, informed her that her original IMSI shares were being cancelled
and that there had been insufficient consideration for the 1999 stock exchange.
According to Ms. Ray, she then agreed to return all but 500,000 common shares.
Ms. Ray now alleges that she was defrauded by Mr. D'Amato and Eagle. In November
2001, she issued a demand letter for $2,500,000, or the value of her original
shares. In February 2002, Ms. Ray threatened legal action.


                                       12
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

        None.

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
          --------------------------------------------------------

         The Company's common stock began trading on the National Association
for Securities Dealers, Inc.'s OTC Bulletin Board in the last quarter of 1996,
and is currently trading under the symbol "EGBT". Set forth below is the range
of high and low bid information for the Company's common stock for the two most
recent fiscal years. This information represents prices between dealers and does
not reflect retail mark-up or mark-down or commissions, and may not necessarily
represent actual market transactions.

       Fiscal Period                      High Bid       Low Bid
       -------------                      --------       -------

       2001:
       -----
       First Quarter..................... $  5.58        $  1.68
       Second Quarter....................    7.29           2.50
       Third Quarter.....................    8.59           3.35
       Fourth Quarter....................   12.10           5.25

       2002:
       -----
       First Quarter..................... $ 12.40        $  1.38
       Second Quarter....................    3.95           2.30
       Third Quarter.....................    3.08           2.30
       Fourth Quarter....................    2.95           1.20

       2003:
       -----
       First Quarter..................... $  3.25        $  1.00
       Second Quarter
         (through June 30, 2002)......... $  2.30        $  1.05

         As of June 30, 2003, there were approximately 532 record holders of the
Company's outstanding Common Stock. Since additional shares of the Company's
Common Stock are held for stockholders at brokerage firms and/or clearing
houses, the Company was unable to determine the precise number of beneficial
owners of its Common Stock as of June 30, 2003.

         The Company has never declared or paid cash dividends on its capital
stock and the Company's Board of Directors intends to continue that policy for
the foreseeable future. Earnings, if any, will be used to finance the
development and expansion of the Company's business. Future dividend policy will
depend upon the Company's earnings, capital requirements, financial condition
and other factors considered relevant by the Company's Board of Directors and
will be subject to limitations imposed under Delaware law.



                                       13
<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
          ---------------------------------------------------------

         The analysis of the Company's financial condition, liquidity, capital
resources and results of operations should be viewed in conjunction with the
accompanying financial statements including the notes thereto.

General

         The Company was incorporated in Nevada in 1994 under the name IAC, Inc.
and has since changed its name to Eagle Building Technologies, Inc. During 1998,
the Company acquired the assets of IMSI CapFund, Inc. ("CapFund"). CapFund
utilized the IMSI{R} Block System which, today, through licensing agreements
between the Company and IMSI, is the preferred technology of the Company.

         As of December 31, 2002, the Company controlled and operated
subsidiaries including the following consolidated subsidiaries, Great Wall
Building Systems, Inc., Fleming Manufacturing Company, Salinas Development
Corporation and Eagle Building Technologies of Puerto Rico and a 16% interest in
Master Holdings.

Financial Condition

         At December 31, 2002, the Company had total assets of $10,699,268 as
compared to total assets of $15,876,397 at December 31, 2001; total
liabilities(2) of $25,704,104 as compared to $18,954,253 in 2001; total
stockholders' deficit of $16,173,584 as compared to $4,246,604 in 2001. The
increase in stockholders' deficit during the year ended December 31, 2002 was
the result of operational losses in the year 2002, the impairment of the value
of certain tangible and intangible assets due to changes in conditions and
assumptions and settlement costs claims and litigation. Impairment losses and
settlement costs claims and litigation recorded during the years ended December
31, 2002 and 2001 were as follows:

                                                         2002           2001
                                                         ----           ----

   Impairment of goodwill related to the Company's
    investment in:
      Great Wall Building Systems, Inc.                   -           $1,696,309
      Fleming Manufacturing                           1,208,991           -
      Salinas Development                             1,096,234           -
  Impairment of Investment in Unconsolidated
   Subsidiaries:
      Master Door                                         -            3,581,183
      China Joint Venture                                 -              622,618

   Impairment of Property and Equipment                   -              399,600
   Impairment of License Rights                       4,030,797
   Settlement Costs Claims and Litigation               858,476        4,012,427

-------------
(2)  As a result of the Company's investigation in connection with the
     restatement of its 2001 financials, the Company believes that there may be
     third parties to whom Anthony D'Amato, the Company's former Chairman and
     CEO, has obligated, or made representations purporting to obligate, the
     Company, or to issue equity in the Company without the knowledge or
     authorization of the Company's Board of Directors. The Company will
     continue to investigate and determine the validity of any such third party
     claims on a case by case basis. At the time of this filing, the Company
     cannot determine the financial impact, if any, to the Company as a result
     of Mr. D'Amato's actions.


                                       14
<PAGE>

Liquidity and Capital Resources

         As of December 31, 2002, the Company's cash totaled $141,066 as
compared to $174,686 at December 31, 2001, a decrease of $33,620. Net cash used
in operations in 2002 was $7,123,502 compared to $6,523,129 in 2001. During the
years 2002 and 2001 the Company did not generate cash flow sufficient to meet
operating requirements. The Company funded this deficiency in 2002 and 2001
primarily through proceeds from notes payable in the approximate amount of
$6,800,000 and $9,500,000 and cash proceeds from the sale of common stock in the
approximate amount of $986,000 and $4,231,000, respectively.

         On July 2, 2001, the Company raised $5,340,000 through the issuance of
convertible 10% notes payable due July 2, 2004 including $3,340,000 from Mr.
Meyer Berman, a Director of the Company. In addition, Mr. Berman personally and
through various entities controlled by Mr. Berman made various short-term loans
to the Company through-out 2002 and 2001 which as of December 31, 2002 and 2001
totaled approximately $6,390,000 and $1,380,000.

         In addition, the Company will continue to seek out additional financing
in order to continue or expand its operations through-out the foreseeable
future.

Results of Operations

         REVENUES - Sales for the year ended December 31, 2002, were $2,928,164
compared to sales of $3,402,915 in 2001. This decrease was the result of
inadequate financing in 2002 available in order to meet sales objectives. The
Company anticipates that sales will increase in 2003 due to anticipated
increased liquidity.

         GROSS PROFIT - Gross profit for the year ended December 31, 2002 was
$492,633 compared to gross profit of $485,051 for 2001. Gross profit as a
percentage of sales increased to 16.8% in 2002 compared to 14.3% in 2001.

         DEPRECIATION AND AMORTIZATION - Depreciation and amortization for the
year 2002 increased to $1,062,325 as compared to $569,789 in 2001.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses were $10,653,985 for the year ended December 31, 2002,
as compared to $11,251,560 for 2001.

         IMPAIRMENT COSTS AND SETTLEMENT COSTS AND LITIGATION - Impairment costs
and Settlement Costs and Litigation for the year ended December 31, 2002 totaled
$7,194,498 as compared to $10,312,137 for 2001. Details related to the 2002 and
2001 impairment losses are as follows:

                                                         2002           2001
                                                         ----           ----

   Impairment of goodwill related to the Company's
    investment in:
      Great Wall Building Systems, Inc.                   -           $1,696,309
      Fleming Manufacturing                           1,208,991           -
      Salinas Development                             1,096,234           -
  Impairment of Investment in Unconsolidated
   Subsidiaries:
      Master Door                                        -             3,581,183
      China Joint Venture                                -               622,618

   Impairment of Property and Equipment                  -               399,600
   Impairment of License Rights                       4,030,797
   Settlement Costs Claims and Litigation               858,476        4,012,427


                                       15
<PAGE>

         The Company during 2002 and 2001 recorded settlement costs claims and
litigation in the amount of $858,476 and $4,012,427 related primarily to the
accrual for estimated amounts the Company may owe and the write-down of assets
as the result of anticipated future settlements.

         OTHER INCOME (EXPENSE) - Other income (expense) is broken down into the
following three (3) areas for 2002 and 2001: interest expense, gain on sales of
securities, and other. The balances were ($1,106,142), $318,500 and $462,272,
respectively, in 2001. Interest expense in 2001 was primarily the result of the
issuance of common stock for accrued interest.

         The 2002 amounts were ($912,541), $0 and $0 respectively. Interest
expense in 2002 included ($355,900) as the result of the issuance of common
stock for accrued interest.

         The Company experienced a net loss of $18,268,391 in 2002 compared to a
net loss of $21,404,016 in 2001. As stated above, the net losses incurred
included total impairment costs and settlement costs and litigation of
$7,194,498 and $10,312,137 in 2002 and 2001, respectfully.

Critical Accounting Policies

         The SEC's Financial reporting Release No. 60 requires all companies to
include a discussion of critical accounting polices or methods used in the
preparation of financial statements. We have identified the following as
accounting policies that are the most critical to aid in understanding and
evaluating our financial results:

|_|      Accounting for costs and revenues associated with real estate
         development

|_|      Accounting for contingencies associated with our litigation

|_|      Evaluation of impairment of intangible assets and our investment in
         Master Door

         Our policies for accounting for real estate development activities are
described in Note 1 to the financial statements. Currently no sales of homes
have occurred and the Company has incurred significant costs to develop its
Salinas project. These costs have been capitalized and will be charged against
the revenues from the sale of the related homes. The Company has estimated the
total revenues to be received from the sale of the homes and has recorded an
expense for any estimated loss it may incur from the ultimate sale of these
homes. Should the Company incur costs in excess of its estimates or not be able
to realize the estimated revenue from the sale of the homes, an additional
impairment loss would be required to be recognized.

         As more fully described under Item 3, the Company has significant
litigation and claims that could result in losses in excess of those provided
for in the financial statements. The Company's policy is to evaluate all claims
and determine whether legal counsel and we believe the likelyhood of an
unfavorable outcome is probable, reasonably possible or remote. For those claims
we evaluate as reasonably possible or remote, no amounts are provided for in the
financial statements. For those claims we believe are probable and estimable we
have recorded an estimated liability in the financial statements. However,
estimating the outcome of litigation and claims and estimating the potential
losses is difficult and therefore the amounts provided for could change and
those changes could be significant.

         As described in Note 1 to the financial statements, the Company
evaluates all tangible and intangible assets for impairment and provides for
losses when it is determined that impairment has occurred. Based on the
Company's estimate of future cash flows etc., losses for impairment have been
provided for on many of the Company's assets. These estimates change based on
the economic environment and other factors that could have a significant impact
on the Company's financial statements.

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------

         The financial statements required pursuant to this Item 7 are included
in this Form 10-KSB as a separate section commencing on page F-1 and are hereby
incorporated by reference into this Item 7.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE
          -----------------------------------------------------------

         None.

                                       16
<PAGE>

                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
          -------------------------------------------------------------

         (a) CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AS OF THE
DATE OF THIS REPORT


Name                       Age       Position
----                       ---       --------

Meyer A. Berman            68        Chairman of the Board and CEO

Steven A. Levy             52        Director and President, Great Wall New
                                     Building Systems

Debbie Keogh               49        Director and President, Fleming
                                     Manufacturing

Alan Jawitz                73        Director


         MEYER A. BERMAN joined the Company in February, 2001, as a Director and
in April 2002, assumed the position of Chairman of the Board. Mr. Berman founded
M.A. Berman Co., a registered securities broker-dealer in 1981. Mr. Berman is
regularly consulted for his stock market expertise, and has been quoted and
referenced in financial publications such as The Wall Street Journal and
Barron's as well as appearances on CNBC. Mr. Berman has attended the University
of Illinois, University of Connecticut, and City College of New York.

         DEBBIE KEOGH is President of Fleming Manufacturing Company and a
Director of Eagle. At Fleming she is responsible for all facets of Fleming's'
manufacturing operation, sales, marketing and financial matters. Following a
career in professional administration, Ms. Keogh joined Fleming 15 years ago,
where she started in sales and came to learn all aspects of Fleming's business.

         STEVEN A. LEVY is a Director and President of the Company's Great Wall
New Building Systems ("GWNBS") subsidiary and Chairman of the joint venture
between GWNBS and the Mi Yun Real Estate Development Company in Beijing China.
Prior to joining the Company, he practiced law in Washington DC, focusing on
international business transactions. He served as a member of the President's
Export Council, Subcommittee on Export Administration and has undertaken
interfaith relations and philanthropic work with the Catholic Archdiocese of
Maryland.

         ALAN JAWITZ joined the Board in 2002, following a long career in
private legal practice in Manhattan, where he specialized in litigation. Mr.
Jawitz graduated from Dickinson School of Law and attended Duquesne University.

         There are no other significant employees. There are no family
relationships between the above listed persons, nor is there any involvement in
certain legal proceedings except for those described under Item 3. The Company's
directors serve for a term of one year, or until their successors shall have
been elected and qualified.

     (b)  CHANGES IN OFFICERS AND DIRECTORS FROM JANUARY 1, 2002 THROUGH
          PRESENT

         ANTHONY D'AMATO joined the Company in April 1999 as a Director and
served as Chairman from May 1999 to February 2002. From June 1, 1999 to February
2002, Mr. D'Amato served as President and CEO of the Company. In February 2002,
Mr. D'Amato resigned as an officer and director of the Company.

         DR. RALPH THOMSON joined the Company as a Director in November 1998,
and was later named Corporate Secretary. Dr. Thomson resigned without
disagreement as an officer and director of the Company in January 2002.

         ANDROS S. SAVVIDES joined the Company as a Director in November 1999,
and resigned without disagreement in October 2001.

                                       17
<PAGE>

         ROBERT P. KORNAHRENS joined the Company as a Director in April 2000,
and resigned without disagreement in February 2002.

         CHARLES A. GARGANO joined the Company as a Director in June 2000, and
resigned without disagreement in October 2001.

         WILFRED G. MANGO, JR. joined the Company in August 2000 as Chief
Operating Officer and Director. Mr. Mango resigned without disagreement as an
officer and Director of the Company in October 2001.

         PAUL-EMILE DESROSIERS joined the Company in December 2000 as Vice
President of Operations and Government Relations. In August 2001, Mr. Desrosiers
was appointed President, Chief Executive Officer and a Director. In January
2002, Mr. Desrosiers was terminated as an executive officer of the Company.

         RON G. LAKEY joined the Company as Treasurer and Chief Financial
Officer in January 2002. In February 2002, Mr. Lakey resigned as an officer of
the Company.

         DR. MARTIN SHUBICK joined the Company as a director in April, 2002 and
resigned without disagreement in June, 2002.

         DOUGLAS BENDER joined the Company as a director in March 2003 and
resigned in April 2003.

         SAM GEJDENSEN joined the Company as a director in February 2001 and
resigned without disagreement in April 2003.

         DAN CURLEE joined the Company as COO, then CEO and as a Director in
January 2002 and resigned as an officer and Director without disagreement in
November 2002.

         HOWARD ASH joined the Company as a Director in March 2002 and resigned
without disagreement in December 2002.

         J. WARREN BLAKER joined the Company as a Director in October 2002 and
resigned without disagreement in December 2002.

         SAUL FENSTER joined the Company as a Director in October 2002 and
resigned without disagreement in December 2002.

         ROGER KAHN joined the Company as a Director in March 2003 and resigned
without disagreement in April 2003.

         GEORGE GAGER joined the Company as a Director in October 2002 and
resigned without disagreement in April 2003.

         RHYS DON POLLOCK was promoted from Chief Financial Officer to Senior
Vice President of Manufacturing in January 2002 and resigned without
disagreement as an officer and director effective December 1, 2002. Mr. Pollock
began his service as a Director in April 2000.

         BRUCE MAULDIN joined the Company as a Director in March 2002 and
resigned without disagreement in August 2002.

         WYNN WESTMORELAND served as a Director from October 2002 through
November 2002.

         MEYER BERMAN took over as CEO in December 2002.

ITEM 10.  EXECUTIVE COMPENSATION
          ----------------------

         The following table sets forth summary compensation information with
respect to compensation paid by the Company to the Chief Executive Officer of
the Company ("CEO") and the Company's six most highly compensated executive
officers or key employees other than the CEO, who were serving as executive
officers during the Company's fiscal year ended December 31, 2002 and 2001.


                                       18
<PAGE>
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
                           --------------------------

               Annual Compensation                                                Long Term Compensation
               -------------------                                      --------------------------------------
                                                                               Awards             Payments
                                                                        -----------------------     ----------
                                                                        Restricted   Securities
Name of Individual                                    Other Annual        Stock       Underlying/     LTIP       All Other
and Principal Position   Year   Salary      Bonus     Compensation       Award(s)    Options/SARs    Payouts     Compensation
----------------------   ----   ------      -----     ---------------    --------    ------------    -------     -------------
<S>                      <C>    <C>          <C>            <C>          <C>              <C>          <C>            <C>
Anthony D'Amato          2001   $ 33,000(1)  $-0-           -0-              -0-          -0-          -0-            -0-
President//CEO

Paul-Emile Desrosiers    2001   $625,000(2)  $-0-           -0-          128,668(3)       -0-          -0-            -0-
President/CEO

Wilfred G. Mango, Jr.    2001   $130,500     $-0-           -0-              -0-          -0-          -0-            -0-
Chief Operating Officer

Gerry Christensen        2001   $ 90,000     $-0-           -0-           25,000(4)       -0-          -0-            -0-
Comptroller              2002   $ 94,250     $-0-           -0-              -0-          -0-          -0-            -0-

Susan J. Fleming         2001   $186,684(5)  $-0-           -0-              -0-          -0-          -0-            -0-

Debbie Keough            2001   $ 56,979     $-0-           -0-              -0-          -0-          -0-            -0-
President-Fleming        2002   $ 45,448     $-0-           -0-              -0-          -0-          -0-            -0-

Steve Levy               2001   $ 81,250     $-0-           -0-              -0-          -0-          -0-            -0-
President-Great Wall     2002   $ 97,442     $-0-           -0-              -0-          -0-          -0-            -0-
</TABLE>

(1)  The Company and Mr. D'Amato dispute amounts paid to Mr. D'Amato which
     amounts may be in excess of $2,000,000, and the amount of compensation paid
     by the Company cannot be accurately determined at this time.


(2)  The Company and Mr. Desrosiers dispute amounts paid to Mr. Desrosiers which
     amounts may be greater than $625,000.

(3)  Pursuant to an Employment Agreement, Mr. Desrosiers received 128,668 shares
     of the Company's restricted common stock valued at $386,004 ($3.00 per
     share).

(4)  Pursuant to an Employment Agreement, Mr. Christensen received 25,000 shares
     of the Company's restricted common stock in 2001 valued at $108,501 ($4.34
     per share).

(5)  Pursuant to a Stock Purchase Agreement between the Company and William
     Fleming, the spouse of Mr. Fleming, Susan J. Fleming, was retained as an
     administrative sales coordinator at Fleming Manufacturing Co.


                                       19
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          --------------------------------------------------------------

         The following table sets forth, as of the date of this report, certain
information concerning beneficial ownership of the Company's Common Stock by (i)
each person known to the Company to own 5% or more of the Company's outstanding
Common Stock, (ii) all directors of the Company and (iii) all directors and
officers of the Company as a group:

                                                         Shares
                                                      Beneficially   Percentage
Name & Address               Position with Company      Owned(1)      of Shares
--------------               ---------------------    ------------   ----------

Paul-Emile Desrosiers
c/o Eagle Building
Technologies, Inc.
700 East Palmetto Park Road
Boca Raton, FL 33432               Director              132,667(2)       1.3%

Meyer Berman
c/o Eagle Building
Technologies, Inc.
700 East Palmetto Park Road
Boca Raton, FL 33432               Director            3,093,568(3)      30.0%

Steven Levy
c/o Eagle Building
Technologies, Inc.
700 East Palmetto Park Road
Boca Raton, FL                     Director               30,000          0.3%

Debbie Keogh
c/o Eagle Building
Technologies, Inc.
700 East Palmetto Park Road
Boca Raton, FL                     Director               30,000          0.3%

Alan Jawitz
c/o Eagle Building
Technologies, Inc.
700 East Palmetto Park Road
Boca Raton, FL                     Director              122,411          1.2%

The "Urbina" Group (4)             Shareholders          514,094          5.0%

All Officers and Directors
  as a Group                                           3,922,740         38.1%



                                       20
<PAGE>

(1)   As used herein, the term beneficial ownership with respect to a
      security is defined by Rule 13d-3 under the Securities Exchange Act of
      1934 as consisting of sole or shared voting power (including the power to
      vote or direct the vote) and/or sole or shared investment power (including
      the power to dispose or direct the disposition of) with respect to the
      security through any contract, arrangement, understanding, relationship or
      otherwise, including a right to acquire such power(s) during the next 60
      days. Unless otherwise noted, beneficial ownership consists of sole
      ownership, voting and investment rights.

(2)   Mr. Desrosiers claims status as a director.  Issues pertaining to his role
      in the Company are subject to litigation as reported in Item 3 above.

(3)   Includes (i) 2,387,434 shares of Common Stock owned by Meyer A. Berman,
      individually (including 2.3 million shares awarded in 2003); and (ii)
      358,333 shares of Common Stock owned by Meyer A. Berman, Individual
      Retirement Account. The balance of the shares are held by members of Mr.
      Berman's immediate family.

(4)   The Company considers the "Urbina" group to be acting in concert for
      purposes of this Report. The "Urbina" group consists of the following
      individuals/entities (with shares in parenthesis): ARH Family Partnership,
      Ltd. (32,738); Ray L. Hart Living Trust (537); Corey L. Hart (10,000);
      JDCAN3 Holdings, LP (43,363); John R. and Terry E. McLaughlin (72,544);
      Jun Ming Trading, Ltd. (66,340); Ken Taylor (13,170); Last Time Around,
      L.P. (58,035); Michael Kenoyer (112,252); La Patrona Ltd. (61,896);
      Hill-McVey Family Ltd. Partnership (20,029); Paul Faulkner (2,000);
      Pamposh Zutshi (6,667); Guadalupe & Ignacio Lozano (466); Intime LP
      (10,000); Pricilla, Steven & Havilal Maya (1,000); and Martin Slagter
      (3,056).


COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively the "Reporting Persons") to file reports and changes in ownership
of such securities with the Securities and Exchange Commission and the Company.
Based solely upon a review of (i) Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e), promulgated under the Exchange Act,
during the Company's fiscal year ended December 31, 2002, and (ii) Forms 5 and
any amendments thereto and/or written representations furnished to the Company
by any Reporting Persons stating that such person was not required to file a
Form 5 during the Company's fiscal year ended December 31, 2002, it has been
determined that Paul-Emile Desrosiers was delinquent with respect to such
person's reporting obligations set forth in Section 16(a) of the Exchange Act.


                                       21
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
          ----------------------------------------------------

         The Company operates in China while holding additional licenses for
Mexico, India, Puerto Rico and Europe pursuant to five (5) licensing agreements
with Integrated Masonry Systems International, Inc. The Company owns thirty-
eight percent (38%) of the issued and outstanding shares of IMSI.

         During the period commencing October 2000 to July 2001, Mr. D'Amato
converted loans in the amount of $2,397,416 to the Company into 789,879 shares
of restricted common stock.

         On January 26, 2001, the Company's Board of Directors approved a 1-
for-6 reverse stock split of the Company's common stock effective February 5,
2001.

         During the period ended December 31, 2001, primarily in July 2001,
Meyer A. Berman and affiliates of Meyer A. Berman, Chairman of the Board of
Directors, loaned the Company a total of $3,340,000. In addition, Mr. Berman
personally and through various entities controlled by Mr. Berman made various
short-term advances to the Company through-out 2002 and 2001 which as of
December 31, 2002 and 2001 totaled approximately $6,700,000 and $1,380,000.
During the period commencing January 1, 2003 through June 30, 2003, Meyer A.
Berman and affiliates of Mr. Berman loaned the Company an additional approximate
net amount of $900,000. In February 2002, Andy Berman and Abby Berman, children
of Meyer A. Berman, loaned the Company a total net amount of $240,000.

         During the period ended December 31, 2001, the Company had unsecured
advanced receivables (3) in the aggregate amount of $934,645 from its former
Chairman and CEO, Anthony D'Amato.

         In February 2002, Don Pollock, an executive officer and director claims
to have loaned the Company $40,000.

         In April 2002, Martin Shubik, a former director, loaned the Company
$30,000.

         In May 2002, the Company assigned all of its interest in Business
Dimensions, Inc. to Don Pollock, an officer and director of the Company.

         As a result of the Company's investigation in connection with the
restatement of its 2000 and 2001 financials, the Company believes that there may
be third parties to whom Anthony D'Amato, the Company's former Chairman and CEO,
has obligated, or made representations purporting to obligate, the Company, or
to issue equity in the Company without the knowledge or authorization of the
Company's Board of Directors. The Company will continue to investigate and
determine the validity of any such third party claims on a case by case basis.
At the time of this filing, the Company cannot determine the financial impact,
if any, to the Company as a result of Mr. D'Amato's actions.

------------
(3) As a result of the Company's investigation in connection with its 2000 and
 2001 financials, the Company cannot determine all monies that may be owed to
 the Company by Mr. D'Amato.


                                       22
<PAGE>

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
          ---------------------------------------------------------------

EXHIBIT NO.
-----------

3.1         Certificate of Incorporation & Certificates of Amendment
            Thereto of Registrant*

3.2         By-Laws of Registrant*

10.1(a)     Anthony D'Amato Employment Agreement (May 15, 1999 - May 14,
            2001) *

10.1(b)     Anthony D'Amato Employment Agreement (May 15, 1999 - May 14,
            2001)*

10.2        Wilfred C. Mango, Jr. Employment Agreement (August 1, 2000 -
            July 31, 2002) *

10.3        Wilfred C. Mango, Jr. Consulting Agreement (August 1, 2000 -
            July 31, 2002)*

10.4        Ralph Thompson Employment Agreement (May 15, 1999 - May 14,
            2001) *

16.1        Letter of No Disagreement from Christensen & Duncan, CPA's
            LC.*

*  Filed with December 31, 2000 Form 10-KSB


REPORTS ON FORM 8-K
-------------------

         During the fourth quarter ended December 31, 2000, and through the date
of the filing of this Form 10-KSB, the Company filed reports of Form 8-K as
follows:

  (1)  On or about November 30, 2000, the Company filed a Report on Form 8-K
       announcing that Christensen & Duncan, CPA's LC resigned as the Company's
       independent accountants.

  (2)  On or about December 4, 2000, the Company filed a Report on Form 8-K
       announcing that the Company had engaged Tanner + Co. as the Company's new
       independent accountants.

  (3)  On or about January 9, 2001, the Company filed a Report on Form 8-K/A
       amending the Forms 8-K filed on or about November 30, 2000 and December
       4, 2000.

  (4)  On or about January 10, 2001, the Company filed a Report on Form 8-K
       announcing the acquisition of Fleming Manufacturing Co., a privately held
       Missouri corporation that manufacturers mobile block pants for the
       production of mortarless block and pavers.


                                       23
<PAGE>

  (5)  On or about January 26, 2001, the Company filed a Report on Form 8-K
       announcing a one-for-six (1:6) reverse stock split of the Company's
       Common Stock effective February 5, 2001.

  (6)  On or about February 9, 2001, the Company filed a Report on Form 8-K
       announcing the appointment of Samuel Gejdenson and Meyer A. Berman to the
       Company's Board of Directors.

  (7)  On or about April 16, 2001, the Company filed a Report on Form 8-K
       announcing the acquisition of eighty-five percent (85%) of the issued and
       outstanding securities of Master Srl ("Master"), an Italian corporation
       located in Piacenza, Italy.

  (8)  On or about May 1, 2001, the Company filed a Report on Form 8- K
       announcing the acquisition of eighty-five percent (85%) of the issued and
       outstanding securities of Master srl ("Master"), an Italian corporation
       located in Piacenza, Italy, subject to completion of due diligence and a
       final audit.

  (9)  On or about May 10, 2001, the Company filed a Report on Form 8-K
       announcing the Company's name change to Eagle Building Technologies, Inc.
       and the new trading symbol to "EGBT".

  (10) On or about May 18, 2001, an Amendment to the January 10, 2001 Form 8-K
       was filed providing the audited financials of Fleming Manufacturing
       Company, Inc. ("Fleming"), a wholly owned subsidiary of the Company, for
       the fiscal year ended December 31, 2000, and the Company's unaudited
       consolidated Proforma Financial Statement for the fiscal year ended
       December 31, 2000, inclusive of Fleming.

  (11) On or about August 2, 2001, the Company filed a Report on Form 8-K
       announcing the Company entered into an agreement with Aquila Ventures
       Corporation ("Aquila") to form a Joint Venture entity, Aquila Squared
       Building Corporation (the "Joint Venture"), to develop large scale social
       housing in Mexico.

  (12) On or about August 9, 2001, the Company filed a Report on Form 8-K
       announcing that the proposed acquisition of eighty-five percent (85%) of
       the issued and outstanding securities of Master srl ("Master"), had not
       as yet been completed because the final audit of Master's sales revenues
       has not been finalized to the satisfaction of the Company.

  (13) On or about December 12, 2001, the Company filed a Report on Form 8-K
       announcing that the Company had filed a complaint in the Circuit Court
       for Palm Beach County, Florida, against an unidentified defendant known
       as "Spadeboy" who the Company alleged posted false defamatory, and
       libelous information about the Company on the internet website known as
       Raging Bull.

  (14) On or about January 22, 2002, the Company filed a Report on Form 8-K
       announcing the appointment of Dan H. Curlee as Chief Operating Officer
       and Ron G. Lakey as Treasurer and Chief Financial Officer.

  (15) On or about February 14, 2002, the Company filed a Report on Form 8-K
       announcing that the Company had contacted the Securities and Exchange
       Commission and has requested that trading in the Company's common stock
       be suspended because the Company believes that its financial statements
       will have to be restated for at least the past two (2) years.

  (16) On or about March 1, 2002, the Company filed a Report on Form 8-K
       announcing the following:

                                       24
<PAGE>

       (a)  Eagle Building Technologies, Inc. ("EGBT") has consented to the
            entry of a preliminary injunction lawsuit brought against it by the
            Securities and Exchange Commission ("SEC") in the U.S. District
            Court for the District of Columbia. The Complaint alleges violations
            of certain provisions of the Securities Exchange Act of 1934 and
            certain rules and regulations thereunder, resulting from the
            company's annual and quarterly reports filed for the periods from
            December 31, 2000 to September 30, 2001 and certain press releases
            issued during the fall of 2001.

       (b)  On February 14, 2002 the SEC entered an order directing private
            investigation and designating officers to take testimony in
            connection with the company's foreign operations and certain
            post-September 11th security measures marketed by EGBT, including an
            airport security system, mail sterilization technology and money
            laundering detection software. The company has been cooperating with
            the SEC in its investigation.

       (c)  Effective February 27, 2002, EGBT's President, Chief Executive
            Officer, and Chairman of the Board of Directors, Anthony M. Damato,
            resigned his officer and board positions. In addition, on February
            18, 2002, EGBT's outside auditors, Tanner & Co., withdrew their
            report on the December 31, 2000 financial statements and any
            assurances rendered associated with the financial statements filed
            in 2001 and 2000.

       (d)  EGBT has recently discovered that its earnings from operations in
            India for the years 2000-2001 were intentionally fabricated by Mr.
            Damato. Preliminary indications are that no earnings from such
            operations existed. In addition, it appears that certain press
            releases issued by EGBT in the fall of 2001 regarding post-September
            11th security measures marketed by EGBT may have been false and
            misleading. "The company is taking appropriate steps to address
            these issues and will take whatever future action is necessary based
            on the results of a comprehensive investigation," according to EGBT
            Board member Meyer Berman.

       (e)  EGBT has retained the law firm of Fulbright & Jaworski L.L.P., which
            has engaged the services of Deloitte & Touche LLP to conduct an
            investigation of business practices and financial accounting
            controls and identify opportunities for improvement in EGBT's
            accounting practices.

       (f)  EGBT is currently in discussions with potential investors to provide
            additional financing for the company.

  (17) On or about March 18, 2002, the Company filed a Report on Form 8-K
       announcing the following changes to the make-up of its board of
       directors: Charles Gargano, Robert Kornahrens and Ralph Thomson have
       resigned and Howard Ash and Bruce P. Mauldin have been added to the
       board. Mr. Ash is the Chairman of Claridge Management and a former Chief
       Financial Officer of Ives Motors Corporation and Chief Operating Officer
       of BioCard Corporation. Mr. Mauldin is the President and Chief Executive
       Officer of Texas Airways, Inc., a Texas holding company and consulting
       group. EGBT also announced that its board of directors has made the
       following appointments: board member Meyer Berman has been named Acting
       Chairman of the Board, board member and Chief Operating Officer Dan
       Curlee has been named to the additional position of President, and board
       member and Secretary Don Pollock has been named to the additional
       position of Treasurer. In addition, Ron Lakey has resigned as Chief
       Financial Officer. Finally, EGBT announced that it is proceeding with the
       development of residential housing in Puerto Rico using the IMSI building
       system.

                                       25
<PAGE>

  (18) On or about April 26, 2002, the Company filed a Report on Form 8-K
       announcing several class action complaints have recently been filed
       against Eagle Building Technologies, Inc. ("Eagle") in federal court
       alleging violations of certain provisions of the Securities Exchange Act
       of 1934 and certain rules and regulations thereunder. The suits arise
       from the company's financial statements filed for the periods December
       31, 2000 to September 30, 2001 and certain press releases issued during
       the fall of 2001. Eagle has requested an extension of time to respond to
       the lawsuit filed against it by the Securities and Exchange Commission
       ("SEC") based on its settlement discussions with the SEC. Eagle is
       continuing to work with its outside auditors, Tanner + Co., to restate
       the above- referenced financial statements and to complete Eagle's
       financial statement for the period ending December 31, 2001. Eagle
       recently named Dr. Martin Shubik to its board of directors. Dr. Shubik
       has a Ph.D. in mathematical economics from Princeton University and has
       held the Seymour H. Knox Professorship in institutional economics at Yale
       University since 1975.

  (19) On or about May 30, 2002, the Company filed a Report on Form 8-K
       announcing that it has settled the action brought against it by the
       Securities and Exchange Commission ("SEC") without admitting or denying
       the allegations contained in the SEC's complaint. As part of the
       settlement, Eagle has consented to the entry of a final judgment of
       permanent injunction against it enjoining it from violating the
       anti-fraud, periodic reporting, and recordkeeping provisions of the
       federal securities laws.

  (20) On or about February 6, 2003, the Company filed a Report on Form
       8-K announcing that it has named Securities Transfer Corporation as its
       transfer agent.

ITEM 14.  CONTROLS AND PROCEDURES
          -----------------------

         Our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer, respectively) have concluded,
based on their evaluation as of June 30, 2003 ("Evaluation Date"), that the
design and operation of our "disclosure controls and procedures" (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") are effective to ensure that information required
to be disclosed by us in the reports filed or submitted and reported to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding whether or not disclosure is
required.

         There were no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to the
Evaluation Date, nor were there any significant deficiencies or material
weaknesses in our internal controls. As a result, no corrective actions were
required or undertaken.

                                       26
<PAGE>

                                   SIGNATURES

         In accordance with the requirements of Section 13 and 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                   EAGLE BUILDING TECHNOLOGIES, INC.

Dated: July 28, 2003                 By:/s/ Meyer A. Berman
                                   ---------------------------------
                                   Meyer A. Berman, Chairman, CEO,
                                   COO, CFO and Director


         In accordance with the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated.

Signature                         Capacity                Date
---------                         --------                ----


/s/ Meyer A. Berman              Chairman, CEO, COO,     July 28, 2003
------------------------         CFO and Director
Meyer A. Berman



/s/ Debbie Keogh                 Director                July 28, 2003
------------------------
Debbie Keogh


/s/ Alan Jawitz                  Director                July 28, 2003
------------------------
Alan Jawitz


/s/ Steven A. Levy               Director                July 28, 2003
------------------------
Steven A. Levy



CERTIFICATIONS

           I,  Meyer A. Berman, certify that:

            1. I have reviewed this annual report on Form 10-K of Eagle Building
Technologies Inc.;

            2. Based on my knowledge, this annual 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
annual report;

            3. Based on my knowledge, the financial statements, and other
financial information included in this annual 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 annual report;

            4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have:

                                       27
<PAGE>

                    (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 annual 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 annual report (the "Evaluation Date"); and

                    (c) presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.

           5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of 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.

            6. I have indicated in this annual 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.

/s/ Meyer A. Berman
-----------------------------------
Meyer A. Berman
President, Chief Executive Officer,
and Chief Financial Officer
July 28, 2003


                                       28
<PAGE>

      CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
    PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

         In connection with the Annual Report on Form 10-K of Eagle Building
Technologies, Inc.(the "Company") for the period ended December 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Meyer A. Berman, President, Chief Executive Officer, and Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to
the best of my knowledge:

     (1) the Report fully complies with the requirements of Section 13(a) or
     15(d) of the Securities Exchange Act of 1934; and

     (2) the information contained in the Report fairly presents, in all
     material respects, the financial condition and results of operations of the
     Company.


/s/ Meyer A. Berman
-----------------------------------
Meyer A. Berman
President, Chief Executive Officer,
and Chief Financial Officer
July 28, 2003


                                       29
<PAGE>
EAGLE BUILDING TECHNOLOGIES, INC.
Consolidated Financial Statements
December 31, 2002 and 2001

<PAGE>


                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Index to Consolidated Financial Statements


--------------------------------------------------------------------------------




                                                                         Page
                                                                         ----

Report of Tanner + Co.                                                    F-1


Consolidated balance sheet                                                F-2


Consolidated statement of operations                                      F-3


Consolidated statement of stockholders' equity (deficit)                  F-4


Consolidated statement of cash flows                                      F-5


Notes to consolidated financial statements                                F-7




<PAGE>


                                                    INDEPENDENT AUDITORS' REPORT




To The Board of Directors and Stockholders of
Eagle Building Technologies, Inc. and Subsidiaries


We have audited the consolidated  balance sheet of Eagle Building  Technologies,
Inc.  and  Subsidiaries  (Formerly  Eagle  Capital  International,  Ltd.)  as of
December  31,  2002  and  2001,  and  the  related  consolidated  statements  of
operations,  stockholders'  equity  (deficit)  and cash flows for the years then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Eagle
Building  Technologies,  Inc. and Subsidiaries as of December 31, 2002 and 2001,
and the  results  of their  operations  and their  cash flows for the years then
ended, in conformity with auditing  standards  generally  accepted in the United
States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has incurred  recurring losses
from operations,  have negative working capital, a deficit in net equity and has
significant  litigation and other  uncertainties,  which raise substantial doubt
about its ability to continue as a going concern.  Management's  plans regarding
those  matters  also  are  described  in  Note  2.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
these uncertainties.



Salt Lake City, Utah
July 16, 2003

                                                                             F-1
<PAGE>
<TABLE>
<CAPTION>
                                                                           EAGLE BUILDING TECHNOLOGIES, INC.
                                                                                  Consolidated Balance Sheet

                                                                                                December 31,
------------------------------------------------------------------------------------------------------------


        Assets
        ------
                                                                               2002               2001
                                                                        ------------------------------------
<S>                                                                     <C>                <C>
Current assets:
  Cash                                                                  $       141,066    $        174,686
  Accounts receivables, net                                                     302,628             758,365
  Inventories                                                                 1,874,248           1,525,131
  Other current assets                                                                -              25,152
                                                                        ------------------------------------

                Total current assets                                          2,317,942           2,483,334
                                                                        ------------------------------------

Property and equipment, net                                                   2,592,768           2,946,754
Intangible assets, net                                                          809,581           7,430,350
Investment in unconsolidated subsidiaries                                       386,820             386,820
Development costs                                                             4,592,157           2,629,139
                                                                        ------------------------------------

                                                                        $    10,699,268    $     15,876,397
                                                                        ------------------------------------

------------------------------------------------------------------------------------------------------------

        Liabilities and Stockholders' Deficit
        -------------------------------------
                                                                               2002              2001
                                                                        ------------------------------------
Current liabilities:
  Notes payable                                                         $    10,473,625    $      5,334,673
  Accounts payable                                                            2,520,449           2,461,942
  Accrued liabilities                                                         2,049,020           1,224,969
  Accrued settlement costs                                                    3,000,000           3,000,000
  Deposits                                                                    1,043,585             550,485
  Current maturities of long-term debt                                          103,443              29,335
                                                                        ------------------------------------

        Total current liabilities                                            19,190,122          12,601,404

Long-term debt                                                                6,513,982           6,340,000
Other                                                                                 -              12,849
                                                                        ------------------------------------

        Total liabilities                                                    25,704,104          18,954,253

Commitments and contingencies                                                         -                   -

Redeemable common stock - 155,834 shares issued and outstanding               1,168,748           1,168,748

Stockholders' deficit:
  Common stock, $.001 par value, 11,666,667 shares authorized;
    7,964,212 and 7,015,271 shares outstanding, respectively                      7,964               7,015

  Additional paid-in capital                                                 37,740,332          31,399,870
  Accumulated deficit                                                       (53,921,880)        (35,653,489)
                                                                        ------------------------------------

Total stockholders' deficit:                                                (16,173,584)         (4,246,604)
                                                                        ------------------------------------

                                                                        $    10,699,268    $     15,876,397
                                                                        ------------------------------------


------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                             F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                           EAGLE BUILDING TECHNOLOGIES, INC.
                                                                        Consolidated Statement of Operations

                                                                                    Years Ended December 31,
------------------------------------------------------------------------------------------------------------

                                                                               2002                2001
                                                                        ------------------------------------
<S>                                                                     <C>                <C>
Sales                                                                   $     2,928,164    $      3,402,915
Cost of sales                                                                 2,435,531           2,917,864
                                                                        ------------------------------------

                Gross profit                                                    492,633             485,051

Selling, general and administrative expenses                                 10,653,985          11,251,560
Impairment of investment in unconsolidated
   subsidairies                                                                       -           4,203,801
Settlement costs, claims and litigation                                         858,476           4,012,427
Impairment of goodwill                                                        2,305,225           1,696,309
Impairment of license rights                                                  4,030,797                   -
Impairment of property and equipment                                                  -             399,600
                                                                        ------------------------------------

        Total operating expenses                                             17,848,483          21,563,697
                                                                        ------------------------------------

        Loss from operations                                                (17,355,850)        (21,078,646)

Other income (expense):
  Interest expense                                                             (912,541)         (1,106,142)
  Gain on sale of securities                                                          -             318,500
  Other                                                                               -             462,272
                                                                        ------------------------------------

        Total other income (expenses)                                          (912,541)           (325,370)
                                                                        ------------------------------------

        Loss before income taxes                                            (18,268,391)        (21,404,016)

Provision for income taxes                                                            -                   -
                                                                        ------------------------------------

        Net loss                                                        $   (18,268,391)   $    (21,404,016)
                                                                        ------------------------------------

Weighted average number of common shares
   outstanding, basic and diluted                                             7,641,000           5,963,000
                                                                        ------------------------------------

Loss per common share, basic and diluted                                $         (2.39)   $          (3.59)
                                                                        ------------------------------------

------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                             F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                            EAGLE BUILDING TECHNOLOGIES, INC.
                                                     Consolidated Statement of Stockholders' Equity (Deficit)

                                                                       Years Ended December 31, 2002 and 2001
-------------------------------------------------------------------------------------------------------------

                                            Common Stock         Additional                        Total
                                      ------------------------    Paid-in       Accumulated    Stockholders'
                                         Shares      Amount       Capital         Deficit         Deficit
                                      -----------------------------------------------------------------------
<S>                                      <C>         <C>         <C>            <C>             <C>
Balance, January 1, 2001                 4,034,243   $   4,034   $ 17,697,898   $ (14,249,473)  $   3,452,459

Issuance of common stock for:
 Cash                                    1,198,388       1,198      4,230,222               -       4,231,420
 Services                                  792,002         792      5,573,412               -       5,574,204
 Payment of debt                           672,472         672      2,016,744               -       2,017,416
 Payment of interest                       106,667         107        660,322               -         660,429
 Payment of accrued liabilities             51,499          51        101,433               -         101,484
 Purchase of subsidiary                    166,667         167      1,169,833               -       1,170,000

Purchase and cancellation of
 treasury stock                             (6,667)         (6)       (49,994)              -         (50,000)

Net loss                                         -           -              -     (21,404,016)    (21,404,016)
                                      ------------------------------------------------------------------------

Balance, December 31, 2001               7,015,271       7,015     31,399,870     (35,653,489)     (4,246,604)

Issuance of common stock for:
 Cash                                      110,333         110        986,071               -         986,181
 Services                                  472,608         473      3,876,357               -       3,876,830
 Payment of debt and
  litigation settlement                    325,000         325        812,175               -         812,500
 Payment of interest                        41,000          41        355,859               -         355,900

Capital contributions from
an officer and shareholder                       -           -        310,000               -         310,000

Net loss                                         -           -              -     (18,268,391)    (18,268,391)
                                      ------------------------------------------------------------------------

Balance, December 31, 2002               7,964,212   $   7,964   $ 37,740,332   $ (53,921,880)  $ (16,173,584)
                                      ------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                               F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                           EAGLE BUILDING TECHNOLOGIES, INC.
                                                                        Consolidated Statement of Cash Flows

                                                                                    Years Ended December 31,
------------------------------------------------------------------------------------------------------------

                                                                                 2002             2001
                                                                        ------------------------------------
<S>                                                                     <C>                <C>
Cash flows from operating activities:
 Net loss                                                               $   (18,268,391)   $    (21,404,016)
  Adjustments to reconcile net loss to net cash
   provided by operating activities:
    Impairment of goodwill                                                    2,305,225           1,696,309
    Impairment of license rights                                              4,030,797                   -
    Impairment of property and equipment                                              -             399,600
    Settlement costs, claims and litigation                                           -           4,012,427
    Settlement of debt                                                                -            (230,000)
    Depreciation and amortization                                             1,062,325             569,789
    Impairment of investment in unconsolidated subsidiaries                           -           4,203,801
    Stock issued for services                                                 3,876,830           5,574,204
    Stock issued for interest                                                   355,900             660,429
    Stock issued for settlement costs                                           462,500                   -
    Changes in operating assets and liabilities:
      Accounts receivable                                                       455,737            (721,427)
      Inventories                                                              (349,117)           (176,613)
      Prepaid and other current assets                                           25,152             221,680
      Deferred development costs                                             (1,963,018)                  -
      Accounts payable                                                           58,507          (1,331,942)
      Accrued liabilities                                                       824,051               2,630
                                                                        ------------------------------------

                Net cash used in operating activities                        (7,123,502)         (6,523,129)

Cash flows from investing activities:
  Net cash acquired (used) in acquisition                                             -            (653,254)
  Investment in and advances to unconsolidated subsidiaries                           -          (2,737,503)
  (Investment) reduction in license rights                                            -              10,000
  Receivable from officer                                                             -             384,645
  Purchase of property, plant and equipment                                    (116,422)           (278,691)
  Deposits                                                                      493,100             467,985
                                                                        ------------------------------------

                Net cash provided by (used in) investing activities             376,678          (2,806,818)

Cash flows from financing activities:
  Proceeds from notes payable                                                 6,815,700           9,531,093
  Payments on notes payable                                                  (1,398,677)         (4,207,441)
  Proceeds from issuance and retirement of common stock                         986,181           4,181,420
  Capital contributions from an officer and shareholder                         310,000                   -
  Cash overdraft                                                                      -                (439)
                                                                        ------------------------------------

                Net cash provided by financing activities                     6,713,204           9,504,633
                                                                        ------------------------------------

Net (decrease) increase in cash and cash equivalents                            (33,620)            174,686

Cash and cash equivalents at beginning of year                                  174,686                   -
                                                                        ------------------------------------

Cash and cash equivalents at end of year                                $       141,066    $        174,686
                                                                        ------------------------------------

------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                            F-5
</TABLE>
<PAGE>
                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                             Consolidated Statement of Cash Flow
                                                                       Continued

--------------------------------------------------------------------------------

Supplemental Disclosure of Cash Flows Information

                                                        December 31,
                                              ----------------------------------
                                                    2002            2001
                                              ----------------------------------
Cash paid during the year for

         Interest                              $       -         $   173,029
                                              ----------------------------------

         Income taxes                          $       -         $         -
                                              ----------------------------------


Supplemental Disclosure of Non-Cash Transactions

2002
----

         o    During the year ended December 31, 2002, the Company issued common
              stock valued at $350,000 in consideration for the payment of notes
              payable and settlement costs.

         o    During  the  year ended  December 31, 2002, the  Company  acquired
              equipment with debt in the amount of $307,170.

2001
----

         o    During the year ended  December 31, 2001,  the Company  acquired a
              75% interest in Salinas Developers Group, Inc. (A Puerto Rico land
              development  company) in exchange  for cash of $312,500 and a note
              payable in the amount of $945,000.  In connection  therewith,  the
              Company recorded the following:

                Prepaid expenses                              $          10,600
                Capitalized development cost                          2,629,139
                Goodwill                                              1,096,234
                Short-term notes payable                             (1,396,257)
                Accounts and advances payable                        (2,019,394)
                Accrued expenses                                         (4,568)
                Deposits                                                (82,500)
                                                              ------------------

Net cash used (net of $79,246 cash acquired)                  $         233,254
                                                              ------------------

         o    During the year ended December 31, 2001, the Company issued common
              stock valued as follows in consideration for the following:

                Payment of notes payable                      $       2,017,416
                Payment of accrued liabilities                          101,484
                Purchase of unconsolidated subsidiary                 1,170,000


--------------------------------------------------------------------------------
                                                                             F-6
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                      December 31, 2002 and 2001
--------------------------------------------------------------------------------

1.   Organization       Organization and Principles of Consolidation
     and                The  consolidated   financial   statements  include  the
     Summary of         accounts of Eagle Building Technologies,  Inc. (formerly
     Significant        Eagle  Capital  International,   LTD)  (Eagle)  and  its
     Accounting         wholly-owned subsidiaries.  All significant intercompany
     Policies           account balances and  transactions  have been eliminated
                        in consolidation.

                        The Company had  operations in four  principal  business
                        segments  during 2002 and 2001:  manufacture and sale of
                        block and wall systems,  masonry products  manufacturing
                        systems  through  its wholly  owned  subsidiary  Fleming
                        Manufacturing  Company,  affordable  housing sales,  and
                        manufacture and sale of doors.

                        Principles of Consolidation
                        The  consolidated   financial   statements  include  the
                        accounts of the Company and its 100% owned subsidiaries.
                        All significant  intercompany  balances and transactions
                        have been eliminated in consolidation.

                        Cash Equivalents
                        The  Company   considers  all  highly  liquid  temporary
                        investments with an original maturity of three months or
                        less to be cash equivalents.

                        Inventories
                        Inventories are recorded at the lower of cost or market,
                        cost being  determined on the first-in  first-out (FIFO)
                        method.

                        Property and Equipment
                        Property  and  equipment  are  recorded  at  cost,  less
                        accumulated depreciation.  Depreciation and amortization
                        on  capital   leases  and  property  and   equipment  is
                        determined  using  the  straight-line  method  over  the
                        estimated  useful  lives of the  assets  or terms of the
                        lease.  Expenditures  of  maintenance  and  repairs  are
                        expensed when incurred and betterments are  capitalized.
                        Gains and losses on sale of property and  equipment  are
                        reflected in operations.

                        Intangible Assets
                        Intangible  assets  consist of license rights to certain
                        production  processes and goodwill.  License  rights are
                        amortized on the straight-line method over a twenty year
                        period.

--------------------------------------------------------------------------------
                                                                             F-7
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

1.   Organization       Impairment of Long-Lived Assets
     and                The Company  reviews  its  long-lived  assets  including
     Summary of         goodwill, for impairment whenever  events  or changes in
     Significant        circumstances indicate that the carrying  amount  of the
     Accounting         assets  may  not  be  recoverable  through  undiscounted
     Policies           future  cash  flows, such  loss  is  recognized  in  the
     Continued          statement of operations.

                        Revenue Recognition
                        The Company  recognizes  revenue from  manufacturing and
                        related   activities   when  evidence   exists  that  an
                        arrangement   exists   between   the   Company  and  its
                        customers,   delivery  of  the  Company's   product  has
                        occurred,  the Company's  selling price to its customers
                        is fixed, and collectibility is reasonably assured.

                        Sales   revenues   and  profits   from  land  sales  and
                        homebuilding  activities  are recognized at closing only
                        when   sufficient  down  payments  have  been  obtained,
                        possession  and other  attributes of ownership have been
                        transferred  to  the  buyer,  and  the  Company  has  no
                        significant continuing involvement.

                        The cost of acquiring and  developing  land and the cost
                        of  homebuilding  construction  are  allocated  to these
                        assets  and  charged  to cost of  sales  as the  related
                        inventories   are  sold.   Interest   costs  related  to
                        homebulding  and  land  assets  are  allocated  to these
                        assets  based on their  development  stage and  relative
                        book value.  The portion of interest  allocated to land,
                        building,  lots  under  development,   and  homebuilding
                        construction  during the  development  and  construction
                        period  is  capitalized  to  the  extent  of  qualifying
                        assets.   Remaining  interest  costs  are  expensed.  No
                        interest has been capitalized  during 2002 and 2001. The
                        Company carries land, development and homebuilding costs
                        at the lower of cost or net realizable value.

                        Development Costs
                        Construction  costs are capitalized as long as the asset
                        is under  development.  Upon completion of construction,
                        the  development  costs are  included as a component  of
                        real estate inventory.  Development costs determined to
                        be unrecoverable are written off.

                        Income (Loss) Per Share
                        The  computation of basic loss per common share is based
                        on the  weighted  average  number of shares  outstanding
                        during each year.

--------------------------------------------------------------------------------
                                                                             F-8
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

1.   Organization       Income (Loss) Per Share - Continued
     and                The computation of diluted  earnings per common share is
     Summary of         based  on  the   weighted   average   number  of  shares
     Significant        outstanding  during  the  year,  plus the  common  stock
     Accounting         equivalents  that would arise from the exercise of stock
     Policies           options and  warrants  outstanding,  using the  treasury
     Continued          stock  method  and the  average  market  price per share
                        during the year.  Options to purchase  208,333 shares of
                        common  stock at prices  ranging  from $12.00 to $18.00,
                        per share were  outstanding  at  December  31,  2002 and
                        2001,  but were not  included  in the  diluted  earnings
                        (loss) per share  calculation  because the effect  would
                        have been antidilutive.

                        Income Taxes
                        Income taxes are recorded  using the asset and liability
                        method.   Deferred  tax  assets  and   liabilities   are
                        recognized for the future tax consequences  attributable
                        to differences  between the financial statement carrying
                        amounts of  existing  assets and  liabilities  and their
                        respective  tax bases and operating  loss and tax credit
                        carryforwards.  Deferred tax assets and  liabilities are
                        measured  using  enacted tax rates  expected to apply to
                        taxable  income  in the years in which  those  temporary
                        differences are expected to be recovered or settled. The
                        effect on  deferred  tax  assets  and  liabilities  of a
                        change  in tax  rates is  recognized  in  income  in the
                        period that includes the enactment date

                        Stock-Based Compensation
                        The Company accounts for stock-based  compensation under
                        the  recognition  and  measurement   principles  of  APB
                        Opinion  No.  25,   Accounting   for  Stock   Issued  to
                        Employees, and related  Interpretations.  No stock-based
                        employee  compensation  cost is  reflected in net income
                        (loss),  as all  options  vested had an  exercise  price
                        equal to the market value of the underlying common stock
                        on the  date  of  grant  or the  date of  repricing.  No
                        options  were  issued or vested  during the years  ended
                        December 31, 2002 and 2001, therefore, there would be no
                        effect  on net  income  and  earnings  per  share if the
                        company   had   applied   the  fair  value   recognition
                        provisions  of FASB  Statement No. 123,  Accounting  for
                        Stock-Based   Compensation,   to  stock-based   employee
                        compensation.

                        Concentration of Credit Risk
                        Financial  instruments  which  potentially  subject  the
                        Company  to   concentration   of  credit  risk   consist
                        primarily  of  receivables.  In  the  normal  course  of
                        business,  the  Company  provides  credit  terms  to its
                        customers.  Accordingly,  the Company  performs  ongoing
                        credit   evaluations  of  its  customers  and  maintains
                        allowances  for possible  losses which,  when  realized,
                        have been within the range of management's expectations.

                        The Company  maintains its cash in bank deposit accounts
                        which, at times,  may exceed  federally  insured limits.
                        The  Company  has not  experienced  any  losses  in such
                        accounts   and   believes  it  is  not  exposed  to  any
                        significant credit risk on cash and cash equivalents.

--------------------------------------------------------------------------------
                                                                             F-9
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

1.   Organization       Use  of  Estimates  in  the   Preparation  of  Financial
     and                Statements
     Summary of         The  preparation  of financial  statements in conformity
     Significant        with generally accepted  accounting  principles requires
     Accounting         management to make estimates and assumptions that affect
     Policies           the  reported  amounts  of assets  and  liabilities  and
     Continued          disclosure of contingent  assets and  liabilities at the
                        date  of  the  financial  statements  and  the  reported
                        amounts of revenues  and expenses  during the  reporting
                        period.   Actual   results   could   differ  from  those
                        estimates.

                        Reclassifications
                        Certain  reclassifications  have  been made to the prior
                        year's financial  statements in order to conform them to
                        the classifications used for the current year.


2.   Going              The financial  statements  have been  prepared  assuming
     Concern            that the Company will continue as a going concern. As of
                        December  31,  2002 the Company had a deficit in working
                        capital,   and  had  incurred  significant  losses  from
                        operations since its inception.  As further described in
                        Note 15 the  Company  has  been  named  in a  number  of
                        significant  lawsuits  and other  disputes  which  could
                        result in  significant  additional  claims  against  the
                        Company's  limited assets and limit its ability to offer
                        the  products  and  services  currently  offered  by the
                        Company.  Management is currently  attempting to resolve
                        the litigation and other disputes and to seek additional
                        equity  financing.  Since a  significant  portion of the
                        Company's  losses have been a result of businesses which
                        have been  abandoned or  discontinued  and the result of
                        actions of the Company's  former  President and Chairman
                        of the Board of  Directors,  management  is hopeful that
                        its equipment  manufacturing and real estate development
                        operations will generate  sufficient profits in order to
                        allow the Company to become profitable.  However,  there
                        are no assurances these operations will result in profit
                        for the Company or that the Company  will be  successful
                        in resolving  its  litigation in a manner which does not
                        have an adverse impact on the financial  position of the
                        Company.

--------------------------------------------------------------------------------
                                                                            F-10
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


3.   Detail of
     Certain
     Balance
     Sheet
     Accounts                                            December 31,
                                             -----------------------------------
                                                     2002              2001
                                             -----------------------------------
                Receivables:
                Trade receivables            $       822,150     $      858,365
                Less allowance for
                  doubtful accounts                 (519,522)          (100,000)
                                             -----------------------------------

                                             $       302,628     $      758,365
                                             -----------------------------------


                Inventories:
                Finished goods/purchased
                  parts                      $        37,446     $      644,549
                Work-in-process                      958,668            139,361
                Raw material                         878,134            741,221
                                             -----------------------------------

                                             $     1,874,248     $    1,525,131
                                             -----------------------------------



4.   Property and       Property and equipment consist of the following:
     Equipment
                                                          December 31,
                                             -----------------------------------
                                                   2002              2001
                                             -----------------------------------

                Equipment                    $     4,710,418     $    4,317,646
                Furniture and fixtures               171,232            165,489
                Leasehold improvements               124,507            124,507
                Transportation equipment              61,146             61,069
                                             -----------------------------------

                                                   5,067,303          4,668,711

                Less accumulated depreciation
                  and amortization                (2,474,535)        (1,721,957)
                                             -----------------------------------

                                             $     2,592,768     $    2,946,754
                                             -----------------------------------

--------------------------------------------------------------------------------
                                                                            F-11
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


4.   Property and       During  the year ended  December  31,  2001 the  Company
     Equipment          recorded  impairment  of  equipment  in  the  amount  of
     Continued          $399,600. The equipment was purchased in connection with
                        the  acquisition of CT India.  These  acquisitions  were
                        made to use in the production  process in India.  During
                        2001,  the  Company  was  unable to  successfully  begin
                        operations  in India and has been  unable to provide the
                        resources  necessary  to  make  India  successful.  As a
                        result,  the  Company  determined  the  equipment  to be
                        impaired and recorded the impairment loss.

5.   Acquisitions       Business Dimensions, Inc. and Master SRL
                        In August 2000,  the Company  acquired all of the assets
                        of Business  Dimensions,  Inc., whose major asset is the
                        license  to sell and  distribute  to the North  American
                        market   security  doors   manufactured  by  Master  SRL
                        (Master)  (an Italian  door  manufacturer).  The Company
                        paid  no  consideration  in  the  acquisition,  but  was
                        required to make certain payments in the future based on
                        specific  events.  During  the year ended  December  31,
                        2001,  the  Company  issued  166,667  shares  valued  at
                        $1,170,000  as  consideration.   This  amount  has  been
                        included  as part of the  total  consideration  paid for
                        Master,  (see  below).  The  results  of  operations  of
                        Business  Dimensions,  Inc. were not significant for the
                        year ended December 31, 2000, 2001 and 2002.

                        During October 2001, the Company entered into agreements
                        to purchase 100% of the outstanding shares of Master for
                        approximately   $8,931,000   cash  from  the  individual
                        shareholders  of  Master.   As  of  December  31,  2001,
                        $6,280,780  was due under these  agreements  to complete
                        the acquisition. Since the Company determined it did not
                        have the  resources to complete the purchase  agreements
                        it has decided to forfeit  its  deposit for  purchase of
                        shares  not fully  paid for and  attempt  to  facilitate
                        purchase of the  balance of the shares by another  party
                        which  could  require  the Company to reduce its current
                        ownership of Master.

--------------------------------------------------------------------------------
                                                                            F-12
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


5.   Acquisitions       Business Dimensions, Inc. and Master SRL - Continued
     Continued          During  the  year  ended  December 31, 2001, the Company
                        wrote  down  its net  investment in Master to 21% of the
                        recorded  book value of Master or  $386,820.  This write
                        down of  $3,581,183  during the year ended  December 31,
                        2001  is  included  in  the  accompanying  statement  of
                        operations  under the caption  "Impairment of investment
                        in unconsolidated subsidiaries". As the Company does not
                        control  Master  and  anticipates  its  investment  will
                        decrease  to less  than  20%,  the  investment  has been
                        accounted for using the cost basis of  accounting  until
                        future events dictate a change in the Company's  current
                        plans.

                        During the year ended  December  31,  2001,  the Company
                        incurred  the  following  costs in  connection  with its
                        evaluation and eventual purchase of 21% of Master.

                          Purchase of 21% of Master              $    1,677,845

                          Non-refundable deposit towards the
                            purchase of the remaining 79% of
                            Master                                      971,942

                          Issuance of 166,667 shares for
                            North American license rights
                            (see above under Business
                            Dimensions, Inc.)                         1,170,000

                          Other costs including travel,
                            consultation and accounting fees            148,216
                                                                 ---------------

                          Total paid                                  3,968,003

                          Impairment                                 (3,581,183)
                                                                 ---------------

                          Net investment as of December 31,
                            2002 and 2001                        $      386,820
                                                                 ---------------

--------------------------------------------------------------------------------
                                                                            F-13
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

5.   Acquisitions       Salinas Developers Group, Inc.
     Continued          ------------------------------
                        During  October  2001,  the Company  acquired 75% of the
                        common stock of Salinas Developers Group, Inc. (Salinas)
                        (a Puerto Rico land development company) in exchange for
                        cash of  $312,500  and a note  payable  in the amount of
                        $945,000. In connection therewith,  the Company recorded
                        the following:

                          Prepaid expenses                       $       10,600
                          Capitalized development cost                2,629,139
                          Goodwill                                    1,096,234
                          Short-term notes payable                   (1,396,257)
                          Accounts and advances payable              (2,019,394)
                          Accrued expenses                               (4,568)
                          Deposits                                      (82,500)
                                                                 ---------------

                          Net cash used (net of cash
                            acquired of $79,246)                 $      233,254
                                                                 ---------------


6.   Intangible         Intangible assets consist of the following:
     Assets
                                                                December 31,
                                                        ------------------------
                                                           2002         2001
                                                        ------------------------

                        Goodwill                        $       -   $ 2,368,856
                        License rights                    809,581     5,695,000
                        Accumulated amortization                -      (633,506)
                                                        ------------------------

                                                        $ 809,581   $ 7,430,350
                                                        ------------------------

                        Amortization  expense was  $284,747 and $462,535 for the
                        years ended December 31, 2002 and 2001, respectively.

                        On January 1, 2002,  the Company  adopted  SFAS No. 142,
                        "Goodwill  and Other  Intangible  Assets".  SFAS No. 142
                        changes  the  accounting  for  goodwill  and  intangible
                        assets with indefinite lives from an amortization method
                        to an impairment approach.


--------------------------------------------------------------------------------
                                                                            F-14
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


6.   Intangible         As of December 31, 2002, the Company determined that the
     Assets             remaining   goodwill  (from  previous   acquisitions  of
     Continued          Fleming  Manufacturing Company and Salinas) was impaired
                        and  recorded  an  impairment  loss in the  accompanying
                        statement of operations of $2,305,225.

                        As of December 31, 2002, the Company determined that the
                        license  rights were impaired and recorded an impairment
                        loss in the  accompanying  statement  of  operations  of
                        $4,030,797 ($4,885,419 less accumulated  amortization of
                        $854,622).

                        During  the year ended  December  31,  2001 the  Company
                        recorded  additional  goodwill  due to its  purchase  of
                        Salinas in the amount of $1,096,234 and also recorded an
                        impairment   loss  due  to  the  write-off  of  goodwill
                        purchased in connection  with the  acquisition  of Great
                        Wall New  Building  Systems in the amount of  $1,696,309
                        ($1,884,787 less accumulated  amortization of $188,478).
                        This  acquisition  was made to obtain  license rights to
                        the  Company's   production   process  in  The  People's
                        Republic of China.  In 2000,  these  rights  allowed the
                        Company  to enter into a joint  venture in The  People's
                        Republic of China which were also written off in 2001 as
                        an  impairment  loss in the  amount of  $622,618  and is
                        included  in  the   accompanying   2001   statement   of
                        operations under the caption,  "Impairment of Investment
                        in  Unconsolidated  Subsidiaries"  (see Note 7).  During
                        2001, the Company, through the joint venture, was unable
                        to successfully begin operations, and has been unable to
                        provide the  resources  necessary to make Great Wall New
                        Building Systems and the joint venture successful.  As a
                        result,  the Company determined the goodwill at December
                        31,  2001  in Great  Wall New  Building  Systems and the
                        corresponding joint venture is impaired and has recorded
                        impairment  losses  in  the  amount  of  $1,696,309  for
                        goodwill and $622,618 for its  investments  in the joint
                        venture.

7.   Joint Venture      During the year ended  December  31,  2000,  the Company
                        entered into a joint venture in the People's Republic of
                        China for the primary  purpose of producing  and selling
                        cement building blocks, bonding cement, polystyrene foam
                        insulation,  and related technical services. The Company
                        has a fifty-five  percent interest in the joint venture,
                        however,  due to the nature of the business  environment
                        in China,  the Company is not  considered for accounting
                        purposes  to exert  significant  control  and the  joint
                        venture has been accounted for under the equity method.


--------------------------------------------------------------------------------
                                                                            F-15
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


7.   Joint Venture      During the years ended  December 31, 2002 and 2001,  the
     Continued          joint   venture   was  not   successful   in   beginning
                        significant  operations,  or in  generating  significant
                        revenues.  Additionally,  the Company has been unable to
                        devote the needed  resources to the joint venture.  As a
                        result,  the Company  determined  its  investment in the
                        joint  venture  to  be  impaired  and  has  recorded  an
                        impairment  in the  amount of  $622,618  during the year
                        ended December 31, 2001.


8. Notes Payable        Notes payable consist of the following at December 31:

                                                      2002            2001
                                               ---------------------------------
 Notes payable to the Company's chairman
 of the board of directors, due on
 demand with no stated interest                $     5,028,354   $            -

 Note payable to an individual, due
 December 31, 2001, with interest at
 6.20% secured by property and equipment
 (related to purchase of Fleming).
 The note is currently in default                    2,125,000        2,125,000

 Advance payable to individuals and
 or entities, due on demand with no
 stated interest rate                                  903,000                -

 Notes payable to individuals and or
 entities, due September 1, 2003, with
 interest at 8.5%, secured by assets                   642,000                -

 Note payable to an entity, due on
 demand with interest at 8% secured by
 real property.                                        453,601          451,255

 Note payable to the Company's chairman
 of the board of directors, due October
 2001 with interest at 10%                             380,000          380,000


--------------------------------------------------------------------------------
                                                                            F-16
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

8.   Notes Payable
     Continued

 Bank line of credit agreement which
 allows the Company to borrow a maximum
 amount of $350,000 at an interest rate
 equal to the bank's prime rate plus
 1.5% (5.75% at December 31, 2002).  The
 line of credit is secured by accounts
 receivable, inventory, furniture,
 fixtures and equipment                                346,329          350,000

 Notes payable to relatives of the
 Company's chairman of the board of
 directors, due September 1, 2003, with
 interest at 8.5%, secured by assets                   240,000                -

 Convertible note payable to an
 individual, due September 2001 with
 interest at 10%, secured by property
 and equipment.  The note is currently
 in default.                                           200,000          200,000

 Obligation payable to an individual,
 due on demand with no stated interest
 rate, secured by equipment                            100,000          230,000

 Note payable to an individual in
 monthly installments including interest
 at 6.2%, secured by property and
 equipment (related to the purchase of
 Fleming)                                               35,341          283,418

 Advance payable to a previous employee
 and shareholder, due on demand with no
 stated interest rate                                   20,000           20,000

 Note payable to an individual for purchase
 of Salinas due on demand with no stated
 interest rate                                               -          945,000


--------------------------------------------------------------------------------
                                                                            F-17
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


8.   Notes Payable
     Continued

 Convertible note payable to an entity,
 due August 2001 with interest at 4%,
 unsecured                                                   -          350,000
                                               ---------------------------------

 Total notes payable                           $    10,473,625   $    5,334,673
                                               ---------------------------------

9.   Long-Term          Long-term debt consists of the following at December 31:
     Debt

                                                     2002            2001
                                               ---------------------------------

 Notes payable convertible into common
 stock at $10 per share, to the
 Company's chairman, due July 2, 2004,
 with interest at 10%, secured by
 Company stock                                 $     3,340,000   $    3,340,000

 Notes payable convertible into common
 stock at $10 per share, to
 organizations and individuals,
 including $250,000 due to related
 parties or entities, due July 2,
 2004, with interest at 10%,
 secured by Company stock                            2,000,000        2,000,000


 Convertible note payable to the
 Company's chairman, due October 2004
 with interest at 10%, unsecured                     1,000,000        1,000,000

 Capital lease obligation                              277,425           29,335
                                               ---------------------------------

                                                     6,617,425        6,369,335
 Less current portion                                 (103,443)         (29,335)
                                               ---------------------------------

 Long-term debt                                $     6,513,982   $    6,340,000
                                               ---------------------------------

                        Future  maturities of notes  payable and long-term  debt
                        are as follows:

                        Year Ended December 31,                Amount
                        -----------------------           ------------------

                            2003                           $     10,577,068
                            2004                                  6,446,609
                            2005                                     67,373
                                                          ------------------

                                                           $     17,091,050
                                                          ------------------


--------------------------------------------------------------------------------
                                                                            F-18
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------



10.  Capital            The   Company    leases    certain    equipment    under
     Leases             noncancellable capital leases. Assets held under capital
                        leases were included in equipment as follows:

                                                     December
                                         ----------------------------------
                                               2002            2001
                                         ----------------------------------

        Equipment                         $       307,170   $            -
        Accumulated amortization                  (20,479)               -
                                         ----------------------------------

                                          $       286,691   $            -
                                         ----------------------------------

                        Amortization  expense  on  capital  leases for the years
                        ended  December 31,  2002 and 2001 were  $20,479 and $0,
                        respectively.

                        Future payments under the capital leases are as follows:

                         Year
                         ----

                         2003                              $        118,980
                         2004                                       118,980
                         2005                                        69,405
                                                          ------------------

                         Total payments                             307,365
                         Less:  amount of interest                  (29,940)
                                                          ------------------

                        Net capital lease principal                 277,425
                        Less:  current maturities                  (103,443)
                                                          ------------------

                        Total long-term                    $        173,982
                                                          ------------------


11.  Accrued            During  February 2002, the Company became aware that its
     Settlement         Chairman of the Board of Directors and former  President
     Costs              had prepared  fraudulent  documents to misrepresent  the
                        revenues,  costs  and cash  associated  with  operations
                        conducted  by  a  subsidiary  in  India  and  concerning
                        certain loans and stock  transactions.  This resulted in
                        the Company's financial  statements being restated as of
                        December 31, 2000.


--------------------------------------------------------------------------------
                                                                            F-19
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

11.  Accrued            As a  result,  the  Company  recorded  settlement  costs
     Settlement         claims and litigation related primarily to  the  accrual
     Costs              for estimated amounts the Company may owe and the write-
     Continued          down of  assets  as  the  result  of  anticipated future
                        settlements.

12.  Income Taxes       The  provision for income taxes differs from the amounts
                        which  would  be  provided  by  applying  the  statutory
                        federal income tax rate to net loss before provision for
                        income taxes for the following reasons:

                                                           Year Ended
                                                          December 31,
                                               ---------------------------------
                                                      2002            2001
                                               ---------------------------------

                   Federal income tax benefit
                    at statutory rate          $     6,851,000   $    8,027,000
                   Stock issued for settlement
                    costs                             (132,000)               -
                   Valuation allowance              (6,719,000)      (8,027,000)
                                               ---------------------------------

                                               $             -   $            -
                                               ---------------------------------

                        Deferred tax assets  (liabilities)  are comprised of the
                        following at December 31:

                                                      2002            2001
                                               ---------------------------------

                   Net operating loss carry
                     forward                   $    11,389,000   $    6,810,000
                   Depreciation and
                     amortization                     (478,000)         (84,000)
                   Goodwill impairment               2,101,000        1,236,000
                   Investment impairment             1,896,000        1,896,000
                   License rights impairment         1,512,000                -
                   Property and equipment
                     Impairment                        150,000          150,000
                   Allowance for doubtful
                     accounts                          195,000           38,000
                                               ---------------------------------

                                                    16,765,000       10,046,000

                   Less valuation allowance        (16,765,000)     (10,046,000)
                                               ---------------------------------

                                               $             -   $            -
                                               ---------------------------------


                        A valuation  allowance  has been  recorded  for the full
                        amount  of the  deferred  tax asset  because  it is more
                        likely than not that the  deferred tax asset will not be
                        realized.


--------------------------------------------------------------------------------
                                                                            F-20
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


12.  Income Taxes       At December  31,  2002,  the  Company has  approximately
     Continued          $30,370,000  of  net  operating  loss  carryforwards  to
                        offset future taxable income.  These carryforwards begin
                        to expire in 2019.

13.  Stock Options
     and Stock-
     Based
     Compensation                                                   Exercise
                                                    Amount           Price
                                               ---------------------------------

        Outstanding at January 1, 2001                 208,333   $ 12.00 - 18.00
            Granted                                          -                 -
            Exercised                                        -                 -
            Expired                                          -                 -
                                               ---------------------------------

         Outstanding at December 31, 2001              208,333   $ 12.00 - 18.00
            Granted                                          -                 -
            Exercised                                        -                 -
            Expired                                          -                 -
                                               ---------------------------------

         Outstanding at December 31, 2002              208,333   $ 12.00 - 18.00
                                               ---------------------------------

                        The Company has adopted the  disclosure-only  provisions
                        of Statement of Financial  Accounting  Standards  (SFAS)
                        No.  123   Accounting  for   Stock-Based   Compensation.
                        Accordingly, no compensation cost has been recognized in
                        the financial  statements  for stock options  granted to
                        employees. Had compensation cost for the Company's stock
                        option plans been determined  based on the fair value at
                        the grant date  consistent  with the  provisions of SFAS
                        No. 123, the Company's net loss and loss per share would
                        have been as indicated below:

                                                           Year Ended
                                                           December 31,
                                               ---------------------------------
                                                    2002              2001
                                               ---------------------------------

                  Net loss - as reported       $   (18,268,391)  $  (21,404,016)
                  Net loss - pro forma         $   (18,268,391)  $  (21,404,016)
                  Loss per share - as reported $         (2.39)  $        (3.59)
                  Less per share - pro forma   $         (2.39)  $        (3.59)


--------------------------------------------------------------------------------
                                                                            F-21
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


13.  Stock Options      The fair value  of  each  option  granted  was estimated
     and Stock-         on  the  date  of grant  using the  Black-Scholes option
     Based              pricing model with the following assumptions:
     Compensation
     Continued
                        Expected Dividend yield                  $             -
                        Expected stock price volatility                      61%
                        Risk-free interest rate                             6.0%
                        Expected life of options                       3-5 years

                        The following table summarizes  information  about stock
                        options outstanding at December 31, 2002:


                         Options and Warrants            Options and Warrants
                              Outstanding                    Exercisable
                ----------------------------------------------------------------
                                Weighted
                                 Average
                                Remaining    Weighted                Weighted
    Range of                   Contractual   Average                  Average
    Exercise        Number        Life       Exercise     Number     Exercise
     Prices      Outstanding     (Years)      Price     Exercisable    Price
 -------------------------------------------------------------------------------

 $         12.00       141,667         0.19  $     12.00     141,667 $     12.00
           18.00        66,666         2.82        18.00      66,666       18.00
 -------------------------------------------------------------------------------

 $   12.00-18.00       208,333         1.03  $     13.92     208,333 $     13.92
 -------------------------------------------------------------------------------



14.  Redeemable         In  connection  with the  issuance  of debt the  Company
     Common             issued  155,834   shares  of  common  stock.   The  debt
     Stock              agreement allows the holder of the shares to require the
                        Company to repurchase  those shares for $7.50 per share.
                        Consequently, the Company recorded a liability for these
                        shares equal to the  estimated fair value of $1,168,748.
                        At December 31, 2002  and 2001, the option  price of the
                        shares were more than the  market price of the Company's
                        stock.


--------------------------------------------------------------------------------
                                                                            F-22
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

15.  Commitments        Royalty Agreements
     and                During  the year ended  December  31,  2000 the  Company
     Contingencies      settled  litigation  with an entity  concerning  certain
                        license  rights.  Under the terms of the  settlement the
                        entity agreed to ratify licenses  previously  granted to
                        the Company  for China,  India and Mexico for a one time
                        license fee of $25,000  each.  In  addition,  the entity
                        agreed to issue  the  Company  a  license  for  Southern
                        Europe for a license fee of $50,000,  and to recognize a
                        previous  license  for  Romania  granted  to  a  Company
                        investee.  The settlement agreement requires the Company
                        to pay a royalty of 4.5% of gross revenues from licensed
                        products.  During  2001,  the  Company  entered  into  a
                        license agreement for Puerto Rico.  Approximate  minimum
                        royalties are as follows:

                         Year Ending December 31,                     Amount
                         ------------------------                ---------------
                              2003                               $      532,000
                              2004                               $      570,000
                              2005                               $      570,000
                              2006                               $      570,000

                        During  2002 and  2001 the  Company  paid  $164,500  and
                        $451,410,   respectively  under  these  agreements.  The
                        Company has also asserted a claim for a credit or refund
                        of  approximately  $290,124 for overpayment of royalties
                        in 2001.  The Company has also  established  a valuation
                        allowance   for  this   claim  due  to  an   uncertainty
                        concerning the ultimate realization of those amounts. As
                        described in Note 16, there is litigation concerning the
                        Company's rights under these agreements.

                        Other Claims
                        A  former  officer  of the  Company  confirmed  a  claim
                        against  the Company  for  approximately  $615,000 as of
                        December   31,   2002   for    reimbursable    expenses,
                        compensation  pursuant to an  acquisition  agreement and
                        also failure to timely remove the restrictive  legend on
                        shares of the  Company's  common  stock held by him. The
                        Company  has  not   recorded  any  of  these  claims  as
                        management  disputes  the claims and  believes  they are
                        without merit.

--------------------------------------------------------------------------------
                                                                            F-23
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


15.  Commitments        Other Claims - Continued
     and                On approximately  April 25, 2001, the Company  purchased
     Contingencies      equipment from an individual,  and through  December 31,
     Continued          2002,  the  Company  has  paid  its  obligations  to the
                        individual except for $100,000 of outstanding principal,
                        which  is   recorded  in  the   accompanying   financial
                        statements  as  a  note  payable.   The  individual  has
                        confirmed a claim  against  the  Company for  additional
                        compensation for non-payment since the date of purchase,
                        accrued interest since the date of purchase and $.10 per
                        unit of inventory  that the Company has  produced  using
                        this  equipment  since the date of purchase  and through
                        December 31,  2002.  The Company has not recorded any of
                        the   additional   compensation   in  the   accompanying
                        financial statements as management disputes the claims.

                        A possible  assessment  exists for the Company's alleged
                        failure to conduct an  archaeological  study of the site
                        where a  residential  project is being  developed by the
                        Company in Puerto Rico.

                        A  potential  claim  exists  from the  federal and state
                        taxing  authorities for the Company's alleged failure to
                        withhold  and deduct the FICA tax and Puerto Rico income
                        taxes on compensation paid to employees, officers and/or
                        directors of the Company.

                        The  Company  is  also  subject  from  time  to  time to
                        lawsuits and other claims arising in the ordinary course
                        of business. In the opinion of the Company's management,
                        these matters are adequately covered by insurance or, if
                        not so covered,  are without merit or are of such nature
                        or  involve  amounts  that  would  not  have a  material
                        adverse  effect on the  Company's  financial  condition,
                        results   of   operations   or  cash  flows  if  decided
                        adversely.

16.  Litigation         Securities and Exchange Commission
                        SEC v. Eagle  Building  Technologies,  Inc.  and Anthony
                        D'Amato (Civil Action No.  1:02CV397ESH  D.D.C.) The SEC
                        and the  Company  agreed to settle  the  lawsuit  in May
                        2002. The Court signed the settlement papers on or about
                        May 30, 2002,  entering a permanent  injunction  against
                        the  Company  for any future  violations  of Sections 10
                        (b), 13 (a),  13 (b) (2) (A),  and 13 (b) (2) (B) of the
                        Securities  Exchange  Act  of  1934,  and  Rules  10b-5,
                        12b-20,  13a-1,  13a-13, and 13b2-1. The Company made no
                        admission or denial of liability in connection  with the
                        settlement.

--------------------------------------------------------------------------------
                                                                            F-24
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------


16.  Litigation         Securities and Exchange Commission - Continued
     Continued          In March  2003,  Anthony  D'Amato was ordered to forfeit
                        $56,623 in trading profits plus prejudgment  interest of
                        $5,637,  and  agreed to cancel  367,742  shares of Eagle
                        Building  stock,  including  286,500  shares of stock he
                        received  as  compensation  for acting as an officer and
                        director of the Company and an additional  81,242 shares
                        to satisfy  the  requirement  that he repay his  trading
                        profits and prejudgment  interest that had been given as
                        part of his compensation.

                        In  October  2002,  D'Amato  consented  to  entry  of  a
                        permanent  injunction  that  prohibits  him from  making
                        false  statements in press  releases and reports made to
                        the SEC, creating false business records,  and providing
                        false information to the Company's auditors in violation
                        of  the  anti-fraud,  periodic  reporting  and  internal
                        record-keeping provisions of Sections 10(b) and 13(b)(5)
                        of the Securities  Exchange Act of 1934 and Rules 10b-5,
                        12b-20,  13b2-1, and 13b2-2. D'Amato is also barred from
                        serving as an officer or director of any publicly traded
                        company.

                        Mr.  D'Amato  pleaded  guilty in a criminal  case to one
                        count of  securities  fraud in the Southern  District of
                        Florida  before  United  States  District  Judge Jose E.
                        Martinez,  and is scheduled  to be sentenced  criminally
                        for his  conduct  in  relation  to the  Company in July.
                        Pursuant  to  the  Victims  Recovery  Act,  the  Company
                        intends to file a claim for restitution.

                        Class Actions
                        As previously reported,  the Company has been named as a
                        defendant  in  various   class  action  suits   alleging
                        securities  violations  by Eagle  pursuant  generally to
                        Section 10(b) and 20(a) of the Exchange Act and Sec Rule
                        10b-5 promulgated  thereunder.  The complaints generally
                        allege that Eagle intentionally perpetrated a fraud upon
                        the public by the  dissemination of false and misleading
                        information.

                        By order dated July 31, 2002, the United States District
                        Court for the Southern District of Florida  consolidated
                        all of the class action cases, appointed certain parties
                        as lead  plaintiffs and the attorneys for the plaintiffs
                        as lead co-counsel for the class. The new case is styled
                        In Re  Eagle  Building  Technologies,  Inc.,  Securities
                        Litigation, Case Number 02-80294-CIV-RYSKAMP.


--------------------------------------------------------------------------------
                                                                            F-25
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Class Actions - Continued
     Continued          Kelso  Capital  et al. v. Eagle  Building  Technologies,
                        Inc., Anthony D'Amato,  Paul-Emile Desrosiers and Tanner
                        + Co.  (Southern  District  of  Nevada,  Civil  Case No.
                        CV-S-02-0367-PMP-PAL, filed March 15, 2002).

                        Alan  Davidson  and Victor  Kashner  v.  Eagle  Building
                        Technologies,   Inc.   (United  States  District  Court,
                        Southern     District    of     Florida,     Case    No.
                        02-80323-CIV-RYSKAMP, filed March 26, 2002)

                        Marc Newman,  Kenneth Wait, Dr. Anthony Roberts and Dana
                        Davis,  et al. v.  Eagle  Building  Technologies,  Inc.,
                        Anthony  D'Amato,  Dr. Ralph Thomson,  Andros  Savvides,
                        Wilfred  G.   Mango,   Jr.,   Donald   Pollock,   Robert
                        Kornahrens,  Charles A. Gargano, Samuel Gejedson,  Meyer
                        A.  Berman  and  Tanner + Co.  (United  States  District
                        Court,   Southern,   District   of   Florida,  Case  No.
                        02-80294-CIV-RYSKAMP, filed April 5, 2002)

                        Inglewood Holdings, Ltd. V. Eagle Building Technologies,
                        Inc., and Anthony D'Amato (United States District Court,
                        Southern     District    of     Florida,     Case    No.
                        02-80340-CIV-MIDDLEBROOKS, filed April 16, 2002)

                        David D. Pain v. Eagle Building  Technologies,  Inc. and
                        Anthony D'Amato (United States District Court,  Southern
                        District of Florida, Case No. 02-80372-CIV-HURLEY, filed
                        April 24, 2002)

                        Jeff Gass v. Eagle Building Technologies,  Inc., Anthony
                        D'Amato,  Paul-Emile Desrosiers and Tanner + Co. (United
                        States  District  Court,  District  of Nevada,  Case No.
                        CV-S-02-0640-PMP-RJJ, filed May 6, 2002)

                        Robert Gluck v. Eagle Building Technologies, Inc. et al.
                        (United  States  District  Court,  Southern  District of
                        Florida, Case No. 02-CV- 80302, filed April 8, 2002

                        Guerrilla   IRA   Partners,   L.P.  v.  Eagle   Building
                        Technologies,  Inc. and Anthony  D'Amato  (United States
                        District Court,  Southern District of Florida,  Case No.
                        02-CV-80403, filed May 3, 2002)

--------------------------------------------------------------------------------
                                                                            F-26
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Additional Securities Litigation
     Continued          Mark  Neuman  v.  Anthony  D'Amato,  et  al.  and  Eagle
                        Building  Technologies,  Inc.  (as a nominal  defendant)
                        (15th  Judicial  Circuit in and for Palm  Beach  County,
                        Florida,  Case No. CA  02-05560-AG).  This complaint was
                        filed  on  May 9,  2002,  as a  shareholders  derivative
                        action    alleging    breach    of    fiduciary    duty,
                        misappropriation   of  confidential   information,   and
                        contribution  and  indemnification.   The  Plaintiff  is
                        seeking damages in excess of $15,000.  The Company filed
                        a motion to dismiss the  complaint on July 3, 2002.  The
                        Court  has not yet  issued a ruling  on the  motion.  No
                        discovery  has  occurred and no trial date has been set.
                        We are  unable  to  express  an  opinion  regarding  the
                        outcome of this  litigation or as to any potential  loss
                        or range of loss to the Company in the event that either
                        a favorable or unfavorable outcome results. Co-Defendant
                        Robert Kornahrens recently filed a cross-claim for legal
                        fees against the Company.

                        Anthony I.  Bentley,  James Bruce Whiting and Beverly D.
                        Whiting  v. Eagle  Building  Technologies,  Inc.  (Third
                        Judicial  District Court, Salt Lake City, Utah, Case No.
                        CA   02-0901808).   The  complaint   alleges  breach  of
                        contract,  unjust  enrichment and conversion for failure
                        to issue securities to the Plaintiffs.

                        Trust #191190MAN(A) v. Eagle Building Technologies, Inc.
                        et al. (US  District  Court,  District of Utah,  Central
                        Division,  Case  No.  02-CV-202CV-0502ST).  This  is  an
                        action  brought  by a Trust  whose  agent is  Clealon B.
                        Mann.  The Trust's sole cause of action is brought under
                        RICO and  alleges  that Eagle  failed to remove the Rule
                        144 legend from 8,333 shares of Eagle stock, claimed the
                        shares were attached pursuant to a pending lawsuit,  and
                        titling shares in the name of Clealon Mann.  Plaintiff's
                        claimed  damages  are the amount of the Eagle  shares at
                        the time it would  have sold  them.  However,  Plaintiff
                        does not indicate when such a sale would have  occurred.
                        As  with  the  McConkie  lawsuit,   General   Securities
                        Transfer   Agency  (GSTA)  and  Iverna  Morgan,   GSTA's
                        president, were named as defendants and Eagle has agreed
                        to indemnify  them. The Company is defending this action
                        based upon the  following  grounds:  (a) the shares were
                        titled in the name of the trust, and listed Mann only as
                        trustee;  (b) the shares were issued without restriction
                        in August 2000;  and (c) at least two writs of execution
                        were issued in 2001, both of which specifically attached
                        the  Trust's  shares  and  prevented  the  sale  of said
                        shares. The Company has filed an answer to the Complaint
                        denying all allegations.


--------------------------------------------------------------------------------
                                                                            F-27
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Additional Securities Litigation - Continued
     Continued          F. Briton  McConkie and Stephen R. Fey v. Eagle  Capital
                        International,  and General Securities  Transfer Agency,
                        Inc.  (United  States  District  Court  for the  Central
                        Division of Utah, Civil Case No. 2:01-CV0-0950 ST). This
                        is an action brought by Brinton McConkie and Stephen Fey
                        on the  grounds of breach of  contract.  The  plaintiffs
                        allege that Eagle wrongfully refused to transfer 200,000
                        shares,  represented by  certificates  number 432114 and
                        432119. Plaintiffs have produced affidavits of Doug Dent
                        and Ralph Thompson, former members of the Eagle Board of
                        Directors,  in which both men state that the shares were
                        properly  issued.  The potential  damages in this matter
                        would  likely be the value of the shares in April  2001,
                        when   Plaintiffs   initially   requested   the   shares
                        transferred.  The Company's asserted defense is that the
                        shares in question were never properly  issued and there
                        was a lack or failure of  consideration.  Discovery  has
                        just  begun.  Additionally,  GSTA,  the agency  handling
                        Eagle's  stock  certificates,  was named as a defendant.
                        Eagle has agreed to indemnify GSTA in this matter.

                        Deborah  Donoghue v. Eagle  Building  Technologies,Inc.,
                        U.S.  District  Court for the  Southern  District of New
                        York Case 03CV2472.  This  stockholders  derivative suit
                        seeks to recover alleged "short swing" profits  realized
                        by certain  beneficial  owners of the  Company's  common
                        stock in  violation of Section  16(b) of the  Securities
                        Exchange Act of 1934. The Company's position is that the
                        claims are satisfied  because the proceeds of such sales
                        in excess of any  imputable  profits  were given over to
                        the  Company  and/or  that  in  any  case  many  of  the
                        transactions   identified   in  the  claims  are  exempt
                        transactions.  A pre-trial conference has been scheduled
                        in the case.

                        Other Litigation
                        Polysolutions   Corp.  and  Bullhide  Liner  of  Broward
                        County, Inc. v. Eagle Capital International,  Inc. (14th
                        Judicial  Circuit  Court in and for Palm  Beach  County,
                        Florida, Civil Case No. CA-01-9017AB). The complaint was
                        filed on September 4, 2001.  On or about April 23, 2002,
                        Plaintiffs sought to amend the complaint to name Anthony
                        D'Amato, Ralph Thomson,  Richard Lahey, Andros Savvides,
                        Wilfred  Mango,   Donald  Pollock,   Robert  Kornahrens,
                        Charles Gargano, Samuel Gejdenson,  Meyer Berman, Howard
                        Ash, and Bruce  Mauldin as  individual  defendants.  The
                        Amended   Complaint   alleges  counts  for  breaches  of
                        contract,   fraud  in  the   inducement  and  breach  of
                        fiduciary  duty.  The Company is presently  substituting
                        the law firm of Adorno and Yoss,  located in Miami, West
                        Palm Beach,  Boca Raton and Fort Lauderdale,  and Naples
                        Florida,  as counsel in this  matter.  A cross claim was
                        recently  filed by former  Director  Kornahrens  in this
                        matter,  complaining  that the  Company  was  failing to
                        honor  its   obligations  to  defend  him.  The  Company
                        believes  that this  cross  claim will be  withdrawn  in
                        light of the substitution of new counsel.

--------------------------------------------------------------------------------
                                                                            F-28
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Other Litigation - Continued
     Continued          Actionable  Intelligence  Technologies,  Inc.  v.  Eagle
                        Building  Technologies,  Inc. (15th Judicial  Circuit in
                        and for Palm Beach  County,  Florida,  Civil Case No. CA
                        02-03197  AB). A complaint  was filed on March 12, 2002,
                        by a company based in San Diego, California, arising out
                        of the Company's  alleged  breach of a contract  between
                        the parties,  and seeking  damages in excess of $15,000.
                        The  plaintiff  claims that the  Company  owes more than
                        $820,000 for  consulting  services  rendered,  and up to
                        $5,000,000 for services that were to be performed in the
                        future.  On April 30, 2002,  the Company filed an answer
                        to the complaint denying liability and asserting several
                        affirmative  defenses.  Discovery is in its  preliminary
                        stages.  No trial  date has  been  set,  but the case is
                        subject to mandatory mediation.  Failing settlement, the
                        Company intends to defend this action vigorously. We are
                        unable to express an opinion  regarding  the  outcome of
                        this  litigation or as to any potential loss or range of
                        loss to the Company in the event that either a favorable
                        or unfavorable outcome results. The Company is presently
                        substituting the law firm of Adorno and Yoss, located in
                        Miami,  West Palm Beach, Boca Raton and Fort Lauderdale,
                        and Naples Florida, as counsel in this matter.

                        Taskin Ticaret, LTD. v. Fleming Manufacturing Company,
                        Inc. (Circuit Court for Crawford County, Missouri, Case
                        No. CV100-269CC). A judgment of $119,215 was entered
                        into against Fleming on May 29, 2002 following a two day
                        jury trial. Because all of the assets of Fleming serve
                        as collateral to lending institutions or other secured
                        creditors, Fleming does not have the authority or
                        ability to pay the judgment. The matter is on appeal.


--------------------------------------------------------------------------------
                                                                            F-29
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Other Litigation - Continued
     Continued          J.C.   Group  Corp.  and  Jose  A.  Camacho  v.  Salinas
                        Developers, Inc., Eagle Building Technologies (Civil No.
                        G-CD2002-0109;  Sala 302). On April 18, 2002, Plaintiffs
                        J.C.  Group,  Inc.  ("J.C.  Group") and Jose A.  Camacho
                        ("Camacho")    filed   a   complaint   against   Salinas
                        Development   Group,   Inc.   ("SDG"),   a  Puerto  Rico
                        corporation controlled by the Company and Eagle Building
                        Technologies,  of  Puerto  Rico,  Inc.  ("Eagle-PR"),  a
                        wholly-owned  subsidiary  of the  Company in the Federal
                        District  Court  of  the  Commonwealth  of  Puerto  Rico
                        claiming  $1,260,299  plus  damages and legal fees.  SDG
                        timely  filed  the  Answer  to  the   Complaint   and  a
                        Counterclaim.  SDG  alleges  in  its  Counterclaim  that
                        Plaintiffs  owe  $4,110,000  to SDG on  account  of fund
                        deviation,  false and  excessive  invoicing and damages.
                        Eagle-PR  filed a motion for summary  judgment  based on
                        the fact that it is not  liable  for the acts of SDG and
                        that  Eagle-PR  is  not  the   stockholder  of  SDG.  In
                        addition,  SDG  filed a Third  Party  Complaint  against
                        Camacho for $5,910,000 claiming:  1) poor performance as
                        project manager; 2) fund deviation;  3) false invoicing;
                        4) purchase  of land in his own name with SDG funds;  5)
                        breach of fiduciary  duty;  6)  interference  with SDG's
                        business;  and 7) failure to make capital contributions.
                        On June 20, 2002,  Plaintiffs filed an Amended Complaint
                        against  SDG and  Eagle-PR,  and  increased  the  amount
                        claimed to  $2,872,857,  including  the lost  profits of
                        Camacho.  As of the date of this filing,  because of the
                        complex nature of the matters  involved,  the outcome of
                        this case cannot be predicted.

                        Paul-Emile  Desrosiers v. Eagle  Building  Technologies,
                        Inc.  (15th  Judicial  Circuit  in and  for  Palm  Beach
                        County, Florida, Civil Case No. CA 02-03431 AA). This is
                        an action filed against the Company on April 1, 2002, by
                        the former President and Chief Executive  Officer of the
                        Company   seeking  damages  in  excess  of  $15,000  for
                        allegedly  owed  compensation  and  reinstatement  as an
                        officer  and  director.  The  Company  filed a motion to
                        dismiss  five of the six  counts in the  complaint;  the
                        Court heard oral  argument on June 28, 2002. On July 25,
                        2002, the Court dismissed  without  prejudice the counts
                        seeking  declaratory relief and damages for retaliation,
                        while  dismissing  with prejudice the counts  requesting
                        injunctive  relief. The only count remaining at the time
                        of this  Report  is  Desrosiers's  claim  for  Breach of
                        Contract.  Discovery is in its preliminary  stages.  The
                        Company is presently substituting the law firm of Adorno
                        and Yoss,  located in Miami, West Palm Beach, Boca Raton
                        and Fort Lauderdale,  and Naples Florida,  as counsel in
                        this matter.

--------------------------------------------------------------------------------
                                                                            F-30
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Other Litigation - Continued
     Continued          Jennifer Nina v. Eagle Building Technologies, Inc. (15th
                        Judicial Circuit in and for Palm Beach County,  Florida,
                        Civil Case No. CA 02- 4297AE).  This complaint was filed
                        April   10,   2002,   alleging   claims   for   unlawful
                        termination,  retaliation, breach of contract and unpaid
                        wages,  and seeking damages in excess of $15,000.  On or
                        about May 6, 2002, the Company filed a motion to dismiss
                        certain claims, which alleged retaliatory discharge. The
                        Court,  by order  entered  June 26,  2002,  granted that
                        motion,   dismissing  those  claims  without  prejudice.
                        Discovery is in the preliminary  stages. A trial date is
                        set,  but the case is  subject to  mandatory  mediation.
                        Failing  settlement,  the Company intends to defend this
                        action  vigorously.  We are unable to express an opinion
                        regarding  the outcome of this  litigation  or as to any
                        potential  loss or range of loss to the  Company  in the
                        event that either a  favorable  or  unfavorable  outcome
                        results.  The Company is presently  substituting the law
                        firm of Adorno  and Yoss,  located  in Miami,  West Palm
                        Beach,  Boca  Raton  and  Fort  Lauderdale,  and  Naples
                        Florida, as counsel in this matter.

                        Julio  Cruz,  Jr. v Eagle  Building  Technologies,  Inc.
                        (15th  Judicial  Circuit in and for Palm  Beach  County,
                        Florida,  Civil Case No. CA 02-  005668-AF).  This is an
                        action  filed on May 15, 2002,  by a former  employee of
                        the  Company  seeking  damages in excess of $15,000  for
                        wrongful  termination,  retaliation,  unpaid wages,  and
                        breach  of  contract.  The  Company  filed a  motion  to
                        dismiss  certain  claims,   which  alleged   retaliatory
                        discharge.  The Court has not yet ruled on that  motion,
                        although  Plaintiff's  counsel has agreed to entry of an
                        order   dismissing   these  claims  without   prejudice.
                        Discovery is in the  preliminary  stages.  No trial date
                        has  been  set.  A trial  date is set,  but the  case is
                        subject to mandatory mediation.  Failing settlement, the
                        Company intends to defend this action vigorously. We are
                        unable to express an opinion  regarding  the  outcome of
                        this  litigation or as to any potential loss or range of
                        loss to the Company in the event that either a favorable
                        or unfavorable outcome results. The Company is presently
                        substituting the law firm of Adorno and Yoss, located in
                        Miami,  West Palm Beach, Boca Raton and Fort Lauderdale,
                        and Naples Florida, as counsel in this matter.

--------------------------------------------------------------------------------
                                                                            F-31
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Other Litigation - Continued
     Continued          Gina Nicoleau v. Eagle Building Technologies, Inc. (15th
                        Judicial Circuit in and for Palm Beach County,  Florida,
                        Civil Case No.  CA-02-  05675-AH).  This  complaint  was
                        filed on June 14,  2002,  by a  former  employee  of the
                        Company   seeking  damages  in  excess  of  $15,000  for
                        wrongful  termination,  retaliation,  unpaid wages,  and
                        breach of contract.  Plaintiff's  counsel has advised us
                        that he  intends  to  amend  the  complaint  to drop the
                        retaliatory  discharge  claims.   Discovery  is  in  the
                        preliminary stages. A trial date is set, but the case is
                        subject to mandatory mediation.  Failing settlement, the
                        Company intends to defend this action vigorously. We are
                        unable to express an opinion  regarding  the  outcome of
                        this  litigation or as to any potential loss or range of
                        loss to the Company in the event that either a favorable
                        or unfavorable outcome results. The Company is presently
                        substituting the law firm of Adorno and Yoss, located in
                        Miami,  West Palm Beach, Boca Raton and Fort Lauderdale,
                        and Naples Florida, as counsel in this matter.

                        A.R.H.  Family et al. v.  Eagle  Building  Technologies,
                        Inc.,  Case Number  GN203813,  345th Judicial  District,
                        Travis County, Texas.; La Petrona Ltd. v. Eagle Building
                        Technologies,  GN300161, 250th Judicial District, Travis
                        County  Texas.  These  suits  allege  that  the  Company
                        fraudulently   solicited   investment   monies   from  a
                        syndicate  of  individual  investors  organized by their
                        investment  advisor  Lee Urbina.  The Company  takes the
                        position  that  the  fraud  was   perpetrated  on  these
                        investors  by  Anthony  D'Amato on his own  account  and
                        without  the  knowledge  of  the  Company   through  the
                        creation of an  investment  vehicle  entirely  under his
                        personal control,  without authorization of the Company,
                        and for his own purposes.

                        Eagle  Building  Technology  Inc.,  v.  Zurich  American
                        Insurance Company, 02-22611-CIV-Ryskamp,  U.S.  District
                        Court for the  Southern  District of Florida.  This case
                        approved  a  settlement  between  the  Company  and  its
                        insurance carrier whereby certain funds were released to
                        the Company  pursuant to a binder for D&O and  liability
                        coverage. Under the terms of the Settlement,  the former
                        officers  are barred from  claiming  coverage  under the
                        binder and the funds are  available  to the  Company for
                        the costs of defending liability claims asserted against
                        the Company.

--------------------------------------------------------------------------------
                                                                            F-32
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

16.  Litigation         Other Litigation - Continued
     Continued          IMSI,  Inc. v. Eagle Building  Technologies,  Inc., U.S.
                        District Court,  Central Division,  Utah. The suit seeks
                        damages and an injunction  for alleged  infringement  of
                        IMSI patents  related to the  Company's  use of the IMSI
                        system in Puerto  Rico.  The Company is of the view that
                        the claims have no merit.  The  Plaintiff  has not moved
                        for specific  relief in  connection  with the  Company's
                        projects in Puerto Rico.

                        Threatened Litigation
                        Claims by Cheryl Ray. Ms. Ray is the surviving spouse of
                        Herbert Ray, a founding  member of IMSI.  Upon Herbert's
                        death,  Ms.  Ray  received  2,000,000  IMSI  shares.  In
                        January 1999, Ms. Ray agreed to exchange her IMSI shares
                        for Eagle  Shares.  Ms. Ray  alleges  that in June 2000,
                        Anthony  D'Amato,  then  President  and  CEO  of  Eagle,
                        informed  her that her  original  IMSI shares were being
                        cancelled   and  that   there   had  been   insufficient
                        consideration for the 1999 stock exchange.  According to
                        Ms.  Ray,  she then  agreed  to return  all but  500,000
                        common  shares.   Ms.  Ray  now  alleges  that  she  was
                        defrauded by Mr.  D'Amato and Eagle.  In November  2001,
                        she issued a demand letter for $2,500,000,  or the value
                        of her  original  shares.  In  February  2002,  Ms.  Ray
                        threatened legal action.

17.  Related Party      During the years ended  December 31, 2002 and 2001,  the
     Transactions       Company issued 74,667 and 532,472 shares of common stock
                        to  its  president  and  chief  executive   officer  for
                        services and or payment on notes payable, respectively.

                        The Company  operates in China while holding  additional
                        licenses  for  Mexico,  India,  Puerto  Rico and  Europe
                        pursuant   to  five  (5)   licensing   agreements   with
                        Integrated Masonry Systems  International,  Inc. (IMSI).
                        The  Company  owns  thirty-eight  percent  (38%)  of the
                        issued and outstanding shares of IMSI.


--------------------------------------------------------------------------------
                                                                            F-33
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

17.  Related Party      During the period commencing  October 2000 to July 2001,
     Transactions       Mr. D'Amato  converted loans in the amount of $2,397,416
     Continued          to the Company into 789,879 shares of restricted  common
                        stock.

                        On January 26, 2001,  the  Company's  Board of Directors
                        approved a 1-for-6  reverse stock split of the Company's
                        common stock effective February 5, 2001.

                        During the period ended December 31, 2001,  primarily in
                        July 2001,  Meyer A. Berman and  affiliates  of Meyer A.
                        Berman,  Chairman of the Board of Directors,  loaned the
                        Company a total of $3,340,000.  In addition,  Mr. Berman
                        personally and through  various  entities  controlled by
                        Mr.  Berman  made  various  short-term  advances  to the
                        Company   through-out   2002  and   2001   which  as  of
                        December 31,   2002  and  2001   totaled   approximately
                        $6,700,000 and $1,380,000.  During the period commencing
                        January 1, 2003 through  June 30, 2003,  Meyer A. Berman
                        and  affiliates  of Mr.  Berman  loaned  the  Company an
                        additional   approximate  net  amount  of  $900,000.  In
                        February 2002, Andy Berman and Abby Berman,  children of
                        Meyer A.  Berman,  loaned the Company a total net amount
                        of $240,000.

                        During May 2002,  Mr.  Berman  contributed  $310,000  of
                        capital to the Company.  This sum  represents  imputable
                        short  swing  profits  and  proceeds  of  sales  of  the
                        Company's  stock by M. A.  Berman  and  affiliates  as a
                        source of working  funds given to the Company to support
                        operational  needs  during the  second  quarter of 2002.
                        Pursuant  to Section 16 (b) of the  Securities  Exchange
                        Act, such imputed profits are  irrevocably  committed to
                        the  Company  by  Berman.  These  transactions  are  the
                        subject of litigation.

                        During the period ended  December 31, 2001,  the Company
                        had  unsecured  advanced  receivables  in the  aggregate
                        amount of  $934,645  from its former  Chairman  and CEO,
                        Anthony D'Amato.

                        In February 2002, Don Pollock,  an executive officer and
                        director claims to have loaned the Company $40,000.

                        In April 2002, Martin Shubik, a former director,  loaned
                        the Company $30,000.

                        In May 2002, the Company assigned all of its interest in
                        Business Dimensions, Inc. to Don Pollock, an officer and
                        director of the Company.

                        As a result of the Company's investigation in connection
                        with the  restatement  of its 2000 and 2001  financials,
                        the Company  believes that there may be third parties to
                        whom Anthony D'Amato,  the Company's former Chairman and
                        CEO, has obligated,  or made representations  purporting
                        to  obligate,  the  Company,  or to issue  equity in the
                        Company  without the knowledge or  authorization  of the
                        Company's Board of Directors.  The Company will continue
                        to  investigate  and  determine the validity of any such
                        third party claims on a case by case basis.  At the time
                        of  this  filing,   the  Company  cannot  determine  the
                        financial  impact, if any, to the Company as a result of
                        Mr. D'Amato's actions.

--------------------------------------------------------------------------------
                                                                            F-34
<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

18.  Fair Value of      The  Company's  financial  instruments  consist of cash,
     Financial          receivables,  payables and notes  payable.  The carrying
     Instruments        amount of cash, receivables  and  payables  approximates
                        fair  value  because of the  short-term  nature of these
                        items.   The  carrying   amount  of  the  notes  payable
                        approximates  fair  value as the  individual  borrowings
                        bear  interest  at  floating  market  interest  rates in
                        aggregate.

19.  Segment            The Company operates in the following business segments:
     Reporting          block and  wallsystems,  block  equipment,  real  estate
                        development, and security doors.

<TABLE>
<CAPTION>

                                                    Year Ended December 31, 2002
                           -------------------------------------------------------------------------------
                             Block & Wall         Block        Real Estate    Security         Total
                               Systems          Equipment       Development    Doors
                           -------------------------------------------------------------------------------

<S>                        <C>               <C>              <C>            <C>           <C>
Revenues                   $             -   $    2,928,164   $          -   $         -   $    2,928,164
Cost of sales                            -        2,435,531              -             -        2,435,531
Selling, general and
  administrative                 9,386,379        1,267,606              -             -       10,653,985
Impairments                      6,336,022                -              -             -        6,336,022
Loss before taxes              (17,896,570)        (371,821)             -             -      (18,268,391)
Identifiable assets              2,389,322        3,717,789      4,592,157             -       10,699,268
Capital expenditures               106,000           10,422              -             -          116,422
</TABLE>

<TABLE>
<CAPTION>

                                                    Year Ended December 31, 2001
                           -------------------------------------------------------------------------------
                             Block & Wall         Block        Real Estate    Security         Total
                               Systems          Equipment       Development    Doors
                           -------------------------------------------------------------------------------

<S>                        <C>               <C>              <C>            <C>           <C>
Revenues                   $        13,948   $    3,388,967   $          -   $         -   $    3,402,915
Cost of sales                            -        2,917,864              -             -        2,917,864
Selling, general and
  administrative                10,172,396        1,079,164              -             -       11,251,560
Impairments                      2,718,527                -              -     3,581,183        6,299,710
Loss before taxes              (17,449,017)        (373,816)             -    (3,581,183)     (21,404,016)
Identifiable assets              6,151,303        5,523,055      3,815,219       386,820       15,876,397
Capital expenditures               209,515           69,176              -             -          278,691

</TABLE>

20.  Recent             In April 2002, the FASB issued SFAS No. 145, "Rescission
     Accounting         of FASB Statements No. 4, 44, and 64,  Amendment of SFAS
     Pronounce-         No.  13,  and  Technical  Corrections."  This  Statement
     ments              amends  existing  authoritative  pronouncements  to make
                        various  technical  corrections,  clarify  meanings,  or
                        describe their  applicability  under changed conditions.
                        This statement  became effective on May 1, 2003 and does
                        not have a material  impact on the  Company's  operating
                        results or financial position.

                        In November  2002,  the FASB issued FASB  Interpretation
                        No. ("FIN") 45,  "Guarantor's  Accounting and Disclosure
                        Requirements   for   Guarantees,    Including   Indirect
                        Guarantees of  Indebtedness  of Others." The  disclosure
                        requirements  of FIN 45  were  effective  for  financial
                        statements  of interim or annual  periods  ending  after
                        December 15, 2002 and did not have a material  impact on
                        the Company's consolidated financial statements.


--------------------------------------------------------------------------------
                                                                            F-35

<PAGE>

                                               EAGLE BUILDING TECHNOLOGIES, INC.
                                      Notes to Consolidated Financial Statements

                                                                       Continued
--------------------------------------------------------------------------------

20.  Recent             In  November  2002,  the  Emerging   Issues  Task  Force
     Accounting         ("EITF")   reached  a  consensus  on  Issue  No.  00-21,
     Pronounce-         "Revenue Arrangements with Multiple  Deliverables." EITF
     ments              Issue No. 00-21 provides  guidance on how to account for
     Continued          arrangements that involve the delivery or performance of
                        multiple products, services and/or rights to use assets.
                        The  provisions  of EITF  Issue No.  00-21 will apply to
                        revenue  arrangements  entered  into in  fiscal  periods
                        beginning  after June 15,  2003.  The  adoption  of this
                        consensus is not  expected to have a material  impact on
                        the Company's consolidated financial statements.

                        In  December   2002,  the  FASB  issued  SFAS  No.  148,
                        "Accounting for Stock-Based Compensation -Transition and
                        Disclosure-an amendment of FASB Statement No. 123." This
                        Statement provides alternative methods of transition for
                        a  voluntary  change to the fair value  based  method of
                        accounting for  stock-based  employee  compensation.  In
                        addition,   this   Statement   amends   the   disclosure
                        requirements  of  Statement  123  to  require  prominent
                        disclosures   in  both  annual  and  interim   financial
                        statements   about   the   method  of   accounting   for
                        stock-based employee  compensation and the effect of the
                        method used on reported  results.  This statement became
                        effective  on  December  15,  2002  and  does not have a
                        material  impact on the Company's  operating  results or
                        financial position.

                        In January 2003, the FASB issued FIN 46,  "Consolidation
                        of Variable  Interest  Entities."  FIN 46  requires  the
                        Company to consolidate a variable  interest entity if it
                        is  subjected to a majority of the risk of loss from the
                        variable  interest  entity's  activities  or entitled to
                        receive a majority of the entity's residual returns,  or
                        both.  The Company does not believe it has any interests
                        in variable interest entities and,  accordingly does not
                        expect the adoption of FIN 46 to have a material  impact
                        on the consolidated financial statements.

                        In May 2003,  the FASB issued SFAS No. 150,  "Accounting
                        for Certain Financial  Instruments with  Characteristics
                        of  both   Liabilities   and   Equity."   SFAS  No.  150
                        establishes  standards for how an issuer  classifies and
                        measures  in  its  balance   sheet   certain   financial
                        instruments with characteristics of both liabilities and
                        equity.  It is effective for such financial  instruments
                        entered  into  after  May 31,  2003,  and  otherwise  is
                        effective at the beginning of the first  interim  period
                        beginning  after June 15, 2003. The Company is currently
                        evaluating  the effect of SFAS No. 150 on its  financial
                        Statements.


--------------------------------------------------------------------------------
                                                                            F-36