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             U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549


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

                            FORM 10-K

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


 [X] Annual Report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

             For the fiscal year ended June 30, 2003
                                       -------------

                               OR
 [ ] Transition Report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

                 Commission File Number 0-25423

                    EAGLE SUPPLY GROUP, INC.
     ------------------------------------------------------
     (Exact name of Registrant as Specified in its Charter)

         Delaware                                  13-3889248
-------------------------------                -------------------
(State or Other Jurisdiction of                  (IRS Employer
Incorporation or Organization)                 Identification No.)

122 East 42nd Street, Suite 1618
    New York, New York                                10168
----------------------------------------       -------------------
(Address of Principal Executive Offices)            (Zip Code)

                         (212) 986-6190
      ----------------------------------------------------
      (Registrant's Telephone Number, Including Area Code)

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

                                           Name of Each Exchange
    Title of Each Class                     On Which Registered
    -------------------                    ---------------------

Common Stock, par value $0.0001 per share  Boston Stock Exchange
Redeemable Common Stock Purchase
  Warrants                                 Boston Stock Exchange


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

                              None

Indicate  by  check mark whether registrant: (1)  has  filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities Exchange Act of 1934 during the past 12 months (or for
such shorter period that the registrant was required to file such
reports),  and  (2) has been subject to such filing  requirements
for the past 90 days.    Yes  [X]   No  [ ]

Indicate  by  check  mark if disclosure of delinquent  filers  in
response  to Item 405 of Regulation S-K is not contained  herein,
and will not be contained, to the best of registrant's knowledge,
in  definitive  proxy or information statements  incorporated  by
reference in Part III of this Form 10-K or any amendments to this
Form 10-K.  [X]

Indicate  by  check mark whether the registrant is an accelerated
filed (as defined in Exchange Act Rule 12b-2).  Yes [ ] No  [X]

The aggregate market value of the common equity of the registrant
held   by   non-affiliates  as  of  September   22,   2003,   was
approximately $8,581,092, as computed by reference to the closing
price  of the common stock as quoted on the Nasdaq SmallCap Stock
Market  on  such date.  As of September 22, 2003, the  number  of
issued  and  outstanding shares of common stock of the registrant
was 10,255,455.

               DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement of Eagle Supply Group,
Inc. for the 2003 Annual Meeting of Stockholders to be filed with
the  Securities and Exchange Commission no later  than  120  days
after   the  end  of  the  registrant's  2003  fiscal  year   are
incorporated by reference into Part III of this Form 10-K.


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<PAGE>

                    EAGLE SUPPLY GROUP, INC.


                            FORM 10-K


                 Fiscal Year Ended June 30, 2003


Item Number in
Form 10-K                                                       Page
--------------                                                  ----

                             PART I
                             ------
   1.        Business........................................... 4

   2.        Properties......................................... 27

   3.        Legal Proceedings.................................. 29

   4.        Submission of Matters to a Vote of
              Security Holders.................................. 29

   4A.       Executive Officers of the Registrant............... 30

                             PART II
                             -------

   5.        Market for Registrant's Common Equity
              and Related Stockholder Matters................... 32

   6.        Selected Finanical Data............................ 35

   7.        Management's Discussion and Analysis of
              Financial Condition and Results  of
              Operations........................................ 36

   7A.       Quantative and Qualitative Disclosure
              About Market Risk................................. 47

   8.        Financial Statements and Supplementary
              Data.............................................. 47

   9.        Changes in and Disagreements With
              Accountants on Accounting and Financial
              Disclosure........................................ 48

   9A.       Controls and Procedures............................ 48

                            PART III
                            --------

   10.       Directors and Executive Officers of the
              Registrant........................................ 49

   11.       Executive Compensation............................. 49

   12.       Security Ownership of Certain Beneficial
              Owners and Management............................. 49

   13.       Certain Relationships and Related
              Transactions...................................... 50


<PAGE>


   14.       Principal Accountant Fees and Services............. 50

                             PART IV
                             -------

15.          Exhibits, Financial Statement Schedules, and
              Reports on Form 8-K............................... 51


<PAGE>


This   Annual   Report  on  Form  10-K  contains  forward-looking
statements  within the meaning of Section 27A of  the  Securities
Act  of  1933 and Section 21E of the Securities Exchange  Act  of
1934  and are subject to risks, uncertainties, and other  factors
which  could cause actual results to differ materially from those
expressed  or  implied by such forward-looking  statements.   See
Item 1. "Business - A Note About Forward Looking Statements"  and
"-- Business Environment and Risk Factors."


                             PART I

ITEM 1.   BUSINESS


Background

       Eagle  Supply  Group,  Inc.  ("us,"  "our,"  "we"  or  the
"Company"),  a  Delaware corporation incorporated  in  May  1996,
believes that it is one of the largest wholesale distributors  of
residential roofing and masonry supplies and related products  in
the  United  States.   The Company, with its principal  executive
office  located in New York City and its operations  headquarters
in   Mansfield,   Texas,  sells  primarily  to  contractors   and
subcontractors engaged in roofing repair and construction of  new
residences  and commercial property through our own  distribution
facilities  and  direct sales force. Historically,  approximately
70%  of  our revenues have been derived from sales to contractors
and  subcontractors engaged in re-roofing or repair and 30%  from
new construction. Additionally, approximately 86% of our revenues
are  from the sale of residential building products and 14%  from
the  sale  of commercial products. Moreover, our product  mix  is
heavily  weighted to roofing supplies and related products,  with
88%  of  revenues  derived from roofing  products  and  12%  from
masonry,  drywall, plywood and ancillary products.  We  currently
operate  a  network  of  33 distribution  centers  in  9  states,
including locations in Texas (13), Florida (9), Colorado (5), and
one  each  in Alabama, Illinois, Indiana, Mississippi,  Missouri,
and Nebraska.

      We are majority-owned by TDA Industries, Inc. ("TDA" or our
"Parent"),  and  we  were  organized to  acquire,  integrate  and
operate   seasoned,  privately-held  companies  that   distribute
products   to   or   manufacture  products   for   the   building
supplies/construction industry.

     On March 17, 1999, we completed the sale of 2,500,000 shares
of  our  Common Stock at $5.00 per share and 2,875,000 Redeemable
Common  Stock  Purchase Warrants (the "Warrants")  at  $.125  per
Warrant  in connection with our initial public offering ("Initial
Public   Offering").   We  received  net   proceeds   aggregating
approximately $10,206,000 from our Initial Public Offering.

      Upon  consummation  of  our Initial  Public  Offering,  the
Company acquired all of the issued and outstanding common  shares
of  Eagle  Supply, Inc. ("Eagle"), JEH/Eagle Supply,  Inc.  ("JEH
Eagle")   and   MSI/Eagle  Supply,  Inc.   ("MSI   Eagle")   (the
"Acquisitions") from TDA for consideration consisting  of,  among
other things, 3,000,000 shares of the Company's Common Stock.

      Upon the consummation of the Acquisitions, Eagle, JEH Eagle
and MSI Eagle became wholly-owned subsidiaries of the Company.

      Effective May 31, 2000, MSI Eagle was merged with and  into
JEH  Eagle. As of July 1, 2000, the Texas operations of JEH Eagle
were  transferred to a newly formed limited partnership  entirely
owned  directly  and  indirectly by JEH Eagle.  Accordingly,  the
Company's business operations are presently conducted through two
wholly-owned subsidiaries and a limited partnership.

      Eagle distributes roofing supplies and related products  to
contractors engaged in residential and commercial roofing  repair
and   the   construction  of  new  residential   and   commercial
properties. Through its 11 distribution centers and direct  sales
force,  Eagle  sells  to  more than 4,500 customers  in  Florida,
Alabama  and


                             4

<PAGE>

Mississippi.  JEH Eagle  operates  22  distribution  centers from
which it sells roofing,  masonry  and  drywall products  to  more
than 4,400 customers,  primarily contractors and builders located
in  Texas, Colorado, Illinois,  Indiana,  Missouri  and Nebraska.

       Our  two  subsidiaries  and  limited  partnership  operate
approximately 550 units of equipment including conveyor and other
delivery  trucks, material handlers, and forklifts. The  type  of
equipment utilized differs from site to site due to the  type  of
delivery  market and other factors. Certain markets are  referred
to  as  "roof  load"  in which the supplier  loads  the  building
materials on the roof on the job site rather than on the  ground.
This  roof  load type of delivery requires trucks with cranes  or
conveyor  systems and other such equipment and, as a result,  the
trucks  are more expensive and the delivery method has  a  higher
potential for liability.

     Our principal executive offices are located at 122 East 42nd
Street,  Suite 1618, New York, New York 10168, and our  telephone
number  is  (212) 986-6190. Our operations are headquartered  and
located  at  2500 U.S. Highway 287, Mansfield, Texas  76063.  See
Item 2 "Properties."

General

     We are a wholesale distributor of a complete line of roofing
supplies  and  related  products  through  our  own  sales  force
primarily  to  roofing  and  related  products  contractors   and
subcontractors in the geographic areas where we have distribution
centers.  Such  contractors  and subcontractors  are  engaged  in
commercial and residential roofing repair and the construction of
new residential and commercial properties.

      We also distribute sheet metal products used in the roofing
repair  and  construction industries. Furthermore, we  distribute
drywall,  plywood and related products and, solely  in  Colorado,
vinyl  siding to the construction industry. Products  distributed
by  us  generally include equipment, tools and accessory products
for the removal of old roofing, re-roofing and roof construction,
and related materials such as shingles, tiles, insulation, liquid
roofing materials, fasteners and ventilation materials.

      In  addition, we also distribute a complete line of cements
and  masonry supplies and related products through our own direct
sales  force  primarily to building and masonry  contractors  and
sub-contractors in certain of the geographic areas where we  have
distribution  centers. In general, such products include  cement,
cement  mixtures and similar "bag" products (lime,  sand,  etc.),
angle  iron, cinder blocks, cultured stone and bricks,  fireplace
and   pool  construction  materials,  and  equipment,  tools  and
accessory   products  for  use  in  residential  and   commercial
construction.

      The following chart indicates the approximate percentage of
the  indicated  product categories sold by  us  for  the  periods
indicated:


<TABLE>
<CAPTION>

                                           Approximate Percentage
                   ----------------------------------------------------------------------
                                                           Drywall   Bagged/
Fiscal Year        Residential    Commecial                 and       Bulk      All Other
Ended June 30,     Roofing        Roofing     Sheet Metal  Plywood   Products   Products
--------------     -----------    ---------   -----------  -------   --------   ---------
<S>                <C>            <C>         <C>          <C>       <C>        <C>
2001                   61            18            5          10         4           2
2002                   72            11            4          8          4           1
2003                   74            14            2          6          3           1
</TABLE>


     Potential Expansion By Acquisition

      We continually evaluate and identify markets into which  we
can  further  expand  our operations and market  share.  In  this
regard, we seek potential acquisition candidates primarily in the
roofing  supplies  and related products industry  throughout  the
United   States,  with  greater  emphasis  on  the  Southeastern,
Midwestern



                             5

<PAGE>

and  Western  regions  and  less  emphasis  on   the Northeastern
region   of   the  United  States.   However,  we   may  consider
acquisition  candidates in any  region  of  the  United States if
an appropriate opportunity arises.

      In  an effort to achieve our growth objectives, we seek out
prospective acquisition candidates in businesses that  complement
or are otherwise related to our current businesses. We anticipate
that  we  will  finance future acquisitions, if  any,  through  a
combination  of  cash, issuances of shares of our capital  stock,
and additional equity or debt financing.

      Although  we  continually consider and  evaluate  potential
strategic expansion and acquisition opportunities, we do not have
any  current understandings, arrangements, or agreements, whether
written  or  oral,  with  respect  to  any  specific  acquisition
prospect,  and  we are not currently negotiating with  any  party
with  respect  thereto. Accordingly, we  can  not  give  you  any
assurance  that  we  will be able successfully  to  negotiate  or
consummate  any future acquisitions or that we will  be  able  to
obtain   the   necessary  financing  therefor   on   commercially
reasonable terms.  We have not acquired any other companies since
our Initial Public Offering in 1999.

      Expansion By Internal Growth

      We intend to continue to pursue expansion of our operations
by  adding  new  distribution centers and  increasing  the  sales
revenues from our existing distribution centers.  Nonetheless, in
light  of  economic  conditions, during  the  fiscal  year  ended
June  30, 2003, we opened one new distribution center, which will
be  temporary,  and  closed  6  distribution  centers.   We  open
temporary  distribution centers in response to storms which  have
created temporary markets. These "storm" distribution centers are
supported  by  our  contractor  customers  that  concentrate   on
repairing  storm damage.  After opening what we intend  to  be  a
permanent  new  distribution center,  our  initial  focus  is  to
develop  a customer base, to develop and improve the distribution
center's market position and operational efficiency and  then  to
expand its customer base.

Our Business

      Distribution Centers

      Our typical distribution center consists of showroom space,
office  space,  warehouse  and receiving  space,  secure  outdoor
holding  space, and receiving and shipping facilities,  including
loading   docks.  Distribution  centers  range   in   size   from
approximately 10,000 to 110,000 square feet of indoor space, with
a  typical  size  of approximately 30,000 square feet  of  indoor
office   and  storage  space  and  additional  outdoor   storage.
Currently,  our  largest distribution center based  on  sales  is
located  in  Mansfield,  Texas, and also houses  our  operational
headquarters.

     Each   distribution  center  location  is   managed   by   a
distribution center manager who oversees the center's  employees,
including various sales and office personnel, as well as delivery
and warehouse personnel. We require that each distribution center
develop  a sales strategy specific to the local market,  but  our
senior  and regional management maintain responsibility  in  each
region  for directing sales efforts and altering the product  mix
of  a  given  center  to meet local market  demands  and  Company
objectives. Our computer software provides data which enable  our
executives  to view sales, inventory and gross margins  daily  as
well  as  monthly   and profitability reports  for  each  of  our
distribution centers.

      We  operate two types of distribution centers: "greenfield"
and   "storm"   distribution  centers.  Greenfield  centers   are
distribution  centers which we have opened  in  areas  where  our
market  analysis indicates a potential for strong and sustainable
demand  for  our products over the long term. The  opening  of  a
greenfield center typically requires approximately six months  of
planning  and  a  net  capital  investment  by  the  Company   of
approximately  $650,000 per center.  The amount of  this  capital
investment  can  vary  widely depending



                             6

<PAGE>

on  many   factors.    Our  management  analyzes  a   greenfield
opportunity  on  the  basis  of competition,  number and  age of
roofs, type of market ("ground" or "roof" load) and availability
 of qualified personnel, among other factors.

      Our  storm distribution centers are opened to service areas
recently  affected  by severe or catastrophic weather  conditions
such  as  hailstorms or hurricanes. Sales of building and roofing
products generally increase dramatically during and after  severe
storms, especially sizeable hurricanes and hailstorms, which  can
cause  significant  roof damage. This sharp  increase  in  demand
provides  an opportunity for us to generate additional  revenues.
New  storm centers typically require a net capital investment  by
the  Company  of  approximately $750,000 or  more  in  inventory,
equipment  and other expenditures and may be staffed by personnel
from our other centers. The amount of this capital investment can
vary   widely  depending  on  many  factors.  After  sales   from
reconstruction  and  reroofing  generated  by  the  storm-related
demand  slow  down, storm centers generally are  closed  and  the
remaining  inventory  returned to  one  of  the  Company's  other
distribution centers. Because the opening of a storm center is in
response  to  the  occurrence of extreme weather  conditions  and
other  factors, we cannot anticipate how many new  storm  centers
will  be  opened, if any. On occasion, we may determine that  the
market  area  in which a storm center is located will  support  a
permanent  distribution center. In that event,  the  distribution
center  is not closed but becomes part of our distribution center
network.

      Principal Products

      We  distribute  a variety of roofing supplies  and  related
products   and   accessories  for  use  in  the  commercial   and
residential  roofing  repair  and construction  industries.  Such
products include the following:

      Residential  Roofing  Products. Shingles  (asphalt,  cedar,
ceramic,  slate, concrete, cement fibered, fiberglass and  tile),
felt,  insulation,  waterproof underlayment, ventilation  systems
and skylights.

      Commercial  Roofing  Products.  Asphalt,  fiberglass  rolls
(including  fire retardant), organic rolls, insulation,  cements,
tar,  other  coatings, single plies, modified  bitumen  and  roll
roofing products.

      Sheet  Metal  Products.  Aluminum, copper,  galvanized  and
stainless sheet metal.

      Drywall/Plywood Products. Sheetrock and plywood.

      Slate and Antique Products. Black slate, Vermont and  other
slates, historical or antique slates, antique clay tile, new clay
tile, Ludowici clay tile and antique tile.

      Accessory Products. We also sell accessory products related
to  each of the foregoing, including, but not limited to, roofing
equipment,  power  and  hand tools, nails,  fasteners  and  other
accessory products.

      Principally in the Dallas/Fort Worth metropolitan area,  we
distribute  a variety of cement and masonry supplies and  related
products   and  accessories  for  use  in  the  residential   and
commercial  building and masonry industries. Such  product  lines
include the following:

      Concrete and Masonry Products. Portland cement for  use  in
housing foundations, laying pavements, walkways and other similar
uses.  Masonry cement for use in brick and stone masonry.  Cement
is  principally sold by bags of varying weight (approximately  10
pounds to 95 pounds) and is sold in a variety of mixtures such as
concrete  mixes  (portland cement, sand and gravel),  sand  mixes
(portland  cement and sand), mortar mixes (masonry mortar  cement
and  masonry  sand) and grout (cement and sand).  Also  sold  are
sand,  gravel, underwater cement, concrete and asphalt "patching"
compounds.

      Angle  Iron. Iron forged at a ninety-degree angle which  is
cut  to customer's specification for use as support above windows
and doorways.



                             7

<PAGE>


      Bricks  and  Stones. Bricks, used bricks, firewall  bricks,
"cultured"  (man-made) stones in a variety of colors and  shapes,
cinder blocks and glass blocks.

      Fireplace  Products.  Fireboxes, dampers,  flues,  facings,
insulations, fireplace tools and accessories.

      Swimming  Pool  Products. Cements and molds  used  in  pool
construction.

      Accessory  Products. We also sell in that same metropolitan
area  a  variety of products related to the foregoing,  including
cement  mixers, rulers, levels, trowels and other tools, cleaning
solvents, patching compounds, supports and fasteners.

      Vendors

      We  purchase  products directly from  more  than  40  major
manufacturers, including GAF Materials Corporation ("GAF"), TAMKO
Roofing Products, Inc. ("TAMKO"), Atlas Roofing Corporation,  Elk
Corporation  ("ELK"), Owens Corning, Johns  Manville  Corp.,  and
Certainteed  Corporation. Payment, discount and  volume  purchase
programs are negotiated directly with our major suppliers, with a
significant portion of our purchases made from suppliers offering
the most favorable programs.

      During the fiscal years ended June 30, 2003, 2002 and 2001,
approximately  19%, 19%, and 18%, respectively,  of  our  product
lines  were  purchased from GAF.  During the fiscal  years  ended
June  30, 2003 and 2001, approximately 10% and 13% of our product
lines  were purchased from TAMKO and ELK, respectively.  No other
supplier accounted for more than ten (10%) percent of our product
lines in each of our last three fiscal years.

      We  have  no written long-term supply agreements  with  any
vendors.  We  believe that, in the event of  an  interruption  of
product deliveries from any suppliers, we will be able to  secure
suitable replacement suppliers on acceptable terms.

      Customers, Sales and Marketing

      Practically  all  customers purchase products  pursuant  to
short-term  credit  arrangements.  Sales  efforts  are   directed
primarily  through  our salespersons including  "inside"  counter
persons  who  serve walk-in and call-in customers  and  "outside"
salespersons who call upon past, current and potential customers.
Members  of  our  sales staff report to their local  distribution
center managers and regional sales managers and are supported  by
inside   customer   service   representatives   either   at   the
distribution  center  or  at the main  administration  center  in
Mansfield, Texas. Additional sales support comes from a number of
regional  sales and merchandising managers who educate our  sales
personnel  regarding technical specifications and how  to  market
and  sell  products  recently added  to  our  product  line.  Our
marketing and advertising efforts, although nominal, are targeted
to  local  markets  and  generally consist of  advertisements  in
regional  magazines.  Our suppliers have  a  vested  interest  in
marketing their products to the end user; therefore, they provide
a  wide  variety of promotional material including  instructional
videos,  product and educational materials and in-store displays.
Additionally,  our  suppliers market their products  in  industry
publications, contractors' trade magazines and trade shows.

      We  have  no  written long-term sales agreements  with  any
customers.  None of our customers accounted for 2% or greater  of
sales during our fiscal year ended June 30, 2003.



                             8

<PAGE>

     Infrastructure and Technology

     We maintain our own computer system and software supplied by
J.D.  Edwards for inventory, sales management, financial  control
and  planning.  We  maintain this centralized computer  and  data
processing  system to support decision making at many  levels  of
operations,  including  checking a customer's  credit,  inventory
management,   accounts  receivable  and  credit  and   collection
management.  Our  executives are able to view monthly  and  other
periodic financial data of each distribution center.

     Competition

     We   face   substantial   competition   in   the   wholesale
distribution of roofing, drywall, cement and masonry supplies and
related  products  from relatively smaller  distributors,  retail
distribution   centers   and   from   a   number   of   regional,
multi-regional  and national wholesale distributors  of  building
products,  including  suppliers of roofing products  and  masonry
products  which have greater financial resources and  are  larger
than we are, some of which include:

     *   American Builders & Contractors Supply Co., Inc.,
     *   Cameron Ashley Building Products, Inc. (owned by Guardian
         Industries, Inc. since June 2000 and now part of Guardian
         Building Products),
     *   Allied Building Products (a division of a subsidiary of CRH,
         plc since 1997),
     *   Bradco Supply Corporation, and
     *   Beacon Roofing Supply, Inc.

     To  a  lesser  degree, we also compete  with  larger,   high
volume,   discount   general  building  supply   stores   selling
standardized products, sometimes at lower prices than  ours,  but
not  carrying the breadth of product lines or offering  the  same
service  as provided by full service wholesale distributors  such
as we are.

     We currently compete on the basis of:

     *   price,
     *   breadth of product line and inventory,
     *   delivery,
     *   customer service, including credit and financial services,
     *   terms of sale, including discounts for prompt payment,
     *   credit extension, and
     *   the abilities of personnel.

     We  anticipate   that  we  may experience  competition  from
entities  and individuals (including venture capital partnerships
and  corporations, equity funds, blind pool companies, operations
of competing wholesale roofing supply distribution centers, large
industrial  and financial institutions, small business investment
companies and wealthy individuals) which are well-established and
have  greater  financial resources and more extensive  experience
than  we  have  in  connection  with identifying,  financing  and
effecting  acquisitions of the type sought by us.  Our  financial
resources  are  limited in comparison to those of  many  of  such
competitors.



                             9

<PAGE>


      Backlog

      Our business is conducted on the basis of short-term orders
and prompt delivery schedules precluding any substantial backlog.

      Employees

      At  June  30, 2003, we employed approximately 595 full-time
employees,  including 7 executives, 49 managerial employees,  115
salespersons (including 53 "inside" salespersons), 341  warehouse
persons,  drivers and helpers, and 83 clerical and administrative
persons.  Difficulties  have  been  experienced  on  occasion  in
retaining drivers and helpers because of the tight job market  in
our  market  areas and the need for drivers to  be  certified  by
departments   of  motor  vehicles  and  to  pass  other   testing
standards,  but  suitable replacements and new  hires  have  been
found  without  material adverse economic impact, although  there
can  be no assurance that this will continue to be the case.   We
are  not subject to any collective bargaining agreement,  and  we
believe that our relationship with our employees is good.

     Recent Developments

     On May 15, 2002, in a private transaction, we agreed to sell
1,090,909  shares  of  our common stock at  $2.75  per  share,  a
discount  of approximately 8.6% below the closing bid  price  for
our  shares of common stock on the Nasdaq SmallCap Market on  May
15, 2002, and to issue warrants, without additional consideration
as  part of that transaction, to purchase 218,181 shares  of  our
common  stock  exercisable  at $3.50 per  share  for  five  years
("Private  Placement"). The Private Placement  provided  for  two
equal  and  separate tranches of common stock and  warrants.  The
first   such  tranche  closed.   The  investors  in  the  Private
Placement declined to make the additional investment required  to
close  the  second tranche.  Accordingly, the second tranche  did
not  and  will  not  close.  As of September 24,  2003,  we  have
entered  into  settlement  agreements  with  four  of  the   five
investors  in  the Private Placement pursuant  to  which  we  (a)
received  $50,000 cash payment, (b) the return of 50,909 warrants
for  cancellation  of  the  109,090 warrants  which  were  issued
pursuant to the Private Placement, and (c) received an advance of
$20,000 to defray a portion of the legal fees we were charged  in
connection with the settlement.

A Note About Forward-Looking Statements

      This  Annual  Report on Form 10-K (including  the  Exhibits
hereto) contains certain "forward-looking statements" within  the
meaning  of  the of Section 27A of the Securities  Act  of  1933,
Section  21E  of  the  Securities Exchange Act  of  1934,and  the
Private  Securities  Litigation  Reform  Act  of  1995,  such  as
statements  relating  to  our  financial  condition,  results  of
operations,  plans, objectives, future performance  and  business
operations.   These statements relate to expectations  concerning
matters  that  are not historical fact.  Accordingly,  statements
that   are   based   on   management's  projections,   estimates,
assumptions and judgments are forward-looking statements.   These
forward-looking statements are typically identified by  words  or
phrases   such  as  "believe,"  "expect,"  "anticipate,"  "plan,"
"estimate,"  "approximately," "intend," and other  similar  words
and  expressions, or future or conditional verbs such as  "will,"
"should," "would," "could," and "may."  In addition, the  Company
may  from time to time make such written or oral "forward-looking
statements"  in future filings with the Securities  and  Exchange
Commission  (including  exhibits  thereto),  in  its  reports  to
shareholders,  and in other communications made by  or  with  the
approval of the Company.

     These  forward-looking statements are based largely  on  our
current  expectations, assumptions, plans,  estimates,  judgments
and  projections  about our business and our industry,  and  they
involve  inherent risks and uncertainties.  Although  we  believe
that  these  forward-looking statements are based upon reasonable
estimates  and  assumptions, we can give no  assurance  that  our
expectations  will  in  fact  occur  or  that  our  estimates  or
assumptions  will be correct, and we caution that actual  results
may  differ  materially and adversely from those



                             10

<PAGE>

in the  forward-looking  statements.   Forward-looking statements
involve known  and unknown  risks,  uncertainties,  contingencies
and  other   factors  that  could  cause  our  or  our industry's
actual results,  level  of activity,  performance or  achievement
to differ  materially from those  discussed  in or implied by any
forward-looking  statements  made  by or  on  behalf  of  us  and
could  cause our  financial  condition, results  of operations or
cash  flows to be  materially adversely  affected.   Accordingly,
investors  and  all  others  are  cautioned  not  to  place undue
reliance on such  forward-looking statements.

     Potential  risks,  uncertainties, and  other  factors  which
could  cause  the Company's financial performance or  results  of
operations to differ materially from current expectations or such
forward-looking statements include, but are not limited to:

     *  general economic and market conditions, either nationally or
        in the markets where we conduct our business, may be less
        favorable than expected;

     *  we may be unable to find adequate and suitable equity or
        debt financing when our current loan facilities mature or when
        otherwise needed on terms as favorable to us as our current
        financing or on terms that are commercially reasonable to us;

     *  our costs of capital including interest rates and related
        fees and expenses may increase;

     *  we  may  be unable to collect our accounts or  notes
        receivables when due, within a reasonable period of time after
        they become due and payable, or at all;

     *  there may be significant increases in competitive pressures
        in our major market areas;

     *  weather conditions in our market areas may adversely affect
        our business;

     *  there may be interruptions or cancellations of sources of
        supply of products that we distribute, significant increases in
        the costs of such products, or changes in the terms of purchase
        that may be less favorable to us;

     *  there may be changes in the cost or pricing of, or consumer
        demand for, our or our industry's distributed products that may
        adversely affect our ability to sell our products at certain
        levels of markup (gross profit margin);

     *  there may be changes in the new housing market or the market
        for construction, renovation and repair relating to the product
        lines that we sell in various market areas that may adversely
        affect our business;

     *  we may be adversely affected by changes in our costs of
        doing business including costs of fuel, labor and related
        benefits, occupancy, and the cost and availability of insurance;

     *  we may be unable to locate suitable facilities or personnel
        to open or maintain distribution center locations;

     *  we may be unable to identify suitable acquisition candidates
        or, if identified, unable to consummate any such acquisitions
        and, if consummated, unable to obtain favorable results of
        operations from such acquisitions;


                             11

<PAGE>

     *  the number of shares of common stock that the Company has
        outstanding and the number of shares of common stock used to
        calculate our basic and diluted earnings per share may increase
        and adversely affect our earnings per share calculations; and

     *  there may be changes in accounting policies and practice
        that may be adopted by regulatory agencies as well as the
        Financial Accounting Standards Board.

     Such  forward-looking statements speak only to the date that
such   statements  are  made,  and  the  Company  undertakes   no
obligation  to  update any forward-looking statement  to  reflect
events or circumstances after the date on which such statement is
made or to reflect the occurrence of unanticipated events.

Business Environment and Risk Factors

     You  should carefully consider the risks described below and
the   other   information  in  this  Form  10-K,  including   our
Consolidated  Financial  Statements  and  the  notes   to   those
statements.  The risks and uncertainties described below are  not
the  only ones facing us, and there may be additional risks  that
we  do not presently know of or that we currently deem immaterial
that   also  could  materially  adversely  affect  our  business,
financial  condition, results of operations or  cash  flows.  The
business,  results of operations or financial  condition  of  the
Company  could  be  seriously  harmed  if  any  of  these   risks
materialize. The trading price of shares of the Company's  common
stock may also decline due to any of these risks.

     To  the  extent  any  of the information contained  in  this
document   constitutes  forward-looking  information,  the   risk
factors  set  forth  below are cautionary statements  identifying
important factors that could cause our actual results for various
financial  reporting  periods  to differ  materially  from  those
expressed in any forward-looking statements made by us or on  our
behalf  and  could  materially  adversely  affect  our  financial
condition,  results of operations or cash flows.  See also,  Item
1. "Business - A Note About Forward-Looking Statements."


                 Risks Relating To Our Business


     The Level Of Our Business Operations, Revenues And Income Is
Directly Impacted By Weather Conditions.

     Our  level  of  business operations, revenues and  operating
income  is  directly  impacted  by  weather  phenomena,  such  as
hailstorms  and hurricanes, which have the result  of  increasing
business  at  the time of the event of the weather phenomena  and
shortly  thereafter, but have the effect frequently of  resulting
in   a  slowdown  of  business  thereafter.   Similarly,  weather
phenomena can also have a negative impact on our customers  which
can  cause certain of such customers to become delinquent in  the
payments of their accounts.


     How Unforeseen Factors May Adversely Affect Us.

     Unforeseen   developments,  increased  competition,   losses
incurred  by  new businesses that we may acquire or  distribution
centers  that  we may open, losses incurred in the  expansion  of
product   lines  from  certain  distribution  centers  to   other
distribution  centers, weather phenomena and other  circumstances
may  have a material adverse affect on our operations in  current
market areas or areas into which we may expand by acquisition  or
otherwise.



                             12

<PAGE>


     We  Acquired  Our  Business Operations In  Non-Arm's  Length
Transactions With Affiliates And Without Independent Appraisal.

     Simultaneously  with the completion of  our  Initial  Public
Offering in March 1999, we acquired our business operations  from
TDA  in exchange for, among other things, 3,000,000 shares of our
common  stock. The determination of the number of shares paid  to
TDA  for the acquisitions was negotiated and evaluated based upon
the  assessments made by the parties to the negotiations  without
independent appraisal. Such negotiations were not conducted on an
arm's length basis.  As a result of this transaction, our largest
shareholder is TDA.  Douglas P. Fields and Frederick M. Friedman,
both of whom are directors and executive officers of the Company,
also  are directors, officers and principal stockholders of  TDA,
and  John  E.  Smircina, Esq., a director of the  Company,  is  a
director  of  TDA.   Because  of  their  positions  and   control
relationship  with  TDA, Messrs. Fields, Friedman,  and  Smircina
may  be  deemed  to  be  in control of us.  As  a  result,  their
interests  in  us  may  conflict with  their  interests  in  TDA.
Although  we  believe  that  the  terms  and  conditions  of  the
acquisitions were fair and reasonable to us, that belief must  be
assessed in light of the lack of an independent appraisal and the
conflicted  positions of Messrs. Fields, Friedman, and  Smircina.
We  can  provide  no  assurance  that  we  were  correct  in  our
assessment.


     We  May  Make Acquisitions And Open New Distribution Centers
Without Your Approval.

     Although we will endeavor to evaluate the risks inherent  in
any   particular   acquisition  or  the  establishment   of   new
distribution  centers,  there can be no assurance  that  we  will
properly  or  accurately ascertain all such risks. We  will  have
virtually  unrestricted flexibility in identifying and  selecting
prospective   acquisition   candidates   and   establishing   new
distribution centers and in deciding if they should  be  acquired
for cash, equity or debt, and in what combination of cash, equity
and/or  debt.  Locations selected for expansion efforts  will  be
made  at the discretion of management and will not be subject  to
stockholder approval.

     We  will  not seek stockholder approval for any acquisitions
or  the  opening of new distribution centers unless  required  by
applicable law and regulations. Our stockholders will not have an
opportunity   to  review  financial  and  other  information   on
acquisition  candidates or the opening of  any  new  distribution
centers  prior to consummation of any acquisitions or the opening
of any new distribution centers under most circumstances.

     Investors  will be relying upon our management,  upon  whose
judgment  the investor must depend, with only limited information
concerning  management's specific intentions.  There  can  be  no
assurance  that  any  acquisitions will  be  consummated  or  new
distribution centers opened.


     Our   Wholesale  Distribution  Businesses  Are  Subject   To
Economic And Other Changes.

     The  wholesale distribution of the building supply  products
sold  by  us is seasonal, cyclical and is affected by weather  as
well  as  by  changes in general economic and  market  conditions
either  nationally  or  in the markets in which  we  conduct  our
business.  Although our roofing and related supplies business  is
located  in  various  locations  throughout  the  United  States,
concentrated  primarily  in  Texas, Florida,  and  Colorado,  the
distribution  of our other products are even more  geographically
concentrated  as  follows and will be directly  affected  by  the
economic and weather conditions of their related market areas:

     *   The cement and masonry supplies business sells its products
         primarily to builders, contractors, subcontractors, and masons
         serving the residential building market in the Dallas/Fort Worth
         metropolitan area.

     *   We sell drywall primarily to contractors in Texas and vinyl
         siding primarily to contractors in Colorado.


                             13

<PAGE>


     As  a  result,  an economic downturn in any of those  market
areas  may  have  a material adverse effect on the  sale  of  our
products  in  those markets notwithstanding the general  economic
conditions   prevalent  nationally.  Accordingly,   an   economic
downturn in one or more of the markets currently served or to  be
served  (as a result of acquisitions or expansion efforts)  could
have a material adverse effect on operations.


     We May Be Unable To Collect All Of Our Accounts Or Notes
Receivables In A Timely Manner.

     The  Company's accounts receivable over ninety days past due
as  of  June 30, 2003 have increased since June 30, 2002 and  our
accounts  receivable over ninety days past due  as  of  June  30,
2002,  significantly increased from June 30, 2001.  As a  result,
the  Company  added $250,000 and $2,200,000 to its allowance  for
doubtful  accounts  and notes receivable, net  of  write-offs  of
approximately  $4,500,000 and $562,000, during the  fiscal  years
2003  and  2002,  respectively.   Approximately  $1,800,000   and
$1,500,000 of the increase in the allowance for doubtful accounts
and  notes receivable during the fiscal years ended June 30, 2003
and  2002,  respectively,  was attributed  to  amounts  due  from
certain customers.  These customers owed the Company an aggregate
of  approximately $8,300,000 and $ 5,400,000 at June 30, 2003 and
June  30, 2002, respectively, and accounted for 2.4% and 4.0%  of
the  Company's total revenues for the fiscal years ended June 30,
2003 and June 30, 2002.

     In  addition,  the  Company reclassified approximately  $2.8
million of its current accounts and notes receivable to long-term
notes receivable during the fiscal year ended June 30, 2003,  net
of  allowance for doubtful accounts.  The reclassifications  took
place  after  meetings with the Company's largest customers  that
had not made satisfactory payments on their accounts when due  or
within a reasonable period of time after they became due.  During
such meetings, management negotiated formal payment schedules  on
terms  that would enable the Company to begin collecting on  past
due   accounts   and  notes  receivable  in  amounts   reasonably
satisfactory  to the Company.  As a result, the Company  accepted
notes from these customers, together with personal guarantees and
additional  collateral  wherever  possible.   These  notes   bear
interest  at rates ranging from 6% to 18% with repayment  periods
ranging  between 6 months and slightly less than 10 years  as  of
June 30, 2003.

     If  our  customers are unable to make payments when  due  or
within  a  reasonable period of time thereafter and the level  of
our  accounts receivable over ninety days past due increases,  we
may  have to increase our allowance for doubtful accounts  and/or
write-off additional accounts.  Such action could have a material
adverse  affect on our financial position, results of operations,
and cash flow.


     We Depend Upon Certain Vendors But We Lack Written Long-Term
Supply Agreements With Them.

     We  distribute  products manufactured by a number  of  major
vendors.   During the fiscal years ended June 30, 2003, 2002  and
2001,  approximately  19%,  19%, and 18%,  respectively,  of  our
product lines were purchased from one supplier, GAF.  During  the
fiscal  years ended June 30, 2003 and 2001, 10% and  13%  of  our
product  lines were purchased from a second supplier,  TAMKO  and
ELK,  respectively.   We  do  not have written  long-term  supply
agreements with any vendors. We believe that, in the event of any
interruption  of product deliveries from any of our  vendors,  we
will   be  able  to  secure  suitable  replacement  supplies   on
acceptable  terms.  However, there can be  no  assurance  of  the
continued  availability of supplies of residential and commercial
roofing, drywall and masonry materials at acceptable prices or at
all.



                             14

<PAGE>


     To  The Extent That The Estimates, Assumptions And Judgments
Used By Us In Formulating Our Critical Accounting Policies Should
Prove To Be Incorrect, Future Financial Reports May Be Materially
And Adversely Affected.

     Our  discussion  and  analysis of  financial  condition  and
results  of  operations  set forth in  this  document  and  other
reports filed with the Securities and Exchange Commission ("SEC")
are  based upon our consolidated financial statements, which have
been  prepared in accordance with accounting principles generally
accepted   in   the  United  States  of  America  ("GAAP").   The
preparation of these financial statements in accordance with GAAP
requires  us  to  make estimates, assumptions and judgments  that
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities  at the date of the financial statements. Significant
estimates  in  the  Company's consolidated  financial  statements
relate  to, among other things, allowances for doubtful  accounts
and  notes  receivable, amounts reserved for  obsolete  and  slow
moving   inventories,  net  realizable  value   of   inventories,
estimates  of  future cash flows associated  with  assets,  asset
impairments,  and useful lives for depreciation and amortization.
On  an  ongoing basis, we re-evaluate our estimates,  assumptions
and judgments, including those related to allowances for doubtful
accounts  and  notes receivable, inventories, intangible  assets,
investments,  other receivables, expenses, income  items,  income
taxes  and  contingencies. We base our  estimates  on  historical
experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the
basis  for making judgments about the carrying values of  assets,
liabilities,  certain  receivables,  allowances,  income   items,
expenses,  and  contingent assets and liabilities  that  are  not
readily  apparent from other sources. Actual results  may  differ
from these estimates and judgments, and there can be no assurance
that  estimates,  assumptions and judgments that  are  made  will
prove to be valid in light of future conditions and developments.
If   such  estimates,  assumptions  and  judgments  prove  to  be
incorrect  in  the future, the Company's results  of  operations,
financial  condition and cash flows could be materially adversely
affected.

     We  believe that the following critical accounting  policies
are  based upon our more significant judgments and estimates used
in the preparation of our consolidated financial statements:

     *   We maintain allowances for doubtful accounts and notes
         receivable for estimated losses resulting from the failure of our
         customers to make payments when due or within a reasonable period
         of time thereafter.  Although many factors can affect the failure
         of customers to make required payments when due, one of the most
         unpredictable is weather, which can have a positive as well as
         negative impact on the Company's customers.  For example, severe
         or  catastrophic weather conditions, such as hailstorms or
         hurricanes, will generally increase the level of activity of our
         customers,  thus enhancing their ability to make  required
         payments.  On the other hand, weather conditions such as heavy
         rain or snow or ice storms will generally preclude customers from
         installing the Company's products on job sites and collecting
         from their own customers, which conditions could result in the
         inability of the Company's customers to make payments when due.
         The  reserve for allowance for doubtful accounts and notes
         receivable is intended to adjust the value of our accounts and
         notes receivable for possible credit losses as of the balance
         sheet date in accordance with generally accepted accounting
         principles.  Calculating such allowances involves significant
         judgment.  We estimate our reserves for allowance for doubtful
         accounts  and notes receivable by applying estimated  loss
         percentages against our aging of accounts receivables and based
         on our estimate of the credit worthiness of the customers from
         which the notes are payable.  Changes to such allowances may be
         required if the financial condition of our customers deteriorates
         or  improves or if we adjust our credit standards, thereby
         resulting in reserve or write-off patterns that differ from
         historical experience.  Errors by the Company in estimating our
         allowance for doubtful accounts and notes receivable could have a
         material adverse affect on the Company's financial condition,
         results of operations, and cash flow.



                             15

<PAGE>

     *   We write down our inventories for estimated obsolete or slow-
         moving inventories equal to the difference between the cost of
         inventories and their estimated market value based upon assumed
         market  conditions.  If actual market conditions are  less
         favorable than those assumed by management, additional inventory
         write-downs may be required.  If inventory write-downs are
         required,  the Company's financial condition,  results  of
         operations,  and cash flows could be materially  adversely
         affected.

     *   We test for impairment of the carrying value of goodwill
         annually and when indicators of impairment occur.  Indicators of
         impairment could include, among other things, a significant
         change in the business climate, including a significant sustained
         decline in an entity's market value, operating performance
         indicators, competition, sale or disposition of a significant
         portion of the business, legal or other factors.  In connection
         with the annual test for impairment, management reviews various
         generally accepted valuation methodologies for valuing goodwill.
         Management reviewed the carrying value of the goodwill on its
         balance sheet as of June 30, 2003 in light of the fact that the
         Company's stock market capitalization of our outstanding equity
         securities as of that date was below our total shareholders'
         equity (book value).  Management concluded that the market price
         of the Company's common stock is not the best indication of the
         fair market value of the Company.  Management believes that, with
         respect to the Company, the better indicator of fair market value
         results from the use of the discounted estimated future cash flow
         method, which includes an estimated terminal value component.
         This method is based on management's estimates, which will vary
         if the judgments and assumptions used to estimate the related
         business's future revenues, gross profit margins, operating
         expenses, interest rates, and other factors, prove  to  be
         inaccurate.  If such judgments, assumptions and estimates prove
         to be incorrect, then the Company's carrying value of goodwill
         may  be overstated on the Company's balance sheet, and the
         Company's results of operations may not reflect the impairment
         charge that would have resulted if such judgments, assumptions
         and estimates had been correct.  Any failure to write down
         goodwill for impairment correctly during any period could have a
         material  adverse effect on the Company's future financial
         condition and results of operations, as well as cause historical
         statements of operations, financial condition, and cash flows to
         have been incorrectly stated in light of the failure to take any
         such write downs correctly.

     *   In conducting the required goodwill impairment test, we
         identified reporting units by determining the level at which
         separate financial statements are prepared and reviewed by
         management.  The test was required by only one of our operating
         subsidiaries.  As a result of the required test, we determined
         that no write down of our goodwill was required at June 30, 2003.
         While we do not use our stock market capitalization to determine
         the fair value of our reporting unit, we expect convergence
         between our stock market value capitalization and our discounted
         cash flow valuation to occur over time or from time to time.  If
         this does not occur, it may signal the need for impairment
         charges.

     *   We seek revenue and income growth by expanding our existing
         customer base, by opening new distribution centers, and by
         pursuing strategic acquisitions that meet our various criteria.
         If our evaluation of the prospects for opening a new distribution
         center or of acquiring a company misjudges our estimated future
         revenues or profitability, such a misjudgment could impair the
         carrying value of the investment and result in operating losses
         for the Company, which could materially adversely affect our
         results of operations, financial condition, and cash flows.

     *   We file income tax returns in every jurisdiction in which we
         have reason to believe we are subject to tax.  Historically, we
         have been subject to examination by various taxing jurisdictions.
         To date, none of these examinations has resulted in any material
         additional tax.  Nonetheless, any tax jurisdiction may contend
         that a filing position claimed by us regarding one or more of our



                             16

<PAGE>


         transactions  is contrary to that jurisdiction's  laws  or
         regulations.  In any such event, we may incur charges to our
         income statement which could materially adversely affect our net
         income and may incur liabilities for taxes and related charges
         which may materially adversely affect our financial condition.


     We  May  Require  Financing That May Result In  Dilution  To
Existing Stockholders And Restrictions On Us.

     We  may require additional equity or debt financing in order
to consummate an acquisition or for additional working capital if
we  open  new  distribution centers, or if we  suffer  losses  or
complete the acquisition of a business that subsequently  suffers
losses,  or  for other reasons.  Any additional equity  financing
that  may  be  obtained may dilute existing stockholders'  voting
power  and  equity  interests.  Any  additional  equity  or  debt
financing that may be obtained may:

     *   impair or restrict our ability to declare dividends;

     *   impose financial or other restrictions on our ability to
         make acquisitions or implement expansion efforts;

     *   cost more in interest, fees and other charges than our
         current financing; and

     *   contain other provisions that are not beneficial to us and
         may restrict our flexibility in operating the Company.

     There  can  be no assurance that we will be able  to  obtain
additional financing on terms acceptable or at all.  In the event
additional  financing  is unavailable, or is  available  only  on
terms  deemed  to be onerous or unacceptable to  us,  we  may  be
materially adversely affected.


     Our Business Strategy Is Unproven.

     A significant element of our business strategy is to acquire
additional  companies  engaged in the wholesale  distribution  of
roofing  supplies and related products industries  and  companies
which  manufacture  products  for  or  supply  products  to  such
industry.  Our strategy is unproven and is based on unpredictable
and  changing  events.  We believe that suitable  candidates  for
potential acquisition exist. There can be no assurance  that  any
acquisitions, if successfully completed:

     *   will be successfully integrated into our operations;

     *   will perform as expected;

     *   will not result in significant unexpected liabilities; or

     *   will ever contribute significant revenues or profits to the
          Company.

     If we are unable to manage growth effectively, our financial
condition,  results  of  operations,  and  cash  flows  could  be
materially   adversely  affected.   We  have  not  acquired   any
companies since our Initial Public Offering in March 1999.




                             17

<PAGE>


         Risks Relating To Our Management And Affiliates


     Our  Executive  Officers And Directors  May  Have  Potential
Conflicts Of Interest With Us.

     Certain  of  our principal executive officers and  directors
also   are   principal  officers,  directors  and  the  principal
stockholders  of  TDA, the entity that owns  a  majority  of  our
voting  stock  and, consequently, may be able,  through  TDA,  to
direct   the   election  of  our  directors,  effect  significant
corporate events and generally direct our affairs.

     Through June 30, 2002, TDA provided office space for use  as
our  New  York  corporate  executive offices  and  administrative
services  to  us  in New York City pursuant to an  administrative
services   agreement  that  terminated  as  of  June  30,   2002.
Commencing  July  1, 2002 we began to pay TDA seventy-five  (75%)
percent  of the occupancy costs (approximately $4,500 per  month)
for  our  New  York corporate executive offices and  seventy-five
(75%)  percent of the remuneration and benefits of our  New  York
administrative  assistant (approximately $4,500 per  month),  and
TDA  began  to  pay  twenty-five (25%) percent  of  such  monthly
occupancy  costs  (approximately $1,500)  and  twenty-five  (25%)
percent  of  the  monthly  remuneration  and  benefits   of   the
administrative  assistant  (approximately  $1,500)  in  order  to
defray any expenses that may be deemed to be attributable to TDA.
In  October  2002, we entered into a new lease for our  New  York
corporate  executive offices which provide for  a  base  rent  of
approximately  $6,900  with customary additional  rental  charges
(i.e.,  proportionate  share of real estate  taxes,  electricity,
etc.)  of  which  TDA  will  continue to  pay  twenty-five  (25%)
percent.

      In  October  1998,  in  connection  with  the  purchase  of
substantially all of the assets and business of MSI Co.,  by  MSI
Eagle,  TDA lent MSI Eagle $1,000,000 pursuant to a 6% per  annum
two-year note.  The note was payable in full in October 2000, and
TDA  had  agreed to defer the interest payable on the note  until
its maturity.  In October 2000, interest on the note was paid  in
full,  and  TDA and JEH Eagle (successor by merger to MSI  Eagle)
agreed  to refinance the $1,000,000 principal amount of the  note
pursuant to a new 8.75% per annum demand promissory note.

     A  subsidiary  of  TDA and James E. Helzer,  our  President,
lease approximately one-half of our facilities to us.

     We do not intend to enter into any material transaction with
any  of our affiliates in the future unless we believe that  such
transaction  is fair and reasonable to us and is  approved  by  a
majority  of  the independent members of our Board of  Directors.
Notwithstanding  the foregoing, there can be  no  assurance  that
future  transactions,  if any, will not result  in  conflicts  of
interest  which will be resolved in a manner unfavorable  to  us.
See  Item  2.  "Properties - Locations Owned By and  Leased  from
TDA."


     We Depend Upon Key Personnel.

     Our  success may depend upon the continued contributions  of
our  officers.  Our business could be adversely affected  by  the
loss  of  the services of Douglas P. Fields, our Chief  Executive
Officer  and  Chairman  of our Board of Directors,  Frederick  M.
Friedman,  our Executive Vice President, Secretary and Treasurer,
James E. Helzer, our President, and E.G. Helzer, our Senior  Vice
President.  Although we have "key person" life insurance  on  the
life  of James E. Helzer in the amount of $2,000,000 and on  each
of  the  lives  of Messrs. Fields and Friedman in the  amount  of
$1,000,000, there can be no assurance that the foregoing  amounts
will be adequate to compensate us in the event of the loss of any
of their lives.



                             18

<PAGE>



     Conflicts  Of  Interest  May  Arise  In  The  Allocation  Of
Management's Time

     The  employment agreements with Messrs. Fields and  Friedman
do  not  require either of them to devote a specified  amount  of
time  to our affairs. Each of Messrs. Fields, Friedman and Helzer
have  significant outside business interests, including  but  not
limited to TDA (our controlling stockholder) and its subsidiaries
(as to Messrs. Fields and Friedman). Accordingly, Messrs. Fields,
Friedman  and Helzer may have conflicts of interest in allocating
time among various business activities. There can be no assurance
that any such conflicts will be resolved in a manner favorable to
us.


     We  Have Entered Into Transactions With Affiliates That Have
Benefited Them.

     Messrs.  Fields and Friedman, two of our principal executive
officers  and  directors, are also principal executive  officers,
directors and the principal stockholders of TDA and have and will
or  may  be deemed to benefit, directly or indirectly,  from  our
transactions with TDA. James E. Helzer, our President, previously
owned  one of our acquisitions and has and will or may be  deemed
to  have  benefited or to benefit directly from his  transactions
with us.

     During our fiscal year ended June 30, 1999, we made dividend
payments  to TDA of approximately $1,200,000.  After our  Initial
Public  Offering,  and  in connection with the  Acquisitions,  we
cancelled in the form of a non-cash dividend all indebtedness  of
TDA  to  us at that date, approximately $3,067,000. To the extent
TDA's  indebtedness  to  us  was  cancelled,  TDA  directly,  and
Messrs. Fields and Friedman indirectly, derived a benefit.

     In  addition,  through June 30, 2002, TDA provided  us  with
office  space  and administrative services in New York  City  for
$3,000  per  month  pursuant  to a month-to-month  administrative
services  agreement. This agreement terminated on June 30,  2002.
Through  June 30, 2002, TDA also provided certain other  services
to us pursuant to a five-year agreement requiring payments to TDA
of $3,000 per month. This agreement expired on June 30, 2002.

     On  February 6, 2003,  we entered into a Securities Purchase
Agreement ("Securities Purchase Agreement") with James E. Helzer,
our  President, Chief Operating Officer, and Vice Chairman of the
Board  of  Directors, to sell in a private placement  transaction
(the  "Helzer  Transaction"), for gross  proceeds  to  us  of  $1
million  (a) 1,000,000 authorized but previously unissued  shares
of  our  common  stock, and (b) warrants to  purchase  up  to  an
additional 1,000,000 authorized but previously unissued shares of
our  common  stock  at  an  exercise price  of  $1.50  per  share
exercisable  for 5 years from the date of issuance  (the  "Helzer
Warrants").  Although the closing price for our common  stock  at
the  close  of business on the day before the Helzer  Transaction
closed  was $0.81 and we received two separate fairness  opinions
indicating that the consideration received by the Company in  the
Helzer  Transaction was fair, Mr. Helzer may be able  to  benefit
from  any  appreciation in the market price of our common  stock.
On  September  22, 2003, the last reported sales  price  for  our
common  stock  was  $2.40 per share.  See Item  5.   "Market  for
Registrant's Common Equity and Related Stockholders' Matters."

     In  February 2003, our Chairman and Chief Executive Officer,
Douglas  P.  Fields, and our Executive Vice President, Treasurer,
Secretary,  and Chief Financial Officer, Frederick  M.  Friedman,
each agreed to accept $100,000 of their cash compensation for the
fiscal  year  ended June 30, 2003 in the form  of  100,000  newly
issued, unregistered shares of the Company's common stock in lieu
of  such  cash compensation.  These shares were issued April  11,
2003.

     We do not intend to enter into any material transaction with
any  of our affiliates in the future unless we believe that  such
transaction  is fair and reasonable to us and is  approved  by  a
majority  of  the independent



                             19

<PAGE>

members  of  our   Board of   Directors.    Notwithstanding   the
foregoing, there can be no  assurance  that future  transactions,
if any, will not result  in  conflicts  of interest which will be
resolved in a manner unfavorable to us.

     See  "-  Our  Executive  Officers  and  Directors  May  Have
Potential  Conflicts of Interest With Us," Item 2. "Properties  -
Locations  Owned  By and Leased from TDA," Item 7.  "Management's
Discussion  and  Analysis of Financial Condition and  Results  of
Operations - Acquisitions."


     We Are Controlled By TDA And Lease Several Of Our Facilities
From TDA.

     TDA  owns  approximately 51.7% of our issued and outstanding
shares  of  our  common  stock.  Douglas  P.  Fields,  our  Chief
Executive Officer and Chairman of our Board of Directors, also is
Chairman  of  the  Board of Directors, President  and  the  Chief
Executive  Officer of TDA as well as a principal  stockholder  of
TDA.  Frederick M. Friedman, our Executive Vice President,  Chief
Financial  Officer, Treasurer, Secretary and one of our Directors
also  is  the Executive Vice President, Chief Financial  Officer,
Treasurer   and  a  director  of  TDA  as  well  as  a  principal
stockholder  of  TDA.  John  E. Smircina,  Esq.  is  one  of  our
Directors and a director of TDA.

     Because Messrs. Fields, Friedman and Smircina may be  deemed
to  control  TDA, they also may be deemed to control  our  common
stock  owned  by  TDA. As a result, they are  in  a  position  to
control the composition of our Board of Directors, and, therefore
our  business, policies, and affairs, and the outcome  of  issues
which may be subject to a vote of our stockholders.

     A  TDA  subsidiary has rented to us the premises for several
distribution  facilities  pursuant  to  ten-year  leases  at   an
approximate  aggregate annual base rental of  $790,000  which  we
believe is fair and reasonable to us.

     See  "-  Our  Executive  Officers  and  Directors  May  Have
Potential  Conflicts of Interest With Us," Item 2.  "Properties,"
Item  7.  "Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations-Acquisitions."


     Substantial   Financial  Benefits   To   Prior   Owners   Of
Subsidiaries.

     *    JEH Eagle.  In July 1997, JEH Eagle acquired the business
          and substantially all of the assets of JEH Company ("JEH Co."), a
          Texas corporation, wholly-owned by James E. Helzer, now our
          President and Vice Chairman of our Board of Directors. The
          purchase price, as adjusted, including transaction expenses, was
          approximately $14,768,000, consisting of a cash payment and a
          note. Certain, substantial, contingent payments, as additional
          consideration to JEH Co. or its designee, were paid by us that
          may be deemed to have resulted in substantial financial benefits
          to JEH Co. or its designee and may be deemed to have had a
          material adverse effect on our financial condition, cash flows
          and income. Upon completion of our Initial Public Offering, we
          issued 300,000 shares of our common stock to James E. Helzer in
          fulfillment of certain of such consideration. Additionally, for
          the  fiscal years ended June 30, 1999, 2000  and  2001,
          approximately $1,773,000, $1,947,000 and $315,000, respectively,
          of such additional consideration was paid to JEH Co. or its
          designee. For the fiscal year ended June 30, 2002, no additional
          consideration was payable to JEH Co. or its designee, and, as of
          June 30, 2002, the Company had no future obligation for such
          additional consideration. James E. Helzer has rented to us the
          premises for several distribution facilities pursuant to
          five-year leases at an approximate aggregate annual base rental
          of $784,000 which we believe is fair and reasonable to us.

     *    MSI  Eagle.   In  October 1998, MSI  Eagle  acquired
          substantially all of the assets and the business of Masonry
          Supply, Inc. ("MSI Co."), a Texas corporation, wholly-owned by
          Gary


                             20

<PAGE>

          L. Howard,  formerly one of  our  executive  officers.  The
          purchase price, as adjusted, including transaction expenses, was
          approximately $8,538,000 subject to further adjustments under
          certain conditions. Certain contingent payments, as additional
          consideration to MSI Co. or its designee, are to be paid by us
          that may result in substantial financial benefits to MSI Co. or
          its designee and may materially and adversely effect our
          financial condition, cash flows and income. After completion of
          our Initial Public Offering, we issued 260,000 shares of our
          common stock to Gary L. Howard in fulfillment of certain of such
          future consideration. Additionally, for the fiscal years ended
          June 30, 2000, 2001 and 2002, approximately $216,000, $226,000,
          and $260,000, respectively, of such additional consideration, was
          paid to MSI Co. or its designee.  For the fiscal year ended June
          30, 2003, approximately $260,000 of additional consideration is
          payable to MSI Co. or its designee. Gary L. Howard rents to us
          the premises for certain offices and a distribution center
          pursuant to a three-year lease at an approximate annual base
          rental of $112,000 which we believe is fair and reasonable to us.

     See  Item  2. "Properties," Item 7. "Management's Discussion
and  Analysis of Financial Condition and Results of Operations  -
Acquisitions."


                Risks Relating To Our Securities


     Our   Securities  Must  Continue  To  Meet  Qualitative  And
Quantitative Listing Maintenance Criteria For The Nasdaq SmallCap
Market And The Boston Stock Exchange.

     Our  securities are quoted and traded on the NASDAQ SmallCap
Market and are listed on the Boston Stock Exchange ("BSE"). There
can  be  no  assurance that we will continue  to  meet  both  the
qualitative and quantitative criteria for continued quotation and
trading  of  our securities on the NASDAQ SmallCap  Market.  That
criteria, which undergoes periodic NASDAQ review, include,  among
other things, at least:

     *    $35,000,000 in market capitalization, $2,500,000  in
          stockholders' equity or $500,000 in net income in an issuer's
          last fiscal year or two of its last three fiscal years;

     *    a $1.00 minimum bid price;

     *    two market makers;

     *    300 round lot shareholders; and

     *    500,000 shares publicly held (excluding officers, directors
          and persons owning 10% or more of the Company's issued and
          outstanding shares) with $1,000,000 in market value.

     The BSE also has similar continued quotation criteria. If we
are unable to meet the continued quotation criteria of the Nasdaq
SmallCap  Market  and the BSE and are suspended from  trading  on
these  markets, our securities could possibly be  traded  in  the
over-the-counter  market and be quoted  in  the  so-called  "pink
sheets"  or, if then available, the OTC Bulletin Board.  In  such
an  event,  an  investor would likely find it more  difficult  to
dispose   of,  or  even  obtain  accurate  quotations   of,   our
securities.   See "- We Will Also Be Required To Meet Anticipated
Nasdaq Corporate Governance Criteria."

       Although we currently are in compliance with the foregoing
listing  criteria, from time to time our closing stock price  has
fallen  below  the Nasdaq minimum bid price requirements.   Under
the  Nasdaq rules, one prerequisite to continued listing  on  the
Nasdaq  SmallCap  Market is the maintenance of a minimum  closing
bid  price of $1.00 per share.  If a quoted company's closing bid
price  falls  below $1.00 per share for thirty  (30)  consecutive
trading  days, such company may be subject to having  its  shares
delisted  from Nasdaq.


                             21
<PAGE>

The closing bid price per  share  of  the Company's  common stock
fell below  $1.00  per  share  for  the  thirty (30)  consecutive
trading   days   prior  to  February  11,   2003.    The  Company
subsequently received  a letter from Nasdaq advising  the Company
that  it   would  be  required  to  come  into  compliance   with
Nasdaq's minimum closing bid rules within one hundred and  eighty
(180)  calendar days following February 11, 2003,  to  avoid  the
commencement  of a possible delisting proceeding.   In  order  to
come  into  compliance with the minimum closing price rules,  the
closing  bid  price per share of the Company's common  stock  was
required  to  be at least $1.00 for ten (10) consecutive  trading
days  ("Minimum Closing Price Requirement").  If the Company were
unable  to  satisfy the Minimum Closing Price Requirement  during
this  one  hundred  and  eighty (180) calendar  day  time  period
(August 11, 2003), Nasdaq would determine whether the Company was
able  to  otherwise satisfy the criteria for initial listing  for
the  Nasdaq  SmallCap  Market.  If the  Company  could  otherwise
satisfy  the initial listing criteria at that time, Nasdaq  would
grant  the  Company an additional one hundred  and  eighty  (180)
calendar  day  grace  period to demonstrate compliance  with  the
Minimum  Closing  Price Requirement.  The trading  price  of  our
common  stock  improved subsequent to February 11, 2003,  and  by
letter  dated May 13, 2003, Nasdaq notified us that  the  Minimum
Closing Price Requirement was satisfied and that we were again in
compliance with Nasdaq Marketplace Rule 4310(c)(8)(D).   However,
we  can not assure you that the Minimum Closing Price Requirement
or  any other listing criteria will continue to be satisfied  and
that  the  Company's  securities  will  not  become  subject   to
delisting from the Nasdaq SmallCap Market in the future.


     We  Will  Be  Required To Meet Anticipated Nasdaq  Corporate
Governance Criteria.

     Although  the Nasdaq SmallCap Market has always had  certain
corporate  governance  criteria for  the  listing  and  continued
quotation  of  an  issuer's securities,  Nasdaq  has  proposed  a
substantially  expanded  corporate governance  criteria  for  the
issuers of those securities quoted on the Nasdaq SmallCap Market.
Although,  in  the  past,  we have been able  to  satisfy  Nasdaq
SmallCap Market's corporate governance criteria, the new proposed
criteria  is substantially more difficult to satisfy.  The  rules
proposed by Nasdaq in February 2003 are partly in response to the
Sarbanes  Oxley Act of 2002 ("Sarbanes Oxley") and would require,
among other things

     *    an increase in the degree of independence of members of the
          board of directors with a majority of board members to be
          independent, and these independent directors are to, among other
          things: (i) hold regular meetings among themselves only, and (ii)
          approve related party transactions, all with a strict definition
          of an independent director;

     *    independent director approval of: (i) director nominations
          and (ii) chief executive officer compensation;

     *    an empowerment of audit committees of boards of directors
          with, among other things: (i) sole authority to hire and fire
          auditors, and (ii) authority to hire their own experts when
          appropriate;

     *    approval by audit committees, in advance of any non-audit
          services to be provided by its auditor;

     *    establishment of a code of conduct addressing conflicts of
          interest and compliance with laws; and

     *    a limit on payments to independent directors and their
          family members (other than for services on the board of
          directors).

     The  proposed  Nasdaq rules provide an  exemption  from  the
requirements for a majority of independent directors on the board
of  directors and from the requirement that independent directors
approve director


                             22

<PAGE>

nominations  and   chief  executive   officer   compensation  for
companies controlled by individuals, groups,  or other companies.
For purposes of this  exemption,  an individual,  group, or other
company has  such  control if they  own in excess of 50%  of  the
issuer's voting power ("Control Person").  Currently, we  have a
company, TDA, which owns approximately 51.7% of  our voting power
and  consequently  we  would  satisfy  this  exemption.  However,
there  is  no  assurance that such  exemption  will  be  approved
in the  final rules  or that we will continue to  have  a Control
Person.

     Nasdaq also has proposed that each listed company modify the
composition  of its board of directors to comply with  these  new
corporate governance rules effective immediately after the  first
annual meeting of stockholders that occurs after January 1,  2004
(except that those proposals relating to the code of conduct, the
holding  of  regular  meetings comprised  solely  of  independent
directors,  and to audit committee charters are to  be  effective
six  months  after the SEC approves the rule changes).   In  this
regard,  the  SEC  is directed under Sarbanes  Oxley  to  require
Nasdaq and other registered national securities associations  and
exchanges   to   adopt  rules  relating  to   audit   committees'
composition,  duties and obligations, and other  related  matters
that  may  result  in  further proposed  changes  to  the  Nasdaq
corporate  governance  rules that may be even more  difficult  to
satisfy than that currently proposed.

     We   believe   that  these  proposed  corporate   governance
requirements,  including the expanded powers and responsibilities
of   independent  directors  and  a  stricter  definition  of  an
independent  director,  will  make  it  more  difficult  to  find
independent  directors  for our Board  of  Directors.   Increased
competition for qualified independent directors, including  those
persons with accounting experience and financial statement acumen
to  serve  on audit committees, can be anticipated.   We  believe
that  compliance  with  Nasdaq's  proposed  corporate  governance
requirements  will be difficult and will increase our  costs  and
expenses  as  the  costs of finding and compensating  independent
directors  escalate  and  the costs of  administering  their  new
powers  and  responsibilities prove  to  be  an  added  financial
burden.   If Nasdaq's corporate governance rules are adopted  and
we  are  unable  to  attract a sufficient number  of  independent
directors willing to take on the responsibilities imposed by such
rules on what we believe to be commercially reasonable terms, our
securities may be delisted from Nasdaq.


     The   Market   Price   Of   Our  Securities   Has   Declined
Substantially Since Our Initial Public Offering.

     The  initial  offering prices of the shares  of  our  common
stock  and  our  Warrants issued pursuant to our  Initial  Public
Offering   were   $5.00  and  $0.125  per  share   and   Warrant,
respectively.  On September 22, 2003, the closing prices for  the
shares  of  our common stock and Warrants were $2.40  and  $0.20,
respectively, as reported by the Nasdaq SmallCap Market  on  that
date.  In  addition to the diminution of market value,  continued
market  price  declines  could result in  the  delisting  of  our
securities  from the Nasdaq SmallCap Market and the Boston  Stock
Exchange ("BSE").


     There Are Risks In Purchasing Low-Priced Securities.

     If  our securities were to be suspended or delisted from the
Nasdaq SmallCap Market, they could be subject to rules under  the
Securities  Exchange Act of 1934 ("Exchange  Act")  which  impose
additional sales practice requirements on broker-dealers who sell
such  securities  to persons other than established  clients  and
"accredited  investors" (i.e., individuals with a  net  worth  in
excess  of  $1,000,000 or an annual income exceeding $200,000  or
$300,000  together with their spouses). For transactions  covered
by  such  rules, a broker-dealer must make a special  suitability
determination of the purchaser and have received the  purchaser's
written   consent  to  the  transaction  prior   to   the   sale.
Consequently,  such  rules may adversely affect  the  ability  of
broker-dealers  and shareholders to sell our securities,  whether
in  any secondary market that may develop for such securities  or
otherwise.   Further, because of the limitations and requirements
imposed on the sale of securities under such circumstances,  such
rules also may have an adverse effect on the prices at which  our
securities  may  trade in any secondary market  place  which  may
develop.



                             23

<PAGE>


     The SEC has enacted rules that define a "penny stock" to  be
any equity security that has a price (as therein defined) of less
than $5.00 per share or an exercise price of less than $5.00  per
share, subject to certain exceptions, including securities listed
on the Nasdaq SmallCap Market or on designated exchanges. For any
transaction  involving a penny stock, unless  exempt,  the  rules
require the delivery, prior to any transaction in a penny  stock,
of  a  disclosure statement prepared by the SEC relating  to  the
penny  stock  market. Disclosure also has to be  made  about  the
risks  of investing in penny stocks in both public offerings  and
in  secondary trading. In the event our securities are no  longer
listed  on the Nasdaq SmallCap Market or are not otherwise exempt
from  the provisions of the SEC's "penny stock" rules, such rules
also  may  adversely  affect the ability  of  broker-dealers  and
shareholders to sell our securities which, in turn, could have an
adverse effect on the prices at which our securities may trade in
any secondary market place that may develop.


     There  Is No Assurance Of A Continued Public Market For  Our
Securities.

     We  can not assure you that a trading market for any of  our
securities  will be sustained.  Investors should  be  aware  that
sales of our securities may have a depressive effect on the price
of  our  securities  in any market in which  our  securities  are
traded or which may develop for such securities.


     We  Have  Outstanding  Options,  Warrants  And  Registration
Rights That May Limit Our Ability To Obtain Equity Financing  And
Could Cause Us To Incur Expenses   .

     We have issued or are obligated to issue warrants:

     *    in our Initial Public Offering, as well as additional
          warrants on identical terms to others;

     *    to the underwriter of our Initial Public Offering;

     *    in connection with a private placement offering of our
          securities in May 2002 to certain private investors; and

     *    to Mr. Helzer in connection with the Helzer Transaction.

     In  accordance with the respective terms of warrants  issued
to  investors  and any options granted and that  may  be  granted
under our 1996 Stock Option Plan (the "Stock Option Plan") or  to
future  investors, the holders are given an opportunity to profit
from  a  rise  in the market price of our common  stock,  with  a
resulting dilution in the interests of the other stockholders. In
this  regard,  the  Warrants issued to  the  underwriter  of  our
Initial  Public  Offering contain a cashless exercise  provision.
The  terms on which we may obtain additional financing during the
exercise periods of any outstanding warrants and options  may  be
adversely affected by the existence of such warrants, options and
Stock  Option  Plan.  The  holders of  options  or  warrants  may
exercise such options or warrants at a time when we might be able
to  obtain additional capital through offerings of securities  on
terms  more  favorable than those provided  by  such  options  or
warrants. In addition, the holders of the underwriter's  warrants
issued in connection with our Initial Public Offering have demand
and   "piggyback"  registration  rights  with  respect  to  their
securities,  and Mr. Helzer has demand registration  rights  with
respect  to  the securities he acquired pursuant  to  the  Helzer
Transaction.   Exercise of such registration rights  may  involve
substantial expense to us.


     We  Have Sold Shares Below The Then Current Market Price And
Warrants With A Lower Exercise Price Than The Warrants.

     On  May 15, 2002, we agreed to sell 1,090,909 shares of  our
common stock at $2.75 per share, a discount of approximately 8.6%
below the closing bid price for our shares of common stock on the
Nasdaq



                             24

<PAGE>

SmallCap  Market on May 15, 2002, and to issue  warrants, without
additional   consideration  as   part  of  that  transaction,  to
purchase 218,181 shares of our common stock exercisable at  $3.50
per  share  in  the  Private  Placement.  The  Private  Placement
provided for two equal and separate tranches of common stock  and
warrants.  The first such tranche closed.  The investors  in  the
Private  Placement  declined to make  the  additional  investment
required  to close the second tranche.  Accordingly,  the  second
tranche  did  not  and  will  not  close.   In  connection   with
settlements  entered into with several of the  investors  in  the
Private  Placement,  all  but 58,181 of the  warrants  issued  in
connection   with   the  first  tranche  has   been   surrendered
unexercised  to  the  Company.  Settlement discussions  with  the
remaining  investor have occured but there can  be  no  assurance
that any settlement will be successful.

     On  February 6, 2003, we entered into the Helzer Transaction
pursuant  to  which we sold 1,000,000 shares of our common  stock
and  the Helzer Warrant to purchase up to an additional 1,000,000
shares  of our common stock to Mr. Helzer, in exchange for  gross
proceeds of $1,000,000.  Although the common stock sold  in  that
transaction  was  at  a price exceeding the  then-current  market
price  for the common stock and the Helzer Warrant exercise price
also   exceeded  such  market  price,  such  Helzer  Warrant   is
exercisable  at  an  exercise price of  $1.50  per  share,  which
exercise  price  is  $4.00 less than the exercise  price  of  the
Warrants issued pursuant to our Initial Public Offering in  March
1999.   The  exercise price and number of shares of common  stock
issuable  upon the exercise of the Helzer Warrant are subject  to
both  typical  anti-dilution provisions as well  as  a  provision
providing for an adjustment to the exercise price of the  warrant
in   the  event  that  the  Company  enters  into  certain  sales
transactions in which the common stock is sold at a  price  below
the  current exercise price of the Helzer Warrant.  See  Item  5.
"Market  for  Registrant's Common Equity and Related  Stockholder
Matters."

     The  sale  of securities pursuant to these private placement
transactions and any future sales of our securities  will  dilute
the  percentage equity ownership of then existing owners  of  the
shares of our common stock and may have a dilutive effect on  the
market  price  for  our outstanding shares of common  stock,  the
warrants issued pursuant to our Initial Public Offering, and  the
value of any other of our previously issued warrants.


     We  Will  Not  Receive  All The Proceeds  From  The  Private
Placement.

     As  a result of the decision of the investors in our Private
Placement  not  to purchase the second tranche of  securities  as
required  in  our  agreements with them, we did not  receive  the
additional  $1,500,000 of gross proceeds therefrom as anticipated
although substantially all of the costs associated therewith have
already  been  incurred by the Company. Although we have  settled
this matter with four of the five institutional investors in  the
Private   Placement,  we  are  currently  considering  the   most
appropriate  course  of  action  to  take  with  regard  to   the
institutional  investor  which has  not  settled  and  anticipate
future  negotiations with such investor to seek  to  resolve  the
matter.   We  may  not  be  able to reach  a  mutually  agreeable
solution  and may be faced with the prospect of either  absorbing
some  or all of the additional costs incurred without receipt  of
any   additional  proceeds  or  the  potential  commencement   of
litigation which also is likely to be costly.


     Substantial Sales Of Restricted Shares Or Shares Held By Our
Officers,  Directors, Or Principal Shareholders  Could  Adversely
Affect The Market Price Of Our Common Stock.

      If  our stockholders sell substantial amounts of our common
stock,  including shares issued upon the exercise of  outstanding
options  or  warrants, the market price of our common  stock  may
decline.   Further, such sales also could make it more  difficult
for  us to sell equity or equity-related securities in the future
at  a time and price that we deem appropriate.  We are unable  to
predict  the  effect  that  such sales  may  have  on  the  then-
prevailing market price of our common stock.  As of September 22,
2003,  we  had  approximately 10,255,455 shares of  common  stock
outstanding and 5,336,781 additional shares of common stock  that
may  be  issued  upon  the exercise of outstanding  warrants  and
options.   Of  these  shares,  approximately  65%  of  our common



                             25

<PAGE>


stock  is  held   by   our  officers,  directors,  and  principal
stockholders ("Affiliate  Stockholders").   In  addition,  as  of
such  date,  approximately  1,236,364 shares  of our  outstanding
common  stock were "restricted securities"  within the meaning of
Rule 144 under the  Securities  Act (including 1.2 million  which
are  held by Affiliate  Stockholders) and an additional 1,911,781
shares  of  common  stock  which  would   constitute  "restricted
securities"  are  issuable  upon  the  exercise  of   outstanding
options  and  warrants (including 1.3   million  shares  issuable
to    Affiliate   Stockholders).    Shares  held   by   Affiliate
Stockholders  which  are not restricted shares are referred to as
"control shares".

      The  restricted shares (including those issuable  upon  the
exercise of outstanding warrants or options) were issued and sold
in  private  transactions  or under  employee  benefit  plans  in
reliance  upon exemptions from registration under the  Securities
Act.   Control shares and restricted shares may be  sold  in  the
public  market  only if they are registered under the  Securities
Act  or if they qualify for an exemption from registration,  such
as  the  exemptions provided under Rule 144 under the  Securities
Act, which is summarized below.

      Holders  of  "restricted shares" or  "control  shares"  are
eligible to sell shares of our common stock under Rule  144.   In
general,  under  Rule  144 as currently in effect,  a  person  or
persons whose shares are required to be aggregated, who holds (a)
control  shares  or (b) has beneficially owned restricted  shares
for  at least one year (including the holding period of any prior
owner except an affiliate), is entitled to sell within any three-
month  period a number of shares that does not exceed the greater
of:

      *  one percent of the number of shares of common stock then
         outstanding (which, as of September 22, 2003, would  equal
         approximately 102,554 shares), or

      *  the average weekly trading volume of our common stock during
         the four calendar weeks preceding the date on which notice o
         the sale is filed.

      Sales under Rule 144 also are subject to certain manner  of
sale  provisions and notice requirements and to the  availability
of  current  public information about us.  Under Rule  144(k),  a
person who is not deemed to have been an affiliate of the Company
at any time during the three months preceding a sale, and who has
beneficially  owned the shares proposed to be sold for  at  least
two years (including the holding period of any prior owner except
an  affiliate), is entitled to sell the shares without  complying
with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.  Affiliated Stockholders who  hold
control  shares  are required to continue to  comply  with  those
requirements  until they are no longer "affiliates"  (within  the
meaning  of Rule 144) of the Company and three months has  passed
since they were last deemed to be an affiliate of the Company.

      We  have  granted  demand registration  rights,  rights  to
participate  in  offerings  that  we  initiate,  and   Form   S-3
registration  rights  to  Mr. Helzer  and  we  may  permit  other
shareholders such as TDA to participate in any such registration.

      Because  the  Affiliated Stockholders  hold  a  significant
number  of  our  common shares, most of which are not  restricted
securities  and  those  which  are restricted  have  registration
rights,  if  they should decide to sell a significant  number  of
shares of our common stock, whether under Rule 144 or pursuant to
a  registration statement, the market price of our  common  stock
could be significantly adversely affected by such sales.


     We May Not Be Able To Make Our Required SEC Filings On Time:

     In  light  of  new  rules,  regulations,  requirements,  and
procedures  created  and/or  imposed  upon  us  and/or   on   our
independent auditors since the passage of the Sarbanes-Oxley  Act
of  2002, or for other reasons, we may not be able to make all of
our  required filings with the Securities and Exchange Commission
in  a  timely manner.  A late filing of any required filing, even
if an extension is available and/or granted, may have an



                             26

<PAGE>


adverse affect  on  our Company, the market price at which our
securities trade, and our listing on Nasdaq or whatever
marketplace on which our securities may be trading.


     We Have No Plans To Pay Cash Dividends.

     Except  for  cash  dividends  paid  to  TDA  prior  to   the
consummation of our Initial Public Offering, we have not paid any
dividends on our common stock and our Board of Directors does not
presently  intend  to declare any dividends  in  the  foreseeable
future.  Instead, the Board of Directors intends  to  retain  all
earnings,   if   any,   for  use  in  our  business   operations.
Additionally, our credit facility contains provisions that  could
restrict  our  ability  to pay dividends if  we  do  not  satisfy
certain financial requirements.


     We   Have   Anti-Takeover  Provisions  That  Authorize   Our
Directors   To   Issue  And  Determine  The  Rights   Of   Shares
Of Preferred Stock In Our Certificate Of Incorporation.

     Our  Certificate of Incorporation permits our  directors  to
designate  the terms of and issue shares of preferred stock.  The
issuance  of shares of preferred stock by the Board of  Directors
could adversely effect the rights of holders of common stock  by,
among   other   matters,  establishing  preferential   dividends,
liquidation rights and voting power. Although we have no  present
intention  to  issue  shares of preferred stock,  their  issuance
might  render  it  more difficult, and therefore  discourage,  an
unsolicited  takeover  proposal such as  a  tender  offer,  proxy
contest  or  the removal of incumbent management,  even  if  such
actions would be in the best interest of our stockholders.


     Our   Certificate   Of   Incorporation   Limits   Directors'
Liability.

     Our Certificate of Incorporation provides that our directors
will  not  be held liable to us or our stockholders for  monetary
damages  upon breach of a director's fiduciary duty with  certain
exceptions.  The  exceptions include a breach of  the  director's
duty  of  loyalty, acts or omissions not in good faith  or  which
involve  intentional  misconduct or  knowing  violation  of  law,
improper  declarations of dividends and transactions  from  which
the director derived an improper personal benefit.



ITEM 2.   PROPERTIES


Locations Owned By and Leased From TDA

     We  lease  approximately  15,000 square  feet  of  executive
office  space  located at 1451 Channelside Drive, Tampa,  Florida
33605  from  a wholly-owned subsidiary of TDA, at an  approximate
base annual rental of $120,000.

     Additionally,  we  lease  nine (9) locations  from  the  TDA
subsidiary,  two (2) in Alabama (Birmingham and Mobile)  and  six
(6)  in  Florida  (Fort Myers, Holiday, Lakeland, Pensacola,  St.
Petersburg  and  Tampa).  We  also  lease  one  (1)  location  in
Littleton,  Colorado, from an entity owned one-half  by  the  TDA
subsidiary  and  one-half by James E. Helzer, our President,  and
his  spouse.  The facilities located in Birmingham, Alabama,  and
Lakeland,  Florida,  have been subleased  to  unaffiliated  third
parties,  and  all or a portion of the Tampa, Florida,  executive
office space may be subleased to third parties in the future.

     The  aggregate  approximate  square  footage  and  aggregate
approximate base annual rental for the locations leased from  the
TDA  subsidiary are 250,000 square feet (exclusive of  land  used
for storage and other purposes) and $790,000.



                             27

<PAGE>


     The  aggregate  approximate  square  footage  and  aggregate
approximate  base  annual  rental  for  the  Littleton,  Colorado
location  leased  from  an  entity  owned  one-half  by  the  TDA
subsidiary  and  one-half by James E. Helzer, our President,  are
7,500  square feet (exclusive of land used for storage and  other
purposes) and $46,000, respectively.

     In  March 1999, we entered into written ten-year leases with
the TDA subsidiary providing for base annual rentals as set forth
above for the first five years of such leases with provisions for
increases  in  rent based upon the consumer price  index  at  the
beginning  of  the sixth year of such ten-year  leases  and  with
provisions for five-year renewal options, increases in rent based
upon the consumer price index, and lease terms, additional rental
and  other charges customarily included in such leases, including
provisions  requiring  us to insure and  maintain  and  pay  real
estate taxes on the premises. We believe that the rent and  other
terms  of our lease agreements with the TDA subsidiary are on  at
least  as  favorable terms as we would expect to  negotiate  with
unaffiliated  third  parties.  Neither  party  is  permitted   to
terminate  the  leases  before the end of their  term  without  a
breach or default by the other party.

     As  part  of  the foregoing leasing arrangements, additional
undeveloped  land  is leased to us from the TDA subsidiary.  That
undeveloped land is used for storage or reserved for future  use.
The locations and approximate acreage of the undeveloped land are
as  follows: Birmingham (one), Littleton (three), Ft. Myers  (one
and  a  third), Holiday (three), Pensacola (two and a half),  St.
Petersburg (two) and Tampa (one).

     Through June 30, 2002, TDA provided office space for use  as
our   New  York  corporate  executive  offices  pursuant  to   an
administrative  services  agreement  that  has  been  terminated.
Commencing July 1, 2002, the Company began to pay to TDA seventy-
five  (75%)  percent of the occupancy cost (approximately  $4,500
per month) for our executive offices, and TDA began to pay twenty-
five  (25%) percent of such occupancy cost (approximately  $1,500
per month) in order to defray any expenses that may be deemed  to
be  attributable to TDA. The current lease for the Company's  New
York corporate executive offices expired in October 2002 with TDA
as the named lessee. In October 2002, the Company entered into  a
new lease with the landlord for these premises at a base rent  of
approximately  $6,900 per month with customary additional  rental
charges   (i.e.,  proportionate  share  of  real  estate   taxes,
electricity, etc.), of which TDA will continue to pay twenty-five
(25%) percent.  This lease expires in October 2012.


Locations Owned By and Leased From James E. Helzer

     We lease approximately 8,000 square feet of executive office
space, used as our operational headquarters, located at 2500 U.S.
Highway  287,  Mansfield, Texas 76063 from James E.  Helzer,  our
President.

     We  also  lease  seven  (7) other locations  from  James  E.
Helzer, two (2) in Colorado (Colorado Springs and Henderson)  and
five  (5)  in  Texas  (Colleyville,  North  Fort  Worth,  Frisco,
Mansfield   and  Mesquite).  One  (1)  additional   location   in
Littleton,  Colorado, is leased from an entity owned one-half  by
James  E.  Helzer  and  his  spouse  and  one-half  by  the   TDA
subsidiary.

     The  aggregate  approximate  square  footage  and  aggregate
approximate  base  annual rental for the  locations  leased  from
James  E. Helzer are 254,700 square feet (exclusive of land  used
for storage and other purposes) and $784,000, respectively.

     The  aggregate  approximate  square  footage  and  aggregate
approximate  base  annual  rental  for  the  Littleton,  Colorado
location  leased  from  an  entity  owned  one-half  by  the  TDA
subsidiary  and  one-half by James E. Helzer, our President,  are
7,500  square feet (exclusive of land used for storage and  other
purposes) and $46,000, respectively.



                             28

<PAGE>


     The  foregoing  premises,  except  for  the  Frisco,  Texas,
premises,  are  leased  to us from James E.  Helzer  pursuant  to
five-year leases expiring in June 2007 providing for base  annual
rentals  as set forth above with provisions for five (5%) percent
increases  commencing  on  July  1,  2006.   The  Frisco,  Texas,
premises  is  leased to us on a month-to-month basis.  Additional
rental  and  other  charges  for  the  foregoing  leases  include
provision for us to insure and maintain and pay all taxes on  the
premises.  We also have a right of first refusal to purchase  the
foregoing premises. We believe that such leases are on  terms  no
less  favorable  than  we could have obtained  from  unaffiliated
third parties.

     As part of the foregoing leases, additional undeveloped land
is  leased to us from James E. Helzer. That undeveloped  land  is
used  for  storage or reserved for future use. The locations  and
approximate  acreage  of  the undeveloped  land  is  as  follows:
Colorado  Springs  (three), Henderson (six),  Littleton  (three),
Colleyville (one and a half), Frisco (two and a half),  Mansfield
(twelve and a half) and Mesquite (two).


Location Owned By and Leased From Gary L. Howard

     We   lease  approximately  30,000  square  feet  of  office,
showroom  and  warehouse space, and approximately four  acres  of
outdoor storage space in Mansfield, Texas, from Gary L. Howard, a
former  executive officer of the Company, at a base annual rental
of approximately $112,000 pursuant to a lease expiring in October
2004.  We  have the right to one, three-year renewal  at  a  base
annual  rental  of five (5%) percent over that  paid  during  the
current  term.  Additional  rental  and  other  charges  for  the
foregoing lease include provisions for us to insure and  maintain
and  pay  taxes on the premises. We have a right of first refusal
to purchase the foregoing premises. We believe that the foregoing
lease  is  on terms no less favorable than we could have obtained
from an unaffiliated third party.


Locations Leased From Third Parties

     We lease eighteen (18) locations (including a parcel of land
and  property subleased to a third party) from third parties (two
(2)  in  Colorado (Eagle and Fort Collins), four (4)  in  Florida
(Clearwater, Orlando, Panama City and Tallahassee), one (1)  each
in  Illinois  (Lake  Zurich), Indiana  (Indianapolis),  Minnesota
(Eagan),   Mississippi  (Gulfport),  Missouri   (Hazelwood)   and
Nebraska (Omaha), and six (6) in Texas (Addison, Austin,  Denton,
Houston, Lubbock and Rosedale)). The aggregate approximate square
footage  and  base annual rentals for the locations  leased  from
third   parties   are   560,000  square  feet   and   $1,919,000,
respectively.

     As part of the foregoing leases, additional undeveloped land
is  leased from third parties. That undeveloped land is used  for
storage or reserved for future use. The locations and approximate
acreages  of  the undeveloped land is as follows:  Austin  (six),
Denton  (six),  Eagle  (two), Fort  Collins  (one  and  a  half),
Hazelwood  (three),  Houston  (four),  Indianapolis  (two),   and
Rosedale (three).

     Other  than two leases, which are on a month-to-month basis,
the  leases  with third parties expire at varying  times  through
October  2008, and several leases contain renewal options.  These
leases  generally contain provisions requiring  us,  among  other
things, to pay various occupancy costs.


ITEM 3.   LEGAL PROCEEDINGS

     We are not subject to any material legal proceedings.




                             29

<PAGE>


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

     There  were no matters submitted to a vote of the  Company's
security-holders  during the fourth quarter of  its  fiscal  year
ended June 30, 2003.


ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

     Pursuant to the Instructions of Form 10-K and Item 401(b) of
Regulation  S-K,  the name, age, and position of  each  executive
officer  of the Company are set forth below, together  with  such
officer's  business  experience  during  the  past  five   years.
Officers  are elected annually by the Board of Directors  of  the
Company  to  hold  office  until  the  earlier  of  their  death,
resignation, or removal.

<TABLE>
<CAPTION>
  Name                          Age     Position with Company
  ----                          ---     ---------------------
<S>                             <C>     <C>
  Douglas P. Fields...........  61      Chairman of the Board and
                                        Chief Executive Officer

  James E. Helzer.............  63      President and Vice Chairman of the
                                        Board of Directors

  Frederick M. Friedman.......  63      Executive Vice President, Chief
                                        Financial Officer, Secretary,
                                        Treasurer, and Director

  E. G. Helzer................  52      Senior Vice President -- Operations

</TABLE>


     Douglas  P.  Fields has been the Chairman of  the  Board  of
Directors, Chief Executive Officer and a Director of the  Company
since  its inception.  From the inception of the Company  through
July  1996,  Mr.  Fields  also served as  the  President  of  the
Company.  For more than the past five years, Mr. Fields has  been
the Chairman of the Board and Chief Executive Officer of each  of
the  Company's  subsidiaries.  Mr.  Fields  serves  in  the  same
capacities  for  TDA  and  each of its subsidiaries.   TDA  is  a
holding  company  that  is  our majority  stockholder  and  whose
operating subsidiaries are engaged in the operation of an  indoor
tennis  facility and the management of real estate.   Mr.  Fields
received  a  Masters degree in Business Administration  from  the
Harvard University Graduate School of Business Administration  in
1966 and a B.S. degree from Fordham University in 1964.

     Frederick M. Friedman has been the Executive Vice President,
Chief  Financial Officer, Treasurer, Secretary and a Director  of
the  Company  since its inception.  For more than the  past  five
years,  Mr.  Friedman  has been Executive Vice  President,  Chief
Financial Officer, Treasurer, Secretary and a Director of each of
the Company's subsidiaries.  He serves in the same capacities for
TDA  and each of its subsidiaries.  Mr. Friedman received a  B.S.
degree in Economics from The Wharton School of the University  of
Pennsylvania in 1962.

     James  E. Helzer has been the President of the Company since
December  1997  and our Vice Chairman of the Board  of  Directors
since  March 1999.  He was President of JEH Eagle from July  1997
through  June 30, 2002 and President of Eagle from December  1997
through  June 30, 2002.  From 1982 until July 1997, Mr. James  E.
Helzer was the owner and Chief Executive Officer of JEH Company.

     E. G. Helzer has been the Senior Vice President - Operations
of  the  Company since December 1997.  He served as  Senior  Vice
President - Operations for JEH Eagle from July 1997 through  June
30,  2002 and has served as President of JEH Eagle since July  1,
2002.    Mr.  Helzer  also  served as Senior  Vice  President  --
Operations for Eagle from December 1997 through June 30, 2002 and
has  served as President of Eagle since July 1, 2002.  From  1994
until  July  1997,  he was the Vice President  -  Operations  and



                             30

<PAGE>


Colorado  manager  of  JEH Company.  From 1982  until  1994,  Mr.
Helzer  was the Manager - Production and Service for JEH Company.
E.G.  Helzer  is  the brother of James E. Helzer,  the  Company's
President and Vice Chairman of our Board of Directors.

     There is no family relationship between any of the Company's
directors  or executive officers, except that James E. Helzer  is
the brother of E.G. Helzer, the Company's Senior Vice President -
- Operations.









                             31

<PAGE>

                             PART II
                             -------

ITEM 5.   MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED
          STOCKHOLDER MATTERS

Market for Our Securities

     We  have  two  classes  of securities presently  registered:
common stock and Warrants.  These securities are presently traded
on  the  NASDAQ SmallCap Market under the trading symbols  "EEGL"
and  "EEGLW,"  respectively, and on the  BSE  under  the  trading
symbols  "EGL" and "EGLW," respectively, and have been since  the
Initial  Public Offering in March 1999.  At the close of business
on  September 22, 2003, there were outstanding 10,255,455  shares
of  common stock which were held by approximately 19 shareholders
of record (and approximately 1,060 beneficial owners).

     The  high and low bid price quotations for our common stock,
as  reported  by NASDAQ SmallCap Market, are as follows  for  the
periods indicated:

<TABLE>
<CAPTION>
                                            High       Low
                                            ----       ---
<S>                                        <C>         <C>
     Year Ended June 30, 2002:
     First Quarter.....................    $ 1.38      $1.01
     Second Quarter....................    $ 1.99      $0.99
     Third Quarter.....................    $ 3.80      $1.51
     Fourth Quarter....................    $ 4.14      $2.30

     Year Ended June 30, 2003:
     First Quarter.....................    $ 2.68      $0.01
     Second Quarter....................    $ 1.18      $0.81
     Third Quarter.....................    $ 0.99      $0.62
     Fourth Quarter....................    $ 1.79      $0.66

     Year Ended June 30, 2004:
     First Quarter
     (through August 31, 2003).........    $ 2.00      $1.33
</TABLE>


     On September 22, 2003, the closing price of the common stock
as quoted by Nasdaq SmallCap Market was $2.40 per share.

     The  high and low bid price quotations for the Warrants sold
in  our  Initial Public Offering, as reported by NASDAQ  SmallCap
Market, are as follows for the periods indicated:

<TABLE>
<CAPTION>

                                            High       Low
                                            ---        ---
<S>                                        <C>         <C>
     Year Ended June 30, 2002:
     First Quarter....................     $ 0.14      $0.08
     Second Quarter...................     $ 0.24      $0.07
     Third Quarter....................     $ 0.47      $0.12
     Fourth Quarter...................     $ 0.68      $0.20

     Year Ended June 30, 2003:
     First Quarter....................     $ 0.30      $0.01
     Second Quarter...................     $ 0.13      $0.05
     Third Quarter....................     $ 0.09      $0.02
     Fourth Quarter...................     $ 0.17      $0.03

     Year Ended June 30, 2004:
     First Quarter (through
     August  31,2003).................     $ 0.17      $0.07
</TABLE>



                             32

<PAGE>


     On  September  22, 2003, the closing price of  the  Warrants
sold  in our Initial Public Offering as quoted by Nasdaq SmallCap
Market was $0.20 per Warrant.

     We  believe that the NASDAQ SmallCap Market is the principal
market  for  our common stock and Warrants.  The over-the-counter
market  quotations set forth above for both our common stock  and
our Warrants reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent  actual
transactions.

Dividends

     Holders   of  our  common  stock  are  entitled  to  receive
dividends when and if declared by our Board of Directors  out  of
funds  legally available therefor.  Except for cash and  non-cash
dividends  paid  to  TDA from our Eagle subsidiary  prior  to  or
simultaneously  with  the  consummation  of  our  Initial  Public
Offering and the Acquisitions, we have not paid any dividends  on
our  common  stock.  The payment of dividends,  if  any,  in  the
future is within the discretion of the Board of Directors and  is
subject  to the terms of our credit facility that could  restrict
our  ability  to  pay  dividends if we  do  not  satisfy  certain
financial requirements.  The payment of dividends, if any, in the
future  will  depend  upon  our earnings,  capital  requirements,
financial  condition and other relevant factors.   Our  Board  of
Directors  does not presently intend to declare any dividends  in
the  foreseeable future. Instead, our Board of Directors  intends
to  retain  all  earnings,  if  any,  for  use  in  our  business
operations.

Recent Sales of Unregistered Securities

     On   February  6,  2003,  in  connection  with  the   Helzer
Transaction,  we entered into the Securities Purchase  Agreement.
We received gross proceeds of $1 million in exchange for our sale
of  (a)  1,000,000 shares of our common stock and (b) the  Helzer
Warrant  pursuant  to  which Mr. Helzer may  purchase  up  to  an
additional 1,000,000 shares of our common stock

     The  Helzer Warrant is exercisable for five years  following
its  issuance  at  an  exercise price of $1.50  per  share.   The
exercise  price and the number of shares of common stock issuable
upon  the  exercise  of the Helzer Warrant are  subject  to  both
typical anti-dilution provisions as well as a provision providing
for an adjustment to the exercise price of the Helzer Warrant  in
the event that the Company enters into certain sales transactions
in  which  the common stock is sold at a price below the  current
exercise  price  of  the Helzer Warrant (a "Diluting  Issuance").
Under the terms of the Helzer Warrant, Mr. Helzer is required  to
seek   approval  of  the  Company's  stockholders  for  (a)   any
adjustment  of  the  exercise price of the Helzer  Warrant  below
$0.875 per warrant share due to a Diluting Issuance and (b) prior
to  exercising  the Helzer Warrant for more than 811,090  warrant
shares  ("Stockholder  Approvals").  We  anticipate  seeking  the
Stockholder  Approvals  at  the  next  annual  meeting   of   our
stockholders.  TDA has agreed with Mr. Helzer and the Company  to
vote  all of the shares of the Company's common stock held by  it
in favor of such approval.

     Pursuant  to the Securities Purchase Agreement, as  amended,
commencing  on August 6, 2003, upon Mr. Helzer's written  demand,
we  are  obligated  to  file a registration statement  under  the
Securities Act registering the shares of common stock Mr.  Helzer
acquired in the Helzer Transaction, including the shares issuable
upon the exercise of the Helzer Warrant.



                             33

<PAGE>


     We  believe that the Helzer Transaction was exempt from  the
registration  requirements  of the Securities  Act  of  1933,  as
amended  (the  "Securities Act"), pursuant to the  provisions  of
Section  4(2)  or  4(6) of the Securities  Act  or  Rule  506  of
Regulation D promulgated by the SEC under the Securities Act.

     In  February 2003, our Chairman and Chief Executive Officer,
Douglas  P.  Fields,  and  our Executive  Vice  President,  Chief
Financial   Officer,  Treasurer,  and  Secretary,  Frederick   M.
Friedman,   each  agreed  to  accept  $100,000  of   their   cash
compensation for the fiscal year ended June 30, 2003 in the  form
of  100,000  newly issued, unregistered shares of  the  Company's
common  stock  in lieu of such cash compensation.   These  shares
were issued April 11, 2003.  We believe that this issuance of our
shares   of   common  stock  was  exempt  from  the  registration
requirements of the Securities Act pursuant to the provisions  of
Section  4(2)  or  4(6) of the Securities  Act  or  Rule  506  of
Regulation D promulgated by the SEC under the Securities Act.













                             34

<PAGE>


ITEM 6.   SELECTED FINANCIAL DATA

      Prior  to  our Initial Public Offering and the Acquisitions
described in Note 2 of the Consolidated Financial Statements, the
Company had limited operations. The historical selected financial
information included in the statement of operations data has been
prepared on a basis which combines the Company (organized on  May
1,  1996), Eagle, JEH Eagle (which acquired JEH Co. as of July 1,
1997)  and MSI Eagle (which acquired MSI Co. on October 22, 1998)
as  four entities controlled by TDA. Information with respect  to
the  Company,  Eagle and JEH Eagle is included  for  all  periods
presented  (including the operations of MSI Eagle  from  June  1,
2000), and information with respect to MSI Eagle is included from
October 22, 1998 through May 31, 2000, the effective date of  its
merger with and into JEH Eagle.

     The selected financial information presented below should be
read  in  conjunction with the consolidated financial statements,
as restated,  and the notes thereto.

<TABLE>
<CAPTION>
                                                            At and for the
                                                    Year Ended June 30 - Combined (1)
                                  ----------------------------------------------------------------------
                                      2003          2002           2001            2000          1999
                                  ----------     ----------     ----------     ----------     ----------
                                            (Dollars in Thousands, except per share data)
<S>                               <C>            <C>            <C>            <C>            <C>

Selected Operations Data:
  Revenues........................$  226,136     $  230,496     $  189,448     $  181,197     $  150,764
  Gross profit....................    54,916         56,554         48,260         44,486         36,398
  (Loss) income from continuing
    operations, net of taxes......    (1,423)         1,747          1,086          2,403          2,865
Loss from discontinued operation,
    net of taxes..................      (191)          (356)          (238)          (273)          (156)
  Cumulative effect of accounting
    change, net of taxes..........      (413)            --             --             --             --
Net income (loss).................    (2,027)         1,391            848          2,130          2,709

Consolidated Per Share Data:
  Net (loss) income from
    continuing operation..........$    (0.15)    $     0.20     $     0.13     $     0.27     $     0.45
  Loss from discontinued
    operation.....................     (0.02)         (0.04)         (0.03)         (0.03)         (0.02)
  Cumulative effect of accounting
    changes.......................     (0.04)            --             --             --             --
  Net income (loss)...............     (0.21)          0.16           0.10           0.24           0.43

Other Financial Data:
  Net cash (used in) provided by
    operating activities..........$   (5,330)    $   (2,237)    $   (4,186)    $   (3,019)    $      939
  Net cash used in investing
    activities....................      (618)        (1,127)        (2,724)        (2,248)        (3,431)
  Net cash provided by financing
    activities....................     2,099          3,040          5,424          3,914          9,326

Selected Balance Sheet Data:
  Working capital.................$   45,342     $   45,938     $   40,210     $   32,637     $   27,159
  Total assets....................   105,696        100,428         93,994         85,229         76,223
  Long-term debt..................    42,688         40,425         38,337         33,089         30,139
  Total liabilities...............    84,480         78,261         74,511         66,593         60,504
  Shareholders' equity............    21,216         22,167         19,483         18,636         15,719

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

</TABLE>

(1)   The historical financial data included in the statement  of
operations  data has been prepared on a basis which combines  the
Company (organized May 1, 1996), Eagle, JEH Eagle (which acquired
JEH  Co. on July 1, 1997), and MSI Eagle (which acquired MSI  Co.
on  October 22, 1998) as four entities controlled by TDA, because
the  separate  financial  data  of  the  Company  would  not   be
meaningful.  Information with respect to the Company,  Eagle  and
JEH  Eagle  is included for all periods presented (including  the
operations  of MSI Eagle from June 1, 2000), and information  for
MSI Eagle is included from October 22, 1998 through May 31, 2000,
the effective date of its merger with and into JEH Eagle.


                             35

<PAGE>



ITEM 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF   FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

     This  Annual  Report  on Form 10-K contains  forward-looking
statements  within the meaning of Section 27A of  the  Securities
Act  of  1933 and Section 21E of the Securities Exchange  Act  of
1934  and are subject to risks, uncertainties, and other  factors
which  could cause actual results to differ materially from those
expressed or implied by such forward-looking statements.   For  a
more  detailed discussion of such forward-looking statements  and
certain  risk factors that should be considered by investors  and
others,  see  Item  1. "Business - A Note About  Forward  Looking
Statements" and "-- Business Environment and Risk Factors."

Critical Accounting Policies and Estimates

     The Company's discussion and analysis of financial condition
and  results of operation are based on the Company's Consolidated
Financial Statements, which have been prepared in accordance with
accounting principals generally accepted in the United States  of
America   and  which  require  the  Company  to  make  estimates,
assumptions  and  judgments that affect the reported  amounts  of
assets,  liabilities, revenues and expenses, and  the  disclosure
and  reported amounts of contingent assets and liabilities at the
dates  of the financial statements.  Significant estimates  which
are  reflected in these Consolidated Financial Statements  relate
to,  among  other  things, allowances for doubtful  accounts  and
notes  receivable, amounts reserved for obsolete and  slow-moving
inventories,  net realizable value of inventories,  estimates  of
future cash flows associated with assets, asset impairments,  and
useful  lives for depreciation and amortization.  On an  on-going
basis,  the  Company  evaluates its  estimates,  assumptions  and
judgments,  including  those related to allowances  for  doubtful
accounts  and  notes receivable, inventories, intangible  assets,
investments,  other receivables, expenses, income  items,  income
taxes  and  contingencies. The Company  bases  its  estimates  on
historical experience and on various other assumptions  that  are
believed to be reasonable under the circumstances, the results of
which  form  the  basis for making judgments about  the  carrying
values  of  assets, liabilities, certain receivables, allowances,
income  items,  expenses, and contingent assets  and  liabilities
that are not readily apparent from other sources.  Actual results
may  differ  from these estimates under different assumptions  or
conditions,  and  there  can  be  no  assurance  that  estimates,
assumptions and judgments that are made will prove to be valid in
light  of future conditions and developments.  If such estimates,
assumptions or judgments prove to be incorrect in the future, the
Company's  financial  condition, results of operations  and  cash
flows could be materially adversely affected.

     The  Company  believes  the  following  critical  accounting
policies  are  based  upon  its more  significant  judgments  and
estimates  used in the preparation of its Consolidated  Financial
Statements:

     * We maintain allowances for doubtful accounts and notes
       receivable for estimated losses resulting from the failure of our
       customers to make payments when due or within a reasonable period
       of time thereafter.  Although many factors can affect the failure
       of customers to make required payments when due, one of the most
       unpredictable is weather, which can have a positive as well as
       negative impact on the Company's customers.  For example, severe
       or catastrophic weather conditions, such as hail storms or
       hurricanes, will generally increase the level of activity of our
       customers,  thus enhancing their ability to make  required
       payments.  On the other hand, weather conditions such as heavy
       rain or snow or ice storms will generally preclude customers from
       installing the Company's products on job sites and collecting
       from their own customers, which conditions could result in the
       inability of the Company's customers to make payments when due.
       The  reserve for allowance for doubtful accounts and notes
       receivable is intended to adjust the value of our accounts and
       notes receivable for possible credit losses as of the balance
       sheet date in accordance with generally accepted accounting
       principles.  Calculating such allowances involves significant
       judgment.  We estimate our reserves for allowance for doubtful
       accounts  and notes


                             36

<PAGE>


       receivable by applying estimated  loss percentages against our
       aging of accounts receivables and based on our estimate of the
       credit worthiness of the customers from which the notes are
       payable.  Changes to such allowances may be required if the
       financial condition of our customers deteriorates or improves
       or if we adjust our credit standards, thereby resulting in
       reserve or write-off patterns that differ from historical
       experience.  Errors by the Company in estimating our allowance
       for doubtful accounts and notes receivable could have a material
       adverse affect on the Company's financial condition, results of
       operations, and cash flow.

     * We write down our inventories for estimated obsolete or slow-
       moving inventories equal to the difference between the cost of
       inventories and their estimated market value based upon assumed
       market  conditions.  If actual market conditions are  less
       favorable than those assumed by management, additional inventory
       write-downs may be required.  If inventory write-downs are
       required,  the Company's financial condition,  results  of
       operations,  and cash flows could be materially  adversely
       affected.

     * We test for impairment of the carrying value of goodwill
       annually and when indicators of impairment occur.  Indicators of
       impairment could include, among other things, a significant
       change in the business climate, including a significant sustained
       decline in an entity's market value, operating performance
       indicators, competition, sale or disposition of a significant
       portion of the business, legal or other factors.  In connection
       with the annual test for impairment, management reviews various
       generally accepted valuation methodologies for valuing goodwill.
       Management reviewed the carrying value of the goodwill on its
       balance sheet as of June 30, 2003 in light of the fact that the
       Company's stock market capitalization of our outstanding equity
       securities as of that date was below our total shareholders'
       equity (book value).  Management concluded that the market price
       of the Company's common stock is not the best indication of the
       fair market value of the Company.  Management believes that, with
       respect to the Company, the better indicator of fair market value
       results from the use of the discounted estimated future cash flow
       method, which includes an estimated terminal value component.
       This method is based on management's estimates, which will vary
       if the judgments and assumptions used to estimate the related
       business's future revenues, gross profit margins, operating
       expenses, interest rates, and other factors, prove  to  be
       inaccurate.  If such judgments, assumptions and estimates prove
       to be incorrect, then the Company's carrying value of goodwill
       may  be overstated on the Company's balance sheet, and the
       Company's results of operations may not reflect the impairment
       charge that would have resulted if such judgments, assumptions
       and estimates had been correct.  Any failure to write down
       goodwill for impairment correctly during any period could have a
       material  adverse effect on the Company's future financial
       condition and results of operations, as well as cause historical
       statements of operations, financial condition, and cash flows to
       have been incorrectly stated in light of the failure to take any
       such write downs correctly.

     * In conducting the required goodwill impairment test, we
       identified reporting units by determining the level at which
       separate financial statements are prepared and reviewed by
       management.  The test was required by only one of our operating
       subsidiaries.  As a result of the required test, we determined
       that no write down of our goodwill was required at June 30, 2003.
       While we do not use our stock market capitalization to determine
       the fair value of our reporting unit, we expect convergence
       between our stock market value capitalization and our discounted
       cash flow valuation to occur over time or from time to time.  If
       this does not occur, it may signal the need for impairment
       charges.

     * We seek revenue and income growth by expanding our existing
       customer base, by opening new distribution centers, and by
       pursuing strategic acquisitions that meet our various criteria.
       If our evaluation of the prospects for opening a new distribution
       center or of acquiring a company


                             37

<PAGE>


        misjudges our estimated future revenues or profitability, such
        a misjudgment could impair the carrying value of the investment
        and result in operating losses for the Company, which could
        materially adversely affect our results of operations, financial
        condition, and cash flows.

     *  We file income tax returns in every jurisdiction in which we
        have reason to believe we are subject to tax.  Historically, we
        have been subject to examination by various taxing jurisdictions.
        To date, none of these examinations has resulted in any material
        additional tax.  Nonetheless, any tax jurisdiction may contend
        that a filing position claimed by us regarding one or more of our
        transactions  is contrary to that jurisdiction's  laws  or
        regulations.  In any such event, we may incur charges to our
        income statement which could materially adversely affect our net
        income and may incur liabilities for taxes and related charges
        which may materially adversely affect our financial condition.


General

     This  Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results of Operations presents a  review  of  the
consolidated  operating results and financial  condition  of  the
Company for the fiscal years ended June 30, 2003, 2002 and  2001.
This   discussion  and  analysis  is  intended   to   assist   in
understanding  the financial condition and results of  operations
of the Company and its subsidiaries.  This section should be read
in conjunction with the Consolidated Financial Statements and the
related  notes  and  the other statistical information  contained
herein.


Results Of Operations

     Comparison of Fiscal Years Ended June 30, 2003 and 2002

     Revenues  of the Company during the fiscal year  ended  June
30,  2003  decreased  by  approximately $4.4  million  (1.9%)  to
approximately $226.1 million from approximately $230.5 million in
fiscal  2002.   This decrease may be attributed  primarily  to  a
decrease  in  revenues of approximately $27.8  million  generated
from  "storm" distribution centers opened for more than one  year
and   a  decrease  in  revenues  of  approximately  $1.1  million
generated  from "greenfield" distribution centers  closed  during
fiscal  2003,  offset by an increase in revenues of approximately
$3.1  million from storm centers opened in fiscal 2003 and during
the  last quarter of fiscal 2002, and approximately $21.4 million
that  had  been  generated from greenfield  distribution  centers
opened  for  more  than one year.  During the fourth  quarter  of
fiscal  2003 the Company's results of operations began to benefit
from  the  unusual and severe storm activity that  occurred  last
spring  in  certain of the Company's existing market areas.   The
Company continues to believe that those storms have had and  will
likely  continue  to  have  a positive impact  on  the  Company's
results of operations in the 2004 fiscal year.

     Cost  of  sales increased between the 2003 and  2002  fiscal
years  at  a  greater rate than the decrease in revenues  between
these  fiscal years.  Accordingly, cost of sales as a  percentage
of  revenues increased to 75.7% in the fiscal year ended June 30,
2003 from 75.5% in the fiscal year ended June 30, 2002, and gross
profit  as  a  percentage of revenues decreased to 24.3%  in  the
fiscal  year  ended June 30, 2003 from 24.5% in the  fiscal  year
ended  June  30,  2002.  As stated in Note 1 to the  Consolidated
Financial  Statements, the Company adopted  Emerging  Issue  Task
Force ("EITF") 02-16, effective July 1, 2002.  The impact of  the
accounting change resulting from the adoption of EITF  02-16  for
fiscal  2002 would have been an increase of $635,000 in  cost  of
sales.   Had  the  effect of EITF 02-16 been recorded  in  fiscal
2002,  gross profit, as a percentage of revenues would have  been
24.3%.

     Operating   expenses   (including   non-cash   charges   for
depreciation  and  amortization) increased  by  approximately  $4
million  (7.6%) between the 2003 and 2002 fiscal years presented.
Of  this increase, approximately $2 million may be attributed  to
an  increase  in  the provision for doubtful accounts  and  notes


                             38

<PAGE>


receivable,  approximately $1.6 million in increased payroll  and
related   expenses,  approximately  $801,000  to  the   operating
expenses  of  new distribution centers and increases  in  various
other  operating expenses.  Regarding the increase in the reserve
for  doubtful  accounts and notes receivable, during  the  fiscal
year  ended  June  30,  2003,  the  Company  added  approximately
$250,000, net of write-offs of approximately $4.5 million, to its
reserves  for  doubtful  accounts  and  notes  receivable.   This
increase  was  attributed to the failure  of  the  aging  of  the
Company's accounts receivable to improve.  At June 30, 2003,  the
Company's accounts receivable over 90 days past due significantly
increased.   As  a result of the foregoing, management  concluded
that  the  deterioration in the aging of the  Company's  accounts
receivable  during the fiscal year ended June 30, 2003  warranted
the  increase  in  the reserve for doubtful  accounts  and  notes
receivable.   Approximately $1.8 million of the increase  in  the
reserve  for doubtful accounts and notes receivable at  June  30,
2003  was  attributable  to  amounts due  from  certain  specific
customers   aggregating  approximately   $8.3   million.    These
customers,  in the aggregate, accounted for 2.4% and  4%  of  the
Company's total revenues for the fiscal years ended June 30, 2003
and  2002, respectively.  Depreciation and amortization decreased
by  an aggregate of approximately $459,000 (31%) between the 2003
and   2002   fiscal   years.    Operating   expenses   (including
depreciation  and amortization) as a percentage of revenues  were
24.7% in the fiscal year ended June 30, 2003 compared to 22.5% in
the fiscal year ended June 30, 2002.

     Interest income was approximately the same in both the  2003
and 2002 fiscal years presented.

     Interest expense decreased by approximately $627,000 (27.3%)
between  the 2003 and 2002 fiscal years presented.  This decrease
is due to lower rates of interest charged on borrowings under the
Company's revolving credit facility.

     In  January 2003, the Company sold its Birmingham,  Alabama,
distribution center and realized a loss of approximately  $90,000
on  the  sale.  The operations of this distribution  center  have
been  reclassified as discontinued in the 2002  and  2001  fiscal
years  and are presented as discontinued in the 2003 fiscal  year
Consolidated Financial Statements.


     Comparison of Fiscal Years Ended June 30, 2002 and 2001

     Revenues  of the Company in fiscal year ended June 30,  2002
increased  by  approximately $41 million (21.7%) to $230  million
from  approximately $189 million in fiscal year  ended  June  30,
2001.   This increase may be attributed primarily to an  increase
in   revenues  of  approximately  $52.7  million  generated  from
distribution  centers opened in fiscal year ended June  30,  2002
and  during the last quarter of fiscal year ended June  30,  2001
and   approximately  $6.1  million  generated  from  distribution
centers  opened  for more than one year, offset by  the  loss  of
revenues  of approximately $17.8 million that had been  generated
from  distribution centers closed or consolidated  during  fiscal
2002.   Of the approximately $41 million increase in revenues  in
fiscal  2002, "greenfield" distribution centers opened in  fiscal
year  ended June 30, 2002 and during the last quarter  of  fiscal
2001, and those opened for more than one year, generated revenues
of  approximately $25.9 million and $11.2 million,  respectively,
offset  by  a decrease in revenues of approximately $9.1  million
from greenfield centers closed or consolidated during fiscal year
ended  June 30, 2002; and "storm" distribution centers opened  in
fiscal year ended June 30, 2002 and during fiscal year ended June
30,  2001  generated  revenues  of approximately  $26.8  million,
offset  by  decreases in revenues from storm centers  opened  for
more  than  one  year, and storm centers closed  or  consolidated
during  fiscal  year  ended June 30, 2002, of approximately  $5.1
million and $8.7 million, respectively.

     Cost  of  sales increased between the 2002 and  2001  fiscal
years  at  a  greater rate than the increase in revenues  between
these  fiscal years.  Accordingly, cost of sales as a  percentage
of  revenues increased to 75.5% in the fiscal year ended June 30,
2002 from 74.5% in the fiscal year ended June 30, 2001, and gross
profit  as  a  percentage of revenues decreased to 24.5%  in  the
fiscal  year  ended June 30, 2002 from 25.5% in the  fiscal  year
ended June 30, 2001.  This decline is attributable to competitive
pricing  pressures in certain market areas and a


                             39

<PAGE>


product mix  in certain  market areas which did not yield as high
a gross  profit margin  as other product mixes that were achieved
in other market  areas.  In addition,  in light  of  the economic
uncertainties  that arose as  a result of the events of September
11, 2001, certain sales and collection incentives were instituted
in October  2001  which negatively impacted gross profit margins.
These incentives cost  the  Company  approximately $1  million in
gross   profit, although  they  resulted in  a  then  substantial
reduction  in  the  Company's  accounts and notes receivable  and
strengthened  the Company's then financial position.

     Operating   expenses   (including   non-cash   charges   for
depreciation   and   amortization)  increased  by   approximately
$8,172,000  (18.7%)  between  the 2002  and  2001  fiscal  years.
Approximately  $8,025,000 of this increase may be  attributed  to
the  operating  expenses  of  the new  distribution  centers  and
approximately  $3,212,000 may be attributed to increased  payroll
and  related expenses, offset by decreases in operating  expenses
of  closed  or consolidated distribution centers of approximately
$3,461,000.  Additionally, in light of the softening of  economic
conditions  in  certain of our market areas during  fiscal  2002,
particularly   in   the  fourth  quarter,   the   Company   added
approximately $1,297,000 to its provision for doubtful  accounts.
Depreciation and amortization, and amortization of cost in excess
of  net  assets acquired (goodwill) and deferred financing  costs
decreased  by  an  aggregate  of approximately  $790,000  (34.7%)
between  the  2002  and  2001 fiscal  years.   This  decrease  is
primarily attributable to the early adoption, effective  July  1,
2001, of Statement of Financial Accounting Standards ("SFAS") No.
142,  Goodwill  and Other Intangible Asset, which  provides  that
goodwill will no longer be subject to periodic amortization.  See
Notes   to  the  Consolidated  Financial  Statements.   Operating
expenses   (including  depreciation  and   amortization)   as   a
percentage  of revenues were 22.5% in the fiscal year ended  June
30,  2002  compared to 23.1% in the fiscal year  ended  June  30,
2001.   During fiscal 2002, the Company added approximately  $2.2
million,  net  of  write-offs of approximately $562,000,  to  its
allowance for doubtful accounts.  This increase was attributed to
the failure of the aging of the Company's accounts receivable  to
improve  during  the  fourth quarter of  fiscal  2002,  which  it
typically does as weather related construction conditions improve
and  customer  activity levels increase.  At June 30,  2002,  the
Company's accounts receivable over 90 days past due significantly
increased  from  June 30, 2001.  As a result  of  the  foregoing,
management concluded that the deterioration in the aging  of  the
Company's  accounts receivable during fiscal 2002  warranted  the
increase  in  the allowance for doubtful accounts.  Approximately
$1,529,000 of the increase in the allowance for doubtful accounts
at  June  30,  2002  was attributed to amounts due  from  certain
specific  customers aggregating approximately $5,464,000.   These
customers  accounted  for 3.2% and 4.3% of  the  Company's  total
revenues in fiscal 2002 and 2001, respectively.

     In  January 2003, the Company sold its Birmingham,  Alabama,
distribution center and realized a loss of approximately  $90,000
on  the  sale.  The operations of this distribution  center  have
been  reclassified as discontinued in the 2002  and  2001  fiscal
years.

     Interest income decreased by approximately $141,000  (29.3%)
between the 2002 and 2001 fiscal years.  This decrease is due  to
lower rates of interest earned on short-term investments.

     Interest expense decreased by approximately $908,000 (28.4%)
between the 2002 and 2001 fiscal years.  This decrease is due  to
lower  rates  of  interest  charged on  borrowings  under  credit
facility loans.


Comparison of Fiscal Years Ended June 2001 and 2000

     Revenues  of the Company during the fiscal year  ended  June
30, 2001 increased by approximately $8,251,000 (4.6%) compared to
the  2000  fiscal  year. This increase may be attributed  to  the
revenues generated from new distribution centers opened in fiscal
2001  and  during the last quarter of fiscal 2000  (approximately
$20,480,000),  offset  by  the loss of  revenues  that  had  been
generated   from   distribution  centers  closed   (approximately
$10,267,000). Revenue growth during the twelve-month period ended
June  30,  2001 was negatively impacted by the loss  of  revenues
during the three-month periods ended December 31, 2000 and


                             40

<PAGE>


March 31, 2001,  which  was caused  by adverse weather conditions
in the Company's Texas, Colorado and Midwest market areas.

      Cost  of  sales increased between the 2001 and 2000  fiscal
years  at  a  lesser rate than the increase in  revenues  between
these fiscal years. Accordingly, cost of sales as a percentage of
revenues  decreased to 74.5% in the fiscal year  ended  June  30,
2001 from 75.4% in the fiscal year ended June 30, 2000, and gross
profit  as  a  percentage of revenues increased to 25.5%  in  the
fiscal  year  ended June 30, 2001 from 24.6% in the  fiscal  year
ended June 30, 2000. This increase may be attributed primarily to
an  increase in out-of-warehouse sales, which carry higher  gross
profit margins than direct sales.

      Operating  expenses  of  the  Company  (including  non-cash
charges   for   depreciation  and  amortization)   increased   by
approximately $5,647,000 (14.8%) between the 2001 and 2000 fiscal
years.   Approximately  $3,539,000  of  this  increase   may   be
attributed to the operating expenses of new distribution  centers
opened in fiscal 2001 and during the last quarter of fiscal 2000,
approximately $363,000 consists of corporate operating  expenses,
approximately  $2,042,000  is  attributable  to  an  increase  in
payroll costs and delivery expenses due primarily to the need  to
service  the  increased  sales  revenues,  an  increase  in   the
provision  for doubtful accounts of $602,000, offset by decreases
in  expenses  of  closed  distribution centers  of  approximately
$1,043,000 and decreases in other expense areas. Depreciation and
amortization,  and amortization of cost in excess of  net  assets
acquired (goodwill) and deferred financing costs increased by  an
aggregate  of  approximately $207,000 between the 2001  and  2000
fiscal   years.  Approximately  $10,000  of  this   increase   is
additional  depreciation,  approximately  $13,000  is  additional
amortization   of  deferred  financing  costs  and  approximately
$184,000 is additional amortization of goodwill. The increase  in
amortization  of  goodwill  may be attributed  primarily  to  the
increase  in  goodwill arising from the additional  consideration
paid for the purchases of the businesses and substantially all of
the  assets  of JEH Co. and MSI Co. by JEH Eagle and  MSI  Eagle,
respectively. Operating expenses as a percentage of revenues were
23.1%  in the 2001 fiscal year compared to 21% in the 2000 fiscal
year.

     In  January 2003, the Company sold its Birmingham,  Alabama,
distribution center and realized a loss of approximately  $90,000
on  the  sale.  The operations of this distribution  center  have
been  reclassified as discontinued in the 2002  and  2001  fiscal
years.

      Interest income was approximately the same in both the 2002
and 2001 fiscal years presented.

      Interest expense increased by approximately $132,000 (4.3%)
between  the  2001 and 2000 fiscal years. This  increase  is  due
primarily   to   the  interest  expense  incurred  on   increased
borrowings under revolving credit loans.


Liquidity and Capital Resources

     The  Company's working capital was approximately $45,342,000
at  June  30, 2003 compared to $45,938,000 at June 30, 2002.   At
June 30, 2003, the Company's current ratio was 2.13-to-1 compared
to 2.26-to-1 at June 30, 2002.

     Net  cash used in operating activities for fiscal year ended
June  30,  2003  increased  by  approximately  $3.1  million   to
approximately  $5.3 million from approximately $2.2  million  for
the  fiscal  year  ended  June 30, 2002.  This  increase  may  be
attributed   principally   to  decreases   in   net   income   of
approximately  $3.4  million, reserve for doubtful  accounts  and
notes  receivable of approximately $2 million, federal and  state
income  taxes of approximately $1.7 million and depreciation  and
amortization  of  approximately  $500,000,  and  an  increase  in
inventory  of approximately $3.2 million, offset by decreases  in
deferred  income taxes of approximately $1 million, accounts  and
notes  receivable  of  approximately $2.3 million,  assets  of  a
discontinued  operation of


                             41

<PAGE>


approximately $500,000, other  current  assets  of  approximately
$400,000, an  increase  in  accounts  payable  of   approximately
$3.2 million and other miscellaneous changes.

     Net  cash  used in investing activities for the fiscal  year
ended  June  30,  2003  decreased by  approximately  $500,000  to
approximately  $600,000 from approximately $1.1 million  for  the
fiscal year ended June 30, 2002.  This decrease may be attributed
to  a  decrease in capital expenditures of approximately $200,000
and   a   decrease  of  approximately  $300,000   in   contingent
consideration payments for acquired companies. Management of  the
Company  presently anticipates capital expenditures in  the  next
twelve  months  of not less than $500,000, of which approximately
$300,000  is  anticipated to be financed,  for  the  purchase  of
trucks   and  forklifts  for  the  Company's  currently  existing
operations  in anticipation of increased business and to  upgrade
its  vehicles and upgrade and maintain its facilities to  compete
in its market areas, and $100,000 for leasehold improvements.

     Net  cash  provided by financing activities for  the  fiscal
year  ended June 30, 2003 decreased by approximately $900,000  to
approximately $2.1 million from approximately $3 million for  the
fiscal  year  ended  June  30,  2002.    This  decrease  may   be
attributed  to  the decrease in the net principal  borrowings  on
long-term debt of approximately $500,000 and the reduction in net
proceeds  from  the  private placements of the  Company's  common
shares and warrants of approximately $400,000.

     On  February 6, 2003, the Company entered into a  Securities
Purchase  Agreement ("Securities Purchase Agreement") with  James
E.  Helzer,  the  President, Chief Operating  Officer,  and  Vice
Chairman of the Board of Directors of the Company, to sell  in  a
private  placement  transaction (the  "Helzer  Transaction")  for
gross  proceeds  to  the  Company of  $1  million  (a)  1,000,000
authorized but previously unissued common shares of the  Company,
and  (b)  warrants  to  purchase up to  an  additional  1,000,000
authorized  but previously unissued common shares of the  Company
at  an  exercise price of $1.50 per share exercisable for 5 years
from  the date of issuance (the "Helzer Warrant").  Although  the
closing  price for the Company's common shares at  the  close  of
business  on  the  day before the Helzer Transaction  closed  was
$0.81  and  the  Company received two separate fairness  opinions
indicating that the consideration received by the Company in  the
Helzer  Transaction was fair, Mr. Helzer will be able to  benefit
from any appreciation in the market price of the Company's common
shares.  On September 22, 2003, the last reported sales price for
the Company's common shares was $2.40 per share.

     In  February 2003, the Chairman and Chief Executive  Officer
of  the  Company,  and  the Executive Vice President,  Secretary,
Treasurer and Chief Financial Officer of the Company, each agreed
to accept $100,000 of their cash compensation for the fiscal year
ended  June  30,  2003  in  the form  of  100,000  newly  issued,
unregistered  common shares of the Company in lieu of  such  cash
compensation.  These shares were issued April 11, 2003.

     During  the  fiscal  year ending June 30,  2004,  management
intends to attempt to  refinance and extend the maturity date  of
the  Company's  existing  asset based credit  facility  with  the
objective  of  increasing  the size of the  credit  facility  and
extending the maturity date three to five years from the  October
21,  2004 current maturity date.  There is no assurance that  the
Company  will  be successful in refinancing its credit  facility,
including extending the maturity date or increasing the  size  of
the credit facility.

     The   Company  believes  that  its  available  sources   for
liquidity  will  be  adequate to sustain  its  normal  operations
during  the twelve-month period beginning July 1, 2003,  assuming
the  Company is able to amend its credit facility to provide  for
limited  over advances and overlines, if required, as it  has  in
the past (see below).

     As  of  June  30,  2003, our long-term debt obligations  and
future  minimum lease obligations under non-cancelable  operating
leases are summarized as follows:



                             42

<PAGE>

                     Payments Due by Period
                     ----------------------
<TABLE>
<CAPTION>


                                                 Less Than             1-3                4-5               After
Contractural Obligations          Total            1 Year             Years              Years             5 Years
------------------------     ---------------    --------------    --------------     --------------    --------------
<S>                          <C>                <C>               <C>                <C>               <C>
Long-term debt               $   43,547,892     $      860,000    $   42,687,892           --                --
Operating lease obligations      21,087,000          6,467,000        12,309,000          2,311,000          --
</TABLE>


Credit Facilities

      In  June  2000, and as subsequently amended, with the  last
amendment  dated  as  of  May  12,  2003,  the  Company's  credit
facilities  were  consolidated  into  an  amended,  restated  and
consolidated  loan agreement with the Company's subsidiaries  and
limited  partnership  as borrowers (the "borrowers").   The  loan
agreement  increased  the  credit  facility  by  $5  million,  to
$44,975,000,   and   lowered  the  average   interest   rate   by
approximately one-half of one (1/2%) percent.  Furthermore,  up  to
$8 million in borrowing (subject to available borrowing base) was
made  available  for  acquisitions.  The  credit  facility  bears
interest  as  follows (with the alternatives  at  the  borrowers'
election):

     *  Equipment Term Note - Libor (as defined), plus two and one-
        half (2.5%) percent, or the lender's Prime Rate (as defined),
        plus one-half of one (1/2%) percent.

     *  Acquisition Term Note - Libor, plus two and three-fourths
        (2.75%) percent, or the lender's Prime Rate, plus three-fourths
        of one (__%) percent.

     *  Revolving Credit loans - Libor, plus two (2%) percent or the
        lender's Prime Rate.

     The  credit facility is collateralized by substantially  all
of  the  tangible  and  intangible assets of  the  borrowers,  is
guaranteed  by the Company and had an original maturity  date  of
October  21,  2003.   The credit facility contains  an  evergreen
provision  which provides for an automatic one-year extension  of
the maturity date if neither any of the borrowers on one hand nor
the  lender  on the other hand  notifies the other in writing  of
its intention not to renew the credit facility within 180 days of
the  scheduled maturity date.  Since neither any of the borrowers
nor  the lender provided the other with such notice, the maturity
date of the credit facility was extended to October 21, 2004.

       The  credit  facility  contained  two  specific  financial
covenants  in  addition  to  standard  affirmative  and  negative
covenants.   The specific financial covenants required  that  the
borrowers  (a) maintain minimum Adjusted Tangible Net  Worth,  as
defined,  of not less than an amount equal to 80% of  the  actual
Net  Worth,  as  defined, as shown on the June 30,  1999  balance
sheets  of the borrowers; and (b) achieve Cash Flow, as  defined,
of  not  less  than  $300,000 for the trailing  12-month  periods
ending  as  of  each  calendar quarter.  The  borrowers  were  in
compliance with the Minimum Adjusted Tangible Net Worth  covenant
but  did not meet the Cash Flow requirement as of March 31, 2003.
By  an  amendment to the loan agreement dated as of May 12, 2003,
the  borrowers received a waiver, and certain terms of  the  loan
agreement  were modified.  The Cash Flow financial  covenant  was
eliminated  in  its  entirety and replaced with  a  Fixed  Charge
Coverage Ratio, as defined; the Applicable Inventory Sublimit, as
defined, was increased to $22.5 million from $20 million  through
July  31, 2003; the amount of aggregate Rentals, as defined,  for
property and equipment under operating leases during any  current
or  future  consecutive twelve-month period was increased  to  $7
million  from  $6 million; and certain definitions were  changed.
The Company was in compliance with all such covenants at June 30,
2003.

     During  the  fiscal  year ending June 30,  2004,  management
intends to attempt to  refinance and extend the maturity date  of
the  Company's  existing  asset based credit  facility  with  the
objective  of  increasing  the size of the  credit  facility  and
extending the maturity date three to five years from the  October
21,  2004 current


                             43

<PAGE>


maturity date.  There is no assurance that  the Company  will  be
successful in refinancing its credit facility including extending
the maturity date or increasing the size of  the credit facility.

      In  October  1998,  in  connection  with  the  purchase  of
substantially all of the assets and business of MSI Co.,  by  MSI
Eagle,  TDA lent MSI Eagle $1,000,000 pursuant to a 6% per  annum
two-year note.  The note was payable in full in October 2000, and
TDA  had  agreed to defer the interest payable on the note  until
its maturity.  In October 2000, interest on the note was paid  in
full,  and  TDA and JEH Eagle (successor by merger to MSI  Eagle)
agreed  to refinance the $1,000,000 principal amount of the  note
pursuant to a new 8.75% per annum demand promissory note.


Impact of Inflation and Changing Prices

      General  inflation in the economy has driven the  operating
expenses  of  many businesses higher, and, accordingly,  we  have
experienced  increased salaries and higher prices  for  supplies,
goods  and  services.  We continuously seek methods  of  reducing
costs  and  streamlining operations while  maximizing  efficiency
through  improved  internal operating  procedures  and  controls.
While  we  are  subject  to  inflation as  described  above,  our
management  believes that inflation currently  does  not  have  a
material  effect on our operating results, but there  can  be  no
assurance that this will continue to be so in the future.


Recent Developments

      During the first quarter of our current fiscal year  ending
June 30, 2004, we entered into settlement agreements with four of
the  five  investors  in the 2002 Private Placement  pursuant  to
which we (a) received a $50,000 cash payment, (b) the return  for
cancellation  of  50,909 warrants of the 109,090  warrants  which
were  issued pursuant to the Private Placement, and (c)  received
an  advance of $20,000 to defray a portion of the legal  fees  we
were charged in connection with the settlement.


Acquisitions

       In   July  1997,  JEH  Eagle  acquired  the  business  and
substantially all of the assets of JEH Co., a Texas  corporation,
wholly-owned  by  James  E.  Helzer, now  the  President  of  the
Company.  The purchase price, as adjusted, including  transaction
expenses,   was   approximately   $14,768,000,   consisting    of
$13,878,000  in  cash, net of $250,000 due from JEH  Co.,  and  a
five-year  note bearing interest at the rate of 6% per  annum  in
the  original principal amount of $864,852. As of June 30,  2002,
the principal amount of the note was adjusted to $655,284 and  is
due  on  October 15, 2002 with interest at the rate of 8.75%  per
annum  from  July 1, 2002. The purchase price and the  note  were
subject to further adjustments under certain conditions. Certain,
substantial, contingent payments, as additional consideration  to
JEH   Co.  or  its  designee,  were  paid  by  JEH  Eagle.   Upon
consummation  of our Initial Public Offering, the Company  issued
300,000  shares  of  its Common Stock to  James  E.  Helzer,  the
designee  of  JEH Co., in fulfillment of certain of  such  future
consideration. For the fiscal years ended June 30, 1999, 2000 and
2001,   approximately   $1,773,000,  $1,947,000   and   $315,000,
respectively, of such additional consideration was  paid  to  JEH
Co.  or  its designee.  As of June 30, 2002, the Company  had  no
future obligation for such additional consideration. All of  such
additional  consideration  increased goodwill  and,  through  the
fiscal  year 2001, was amortized over the remaining life  of  the
goodwill. During the fiscal years 2003 and 2002, pursuant to SFAS
142,  which  the Company adopted as of July 1, 2001, the  Company
did  not  amortize  goodwill. See "- Impact  of  Recently  Issued
Accounting Pronouncements."

      In  October  1998,  MSI  Eagle acquired  the  business  and
substantially all of the assets of MSI Co., a Texas  corporation,
wholly-owned by Gary L. Howard, a former executive officer of the
Company.  The purchase price, as adjusted, including  transaction
expenses,  was approximately $8,538,000, consisting of $6,492,000
in  cash and a five-year note bearing interest at the rate of  8%
per  annum  in  the principal amount of $2,045,972. The  purchase
price was subject to further adjustment under certain conditions.


                             44

<PAGE>


Upon consummation  of our Initial Public Offering,  the  Company
issued  50,000 shares of our common stock to Gary L. Howard,  the
designee  of MSI Co., in payment of $250,000 principal amount  of
the  note. The balance of the note was paid in full in March 1999
out  of  the  proceeds of our Initial Public  Offering.  Certain,
potentially  substantial,  contingent  payments,  as   additional
future  consideration to MSI Co. or its designee, are to be  paid
by  JEH Eagle. (Effective May 31, 2000, MSI Eagle was merged with
and  into  JEH  Eagle.) Upon consummation of our  Initial  Public
Offering, the Company issued 200,000 shares of its common  stock,
and, as of July 1, 1999, the Company issued 60,000 shares of  its
common  stock,  to Mr. Howard in fulfillment of certain  of  such
future  consideration. For the fiscal years ended June 30,  2000,
2001,  and  2002, approximately $216,000, $226,000, and $260,000,
respectively, of such additional consideration was  paid  to  MSI
Co.  or  its designee. For the fiscal year ended June  30,  2003,
approximately $260,000 of additional consideration is payable  to
MSI  Co.  or  its designee. All of such additional  consideration
increased  goodwill  and,  through  the  fiscal  year  2001,  was
amortized  over  the remaining life of the goodwill.  During  the
fiscal  years  2003  and 2002, pursuant to SFAS  142,  which  the
Company  adopted as of July 1, 2001, the Company did not amortize
goodwill.   See   "-   Impact  of  Recently   Issued   Accounting
Pronouncements."


Impact of Recently Issued Accounting Pronouncements

      The  Company  adopted  SFAS No.  144  "Accounting  for  the
Impairment  or  Disposal of Long-Lived Assets" on July  1,  2002.
SFAS  No.  144  replaces  SFAS  No.  121,  "Accounting  for   the
Impairment of Long-Lived Assets and for Long-Lived Assets  to  be
Disposed  Of" and establishes accounting and reporting  standards
for  long-lived assets to be disposed of by sale.  SFAS  No.  144
requires  that those assets be measured at the lower of  carrying
amount  or  fair  value  less cost to sell.  SFAS  No.  144  also
broadens the reporting of discontinued operations to include  all
components of an entity with operations that can be distinguished
from  the  rest  of the entity that will be eliminated  from  the
ongoing  operations  of  the entity in  a  disposal  transaction.
Management   believes   that  the   effect   of   adopting   this
pronouncement  does not have a material impact on  the  Company's
financial condition or results of operations.

      In June 2002, the FASB issued SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities."  SFAS No. 146
addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies EITF Issue No. 94-
3,   "Liability  Recognition  for  Certain  Employee  Termination
Benefits  and Other Costs to Exit an Activity (including  Certain
Costs Incurred in a Restructuring)."  SFAS No. 146 requires  that
a  liability  for  a  cost associated with an  exit  or  disposal
activity  be  recognized  when the liability  is  incurred.  This
statement  also established that fair value is the objective  for
initial measurement of the liability.  The provisions of SFAS No.
146  are  effective  for  exit or disposal  activities  that  are
initiated after December 31, 2002.

      In  November  2002, the FASB issued Interpretation  No.  45
("FIN  45"),  "Guarantor's Accounting and Disclosure Requirements
for  Guarantees Including Indirect Guarantees of Indebtedness  of
Others."  This interpretation elaborates on the disclosures to be
made   by  a  guarantor  in  its  interim  and  annual  financial
statements about its obligations under certain guarantees that it
has  issued.   It also clarifies that a guarantor is required  to
recognize, at the inception of a guarantee, a liability  for  the
fair value of the obligation undertaken in issuing the guarantee.
The  disclosure requirements of FIN 45 are effective for  interim
and  annual reports after December 15, 2002, and we have  adopted
those requirements for our financial statements included in  this
Form  10-K.   The  initial  recognition and  initial  measurement
requirements of FIN 45 are effective prospectively for guarantees
issued or modified after December 31, 2002.  The Company is not a
party to any agreement in which it is a guarantor of indebtedness
of  others.   Accordingly, this pronouncement  currently  is  not
applicable to the Company.

     In January 2003, the FASB issued Interpretation No. 46 ("FIN
46"),   "Consolidation  of  Variable  Interest  Entities   -   an
Interpretation of ARB No. 51."  FIN 46 addresses consolidation by
business  enterprises  of  variable interest  entities  (formerly
special  purpose  entities  or SPEs).   In  general,  a  variable
interest entity is


                             45

<PAGE>



a corporation, partnership , trust or any other  legal  structure
used for business purposes that either (a)  does not have  equity
investors with voting rights or (b) has  equity investors that do
not provide  sufficient  financial resources  for  the  entity to
support  its  activities.   The  objective of  FIN 46  is not  to
restrict  the use of variable  interest entities  but  to improve
financial reporting by companies involved with  variable interest
entities.   FIN  46   requires  a  variable  interest  entity  to
be  consolidated  by a company if that company is  subject  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 consolidation requirements of  FIN
46  apply to variable interest entities created after January 31,
2003.  The consolidation requirements apply to older entities  in
the  first fiscal year or interim period beginning after June 15,
2003.   However, certain of the disclosure requirements apply  to
financial statements issued after January 31, 2003, regardless of
when  the variable interest entity was established.  The  Company
does  not have any variable interest entities as defined  in  FIN
46.   Accordingly, this pronouncement currently is not applicable
to the Company.

      In  March  2003, the EITF issued final transition  guidance
regarding  accounting  for vendor allowances  (EITF  No.  02-16),
"Accounting  by  a  Customer (including a Reseller)  for  Certain
Consideration  Received from a Vendor."   The  EITF  decision  to
allow retroactive application was made by the task force on March
20,  2003.  As a result of the EITF change to its transition, the
Company  has adopted the new guidance on a retroactive  basis  to
July  1,  2002, the beginning of its fiscal year ending June  30,
2003.   In  adopting  the new guidance, the Company  changed  its
previous   method  of  accounting,  which  was  consistent   with
generally  accepted  accounting principals.  Under  the  previous
accounting method, vendor allowances were treated as a  reduction
of cost of sales when such allowances were earned.  Under the new
accounting guidance, vendor allowances are considered a reduction
in  inventory  and a subsequent reduction in cost of  goods  sold
when the related product is sold.

     The adoption of EITF 02-16, effective July 1, 2002, resulted
in  a  cumulative  effect of account change of $413,000,  net  of
$222,000  of taxes, to reflect the deferral of certain allowances
as a reduction of inventory cost.

      In April 2003, the FASB issued SFAS No. 149, "Amendment  of
Statement  133 on Derivative Instruments and Hedging Activities."
SFAS  No.  149  amends  and  clarifies financial  accounting  and
reporting   for   derivative   instruments,   including   certain
derivative  instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under SFAS
Statement  No.  133,  Accounting for Derivative  Instruments  and
Hedging   Activities.   The  Company  has  not  used   derivative
instruments and does not expect the adoption of this statement to
have a material effect on the Company.

      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  certain   financial
instruments with characteristics of both liabilities and  equity.
It  requires that an issuer classify a financial instrument  that
is  within  its  scope  as  a liability  (or  an  asset  in  some
circumstances).   It  is  effective  for  financial   instruments
entered  into  or modified after May 31, 2003, and  otherwise  is
effective  at the beginning of the first interim period beginning
after  June  15, 2003.   Management believes that the  effect  of
implementing  this pronouncement will not have a material  impact
on the Company's financial condition or results of operations.



                             46

<PAGE>


ITEM  7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT  MARKET
            RISK

     The  estimated fair value of financial instruments have been
determined by the Company using available market information  and
what  it  believes are appropriate valuations and  methodologies.
However, considerable judgment is required in interpreting market
data  to  develop the estimates of fair value.  Accordingly,  the
estimates  presented here are not necessarily indicative  of  the
amounts  that  the  Company could realize  in  a  current  market
exchange.   The  use  of  different  market  assumptions   and/or
estimation  methodologies  may have  a  material  effect  on  the
estimated fair value amounts.

      The following methods and assumptions were used to estimate
the fair value of the financial instruments:

      Cash  and  Cash Equivalents, Accounts and Notes Receivable,
Accounts  Payable and Accrued Expenses - The carrying amounts  of
these items are a reasonable estimate of their fair value.

     Long-Term Debt - Interest rates that are currently available
to  the  Company  for  issuance of debt with  similar  terms  and
remaining  maturities are used to estimate fair  value  for  bank
debt.  The  carrying amounts comprising this item are  reasonable
estimates of fair value.

      The fair value estimates are based on pertinent information
available  to management as of June 30, 2003. Although management
is  not aware of any factors that would significantly affect  the
estimated  fair  value  amounts,  such  amounts  have  not   been
comprehensively   revalued  for  purposes  of   these   financial
statements  since  June 30, 2003 and current  estimates  of  fair
value  may  differ significantly from the amounts presented.  The
Company has not entered into, and does not expect to enter  into,
financial instruments for trading or hedging purposes.

     The Company is currently exposed to material future earnings
or  cash  flow exposures from changes in interest rates on  long-
term  debt obligations since the majority of the Company's  long-
term debt obligations are at variable rates. The Company does not
currently  anticipate entering into interest  rate  swaps  and/or
similar  instruments. Based on the amount outstanding as of  June
30, 2003, a 100 basis point change in interest rates would result
in  an  approximate  $430,000  change  in  the  Company's  annual
interest  expense.  For  fixed rate  interest  rate  obligations,
changes in market interest rates affect the fair market value  of
such debt but do not impact the Company's earnings or cash flows.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following financial statements are contained on pages F-
1 through F-25 of this Report:

     Report of Independent Certified Public Accountants;

     Consolidated Balance Sheets - June 30, 2003 and 2002;

     Consolidated Statements of Operations - Years ended June 30,
     2003, 2002 and 2001;

     Consolidated Statements of Shareholders' Equity - Years
     ended June 30, 2003, 2002 and 2001;

     Consolidated Statements of Cash Flows - Years ended June 30,
     2003, 2002 and 2001; and

     Notes to Consolidated Financial Statements.



                             47

<PAGE>


ITEM 9.   CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS   ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.



ITEM 9A.  CONTROLS AND PROCEDURES

       Our  management,  with  the  participation  of  our  Chief
Executive  Officer  and  Chief Financial  Officer,  conducted  an
evaluation  of the effectiveness of our disclosure  controls  and
procedures (as defined in Rule 13a-15(e) of the Exchange Act), as
of the end of the period covered by this annual report.

      The  Company's  management, including its  Chief  Executive
Officer  and  Chief Financial Officer, does not expect  that  its
disclosure controls and procedures will prevent all error and all
fraud.   A  control  system,  no matter  how  well  designed  and
operated,  can  provide only reasonable, not absolute,  assurance
that  the control system's objectives will be met.  Further,  the
design  of a control system must reflect the fact that there  are
resource  constraints,  and  the benefits  of  controls  must  be
considered  relative  to  their costs. Because  of  the  inherent
limitations in all control systems, no evaluation of controls can
provide  absolute assurance that all control issues, errors,  and
instances of fraud, if any, within the Company have been or  will
be  detected.   The  inherent limitations  include,  among  other
things,  the realities that judgments in decision-making  can  be
faulty, and that breakdowns can occur because of simple error  or
mistake.  Controls and procedures also can be circumvented by the
individual  acts of some persons, by collision  of  two  or  more
people, or by management or employee override of the controls and
procedures.  The design of any system of controls and  procedures
is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential  future
conditions.   Over  time,  controls  and  procedures  may  become
inadequate  because of changes in conditions or deterioration  in
the degree of compliance with policies or procedures.  Because of
the  inherent  limitations  in a cost-effective  control  system,
misstatements  due  to  error  or fraud  may  occur  and  not  be
detected.   If  and when management learns that  any  control  or
procedure  is not being properly implemented, (a) it  immediately
reviews our controls and procedures to determine whether they are
appropriate   to  accomplish  the  control  objective   and,   if
necessary,  modifies and improves our controls and procedures  to
assure  compliance  with  our control objectives,  (b)  it  takes
immediate  action  to  cause our controls and  procedures  to  be
strictly  adhered  to,  (c) it immediately informs  all  relevant
managers of the requirement to adhere to such controls,  as  well
as all relevant personnel throughout our organization, and (d) it
implements  in  our training program specific  emphasis  on  such
controls  and procedures to assure compliance with such  controls
and  procedures.   The  development,  modification,  improvement,
implementation  and  evaluation of our systems  of  controls  and
procedures  is  a  continuous project that requires  changes  and
modifications  to  them  to  remedy  deficiencies,   to   improve
training,  and to improve implementation in order to  assure  the
achievement of our overall control objectives.

     Based  upon  the evaluation of our disclosure  controls  and
procedures,  our  Chief  Executive Officer  and  Chief  Financial
Officer  have  concluded that, subject to the  limitations  noted
above,  the  Company's disclosure controls  and  procedures  were
effective  to  ensure that material information relating  to  the
Company and the Company's consolidated subsidiaries is made known
to them by others within those entities to allow timely decisions
regarding required disclosures.

     There  have  been  no significant changes  in  our  internal
controls,  or  in  other factors that could significantly  affect
internal  controls,  subsequent to the date the  Chief  Executive
Officer   and   the  Chief  Financial  Officer  completed   their
evaluation,  including  any significant corrective  actions  with
regard to significant deficiencies and material weaknesses.



                             48

<PAGE>


                            PART III


ITEM 10.  DIRECTORS  AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information  required by Item  10  of  Form  10-K  with
respect  to  our directors and executive officers is incorporated
by  reference  from  the  information contained  in  the  section
captioned  "Election  of Directors" in the  Company's  definitive
Proxy Statement for the 2003 Annual Meeting of Stockholders which
will  be  filed  with the Securities and Exchange  Commission  no
later  than 120 days after the close of the Company's 2003 fiscal
year  (the  "2003  Proxy  Statement"). Certain  information  with
respect  to  executive officers is included in Item  4A  of  this
report.   The information required by Item 10 of Form  10-K  with
respect  to  compliance  with Section  16(a)  of  the  Securities
Exchange  Act  of  1934  is incorporated by  reference  from  the
information  contained  in the section captioned  "Section  16(a)
Beneficial  Ownership Reporting Compliance"  in  our  2003  Proxy
Statement.


ITEM 11.  EXECUTIVE COMPENSATION

     The  information  required  by  Item  11  of  Form  10-K  is
incorporated by reference from the information contained  in  the
sections  captioned  "Election of  Directors  -  Compensation  of
Directors," "Compensation of Executive Officers," "Report of  the
Compensation  Committee  of the Board of Directors  on  Executive
Compensation"    and   "Certain   Relationships    and    Related
Transactions" in the 2003 Proxy Statement.


ITEM 12.  SECURITY  OWNERSHIP  OF CERTAIN BENEFICIAL  OWNERS  AND
          MANAGEMENT

     (a)   The  information required by Item 12 of Form  10-K  is
incorporated by reference from the information contained  in  the
section  captioned "Security Ownership of Management and  Certain
Beneficial Owners" in the 2003 Proxy Statement.

     (b)   The  following  table provides information  about  the
Company's  common stock that may be issued upon the  exercise  of
stock  options  under  all of our equity  compensation  plans  in
effect as of June 30, 2003.

<TABLE>
<CAPTION>
                                                                            Number of securities
                                                      Weighted average      remaining available for
                           Number of securities to    exercise price of     future issuance under
                           be issued upon exercise    outstanding           equity compensation plan
                           of outstanding options     options, warrants,    (excluding securities
Plan category              warrants, and rights       and rights            reflected in column (a))
-------------              -----------------------    ------------------    ------------------------
                                   (a)                      (b)                  (c)
<S>                        <C>                        <C>                   <C>
Equity compensation
plan approved by
security holders                  753,600                  $ 4.98                   446,400

Equity compensation
plan not approved by
security holders                        0                  $ 0.00                         0 (2)

-------------------------
</TABLE>


(1)  Based upon 15,000 options exercisable at $4.00 per share and
     749,080 options exercisable at $5.00 per share.
(2)  200,000 shares of the Company's common stock were issued  in
     April  2003  to  our  Chairman and Chief Executive  Officer,
     Douglas  P.  Fields,  and to our Executive  Vice  President,
     Treasurer, Secretary, and Chief Financial Officer, Frederick
     M.  Friedman.  In February 2003, Messrs. Fields and Friedman
     each  agreed  to accept 100,000 unregistered shares  of  the



                             49

<PAGE>


     Company's  common stock in lieu of $100,000  of  their  cash
     compensation for the fiscal year ended June 30, 2003.

     Our   Stock   Option  Plan  provides  for  a   proportionate
adjustment to the number of shares reserved for issuance  in  the
event   of   any   stock  dividend,  stock  split,   combination,
recapitalization, or similar event.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required  by  Item  13  of  Form  10-K  is
incorporated by reference from the information contained  in  the
section    captioned   "Certain   Relationships    and    Related
Transactions" in the 2003 Proxy Statement.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The  information  required by Item 14 of Form  10-K  is  not
required  to  be  included  in this  report  in  accordance  with
Securities and Exchange Commission Release No. 34-47265A.
























                             50

<PAGE>


                             PART IV


ITEM 15.  EXHIBITS,  FINANCIAL STATEMENT SCHEDULES,  AND  REPORTS
          ON FORM 8-K

   (a)    Exhibits

 3.1  --  Certificate   of   Incorporation   of   the    Company,
          incorporated herein by reference to Exhibit 3.1 to  the
          Company's Form S-1 filed with the Commission on  August
          12, 1996.

 3.2  --  Certificate   of   Amendment  to  the  Certificate   of
          Incorporation  of the Company, incorporated  herein  by
          reference  to Exhibit 3.1(A) to the Company's  Form  S-
          1/A filed with the Commission on May 1, 1998.

 3.3  --  Certificate   of   Amendment  to  the  Certificate   of
          Incorporation  of the Company, incorporated  herein  by
          reference to Exhibit 3.1(B) to the Company's  Form  8-K
          filed with the Commission on December 20, 2002.

 3.4  --  Bylaws,  incorporated  herein by reference  to  Exhibit
          3.2   to   the  Company's  Form  S-1  filed  with   the
          Commission on August 12, 1996.

 4.1  --  See  Exhibits  3.1  and  3.2  for  provisions  of   the
          Certificate   of  Incorporation,   as amended  and  the
          Bylaws of the Company  defining the rights  of  holders
          of the Company's common stock.

 4.2  --  Form of  Common Stock  Certificate, incorporated  herein
          by reference to Exhibit 4.4 to the Company's  Form S-1/A
          filed with the Commission on October 15, 1996.

 4.3  --  Form of Warrant  Agreement  between  the   Company   and
          Continental   Stock   Transfer   and   Trust    Company,
          incorporated herein by reference  to Exhibit 4.7 to  the
          Company's  Form  S-1/A  filed  with  the  Commission  on
          October 15, 1996.

 4.4  --  Form  of  Underwriter's Warrant Agreement by and between
          the Company and Barron Chase Securities, Inc. with  Form
          of   Warrant   Certificate,   incorporated   herein   by
          reference  to  Exhibit  4.1 to  the Company's Form S-1/A
          filed on May 1, 1998.

 4.5  --  Form of  Redeemable  Common  Stock   Purchase   Warrant,
          incorporated  herein by reference to Exhibit 4.6 to  the
          Company's Form  S-1/A filed with the Commission on  July
          1, 1998.

 4.6  --  Form of  Warrant to purchase common stock issued  by the
          Company  to  investors in the May 2002 private placement
          transaction,   incorporated  herein   by  reference   to
          Exhibit  4.1 to the Company's Form  8-K filed  with  the
          Commission on May 22, 2002.

 4.7  --  Form of Warrant to purchase common stock  issued by  the
          Company  to  vFinance  Investments, Inc. as compensation
          for   services  in  the  May  2002   private   placement
          transaction,   incorporated   herein  by  reference   to
          Exhibit  4.2 to the Company's  Form 8-K filed  with  the
          Commission on May 22, 2002.

 4.8  --  Securities  Purchase  Agreement dated May 15,  2002,  by
          and  between  the Company  and each of the investors  in
          the    May    2002   private   placement    transaction,
          incorporated herein by  reference to Exhibit 4.3 to  the
          Company's  Form  8-K  filed with the Commission  on  May
          22, 2002.



                             51

<PAGE>

 4.9  --  Registration Rights Agreement, dated May 15,  2002,  by
          and  between  the Company and each of the investors  in
          the    May    2002   private   placement   transaction,
          incorporated herein by reference to Exhibit 4.4 to  the
          Company's  Form  8-K filed with the Commission  on  May
          22, 2002.

4.10  --  Securities Purchase Agreement, dated February 6,  2003,
          by  and  between  the  Company  and  James  E.  Helzer,
          incorporated herein by reference to Exhibit 4.1 to  the
          Company's  Form  8-K  filed  with  the  Commission   on
          February 7, 2003.

4.11  --  First Amendment to Securities Purchase Agreement, dated
          May  5,  2003,  by  and  between the Company,  James E.
          Helzer,and  TDA  Industries, Inc.,  incorporated herein
          by  reference  to  Exhibit 4.1 to  the  Company's  Form
          8-K filed with the Commission on May 12, 2003.

4.12 --   Warrant No. 001, dated February 6, 2003, issued by  the
          Company  to  James  E. Helzer, incorporated  herein  by
          reference  to  Exhibit 4.2 to the  Company's  Form  8-K
          filed with the Commission on February 7, 2003.

4.13 --   First Amendment  to  Warrant, dated May 5, 2003, by and
          between  the  Company and James E. Helzer, incorporated
          herein  by  reference to Exhibit 4.2 to  the  Company's
          Form 8-K filed with the Commission on May 12, 2003.

10.1 --   Amended,    Consolidated   and   Restated    Employment
          Agreement,  dated  as  of  November  1,  2001,  between
          JEH/Eagle  Supply,  Inc. and the Company  and  James  E
          Helzer,  incorporated  herein by reference  to  Exhibit
          10.46  to  the  Company's  Form  10-Q  filed  with  the
          Commission on November 9, 2001.

10.2 --   Modification Agreement to the Employment Agreement,  as
          amended,  with James E. Helzer, incorporated herein  by
          reference  to Exhibit 10.55 to the Company's Form  10-Q
          filed with the Commission on February 14, 2003.

10.3 --   Amended,    Restated   and   Consolidated    Employment
          Agreement,  dated  as  of  November  1,  2001,  between
          JEH/Eagle  Supply,  Inc., Eagle Supply,  Inc.  and  the
          Company  and Douglas P. Fields, incorporated herein  by
          reference  to Exhibit 10.47 to the Company's Form  10-Q
          filed with the Commission on November 9, 2001.

10.4 --   Modification Agreement to the Employment Agreement,  as
          amended,  with  Douglas P. Fields, incorporated  herein
          by reference to Exhibit 10.54 to the Company's Form 10-
          Q filed with the Commission on February 14, 2003.

10.5 --   Amended,    Restated   and   Consolidated    Employment
          Agreement,  dated  as  of  November  1,  2001,  between
          JEH/Eagle  Supply,  Inc., Eagle Supply,  Inc.  and  the
          Company and Frederick M. Friedman, incorporated  herein
          by reference to Exhibit 10.48 to the Company's Form 10-
          Q filed with the Commission on November 9, 2001.

10.6 --   Modification Agreement to the Employment Agreement,  as
          amended,   with  Frederick  M.  Friedman,  incorporated
          herein  by  reference to Exhibit 10.56 to the Company's
          Form  10-Q  filed with the Commission on  February  14,
          2003.

10.7 --   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office  and  warehouse  space in  Henderson,  Colorado,
          incorporated  herein by reference to  Exhibit  10.18(A)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.



                             52

<PAGE>


10.8 --   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and  warehouse  space  in  Colorado   Springs,
          Colorado,  incorporated herein by reference to  Exhibit
          10.18(B)  to  the Company's Form S-1/A filed  with  the
          Commission on May 1, 1998.

10.9 --   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and  warehouse  space  in  Mansfield,   Texas,
          incorporated  herein by reference to  Exhibit  10.18(C)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.10--   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office  and  warehouse  space  in  Colleyville,  Texas,
          incorporated  herein by reference to  Exhibit  10.18(D)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.11--   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and   warehouse  space   in   Frisco,   Texas,
          incorporated  herein by reference to  Exhibit  10.18(E)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.12--   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and   warehouse  space  in  Mesquite,   Texas,
          incorporated  herein by reference to  Exhibit  10.18(F)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.13--   Lease,  dated  October 22, 1998,  by  and  between  MSI
          Eagle   Supply,   Inc.  and  Gary  and  Linda   Howard,
          incorporated  herein by reference to Exhibit  10.30  to
          the  Company's Form S-1/A filed with the Commission  on
          December 28, 1998.

10.14--   Asset Purchase Agreement, dated July 8, 1997, by and  between
          JEH/Eagle  Supply,  Inc., JEH  Company,  and  James  E.
          Helzer,  incorporated  herein by reference  to  Exhibit
          10.11  to  the  Company's Form  S-1/A  filed  with  the
          Commission on May 1, 1998.

10.15--   Asset Purchase Agreement, dated October 22, 1998, by and
          among  MSI/Eagle  Supply, Inc., Masonry  Supply,  Inc.,
          and  Gary  L. Howard,  incorporated herein by reference
          to  Exhibit  10.19  to the Company's Form  S-1/A  filed
          with the Commission on December 28, 1998.

10.16--   Letter  Amendment, dated April 30, 1999,  amending  the
          Asset  Purchase  Agreement, dated October 22, 1998,  by
          and  among  MSI/Eagle  Supply,  Inc.,  Masonry  Supply,
          Inc.,  and  Gary  L.  Howard,  incorporated  herein  by
          reference  to Exhibit 10.35 to the Company's Form  10-K
          filed with the Commission on September 28, 1999.

10.17--   Purchase  and Non-Competition Agreement, dated  October
          22,  1998,  by and among TUSA, Inc.,  Gary  L.  Howard,
          Patty   L.   Howard,   and  MSI/Eagle   Supply,   Inc.,
          incorporated  herein by reference to Exhibit  10.21  to
          the  Company's Form S-1/A filed with the Commission  on
          December 28, 1998.



                             53

<PAGE>


10.18--   Subordinate  Security  Agreement,  dated  October   22,
          1998,   by   and  between  Masonry  Supply,  Inc.   and
          MSI/Eagle   Supply,   Inc.,  incorporated   herein   by
          reference to Exhibit 10.22 to the Company's Form  S-1/A
          filed with the Commission on December 28, 1998.

10.19--   Promissory  Note,  dated  October  22,1998,  issued  by
          MSI/Eagle   Supply,  Inc.  by  TDA  Industries,   Inc.,
          incorporated  herein by reference to Exhibit  10.23  to
          the  Company's Form S-1/A filed with the Commission  on
          December 28, 1998.

10.20--   Letter  Agreement, dated September  21,  1999,  by  and
          between   the   Company   and   George   Skakel    III,
          incorporated  herein by reference to Exhibit  10.36  to
          the  Company's  Form 10-K filed with the Commission  on
          September 28, 1999.

10.21--   Amended,  Restated and Consolidated Loan  and  Security
          Agreement,   dated  June  20,  2000,  by  and   between
          JEH/Eagle  Supply,  Inc.  and Eagle  Supply,  Inc.,  as
          Borrowers,  and Fleet Capital Corporation, as  Lenders,
          incorporated  herein by reference to Exhibit  10.37  to
          the  Company's  Form 8-K filed with the  Commission  on
          July 10, 2000.

10.22--   Amended,  Restated  and Consolidated  Revolving  Credit
          Note,  dated  June  20, 2000, by and between  JEH/Eagle
          Supply, Inc. and Eagle Supply, Inc., as Borrowers,  and
          Fleet  Capital  Corporation, as  Lenders,  incorporated
          herein  by  reference to Exhibit 10.38 to the Company's
          Form 8-K filed with the Commission on July 10, 2000.

10.23--   Amended,  Restated  and  Consolidated  Equipment   Term
          Note,  dated  June  20, 2000, by and between  JEH/Eagle
          Supply, Inc. and Eagle Supply, Inc., as Borrowers,  and
          Fleet  Capital  Corporation, as  Lenders,  incorporated
          herein  by  reference to Exhibit 10.39 to the Company's
          Form 8-K filed with the Commission on July 10, 2000.

10.24--   Amended,  Restated  and Consolidated  Acquisition  Term
          Note,  dated  June  20, 2000, by and between  JEH/Eagle
          Supply, Inc. and Eagle Supply, Inc., as Borrowers,  and
          Fleet  Capital  Corporation, as  Lenders,  incorporated
          herein  by  reference to Exhibit 10.40 to the Company's
          Form 8-K filed with the Commission on July 10, 2000.

10.25--   First Amendment  to  Amended, Restated and Consolidated  Loan
          and  Security  Agreement; and Subordination  Agreement,
          dated  February  14,  2001, by  and  between  JEH/Eagle
          Supply, Inc., Eagle Supply, Inc., JEH/Eagle, L.P.,  and
          Fleet  Capital  Corporation,  incorporated  herein   by
          reference  to Exhibit 10.45 to the Company's Form  10-Q
          filed with the Commission on February 14, 2001.

10.26--   Fifth Amendment  to Amended, Restated and  Consolidated  Loan
          and   Security   Agreement  and  First   Amendment   to
          Subordination  Agreement, dated May 12,  2003,  by  and
          among  JEH/Eagle  Supply,  Inc.,  Eagle  Supply,  Inc.,
          JEH/Eagle,  L.P., Eagle Supply Group, Inc.,  and  Fleet
          Capital  Corporation, incorporated herein by  reference
          to  Exhibit 10.57 to the Company's Form 10-Q filed with
          the Commission on May 15, 2003.

10.27--   Stock Option Plan of the Company, incorporated herein by
          reference to Exhibit 10.9 to the Company's Form S-1/A
          filed with the Commission on December 28, 1998.

10.28--   Termination and Mutual Release, dated August 28,  2003,
          by and between the Company and Alpha Capital AG.*

10.29--   Termination and Mutual Release, dated August 28,  2003,
          by  and  between  the  Company and  Bristol  Investment
          Fund, Ltd.*



                             54

<PAGE>


10.30--   Termination and Mutual Release, dated August 28,  2003,
          by and between the Company and Stonestreet LP.*

10.31--   Termination  and  Mutual Release, dated  September  23,
          2003,  by  and between the Company and Seaway Holdings,
          Ltd.*

18.1 --   Letter,  dated  September 29,  2003,  from  Deloitte  &
          Touche LLP regarding change in accounting principle.*

21.1 --   Subsidiaries of the Company.*

23.1 --   Consent of Deloitte & Touche LLP.*

31.1 --   Certification of the Chief Executive Officer pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-
          14(a)).*

31.2 --   Certification of the Chief Financial Officer
          pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule
          13a-14(a)).*

32.1 --   Certificate of the Chief Executive Officer
          Pursuant to 18 U.S.C. Section 1350,  as Adopted
          Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002 (Rule 13a-14(b)).*

32.2 --   Certificate of the Chief Financial Officer
          Pursuant to 18 U.S.C. Section 1350,  as Adopted
          Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002 (Rule 13a-14(b)).*

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


          *    Exhibit filed herewith.


     (b)  Reports on Form 8-K

     During the last quarter of the fiscal period covered by this
Report, the Registrant filed the following Reports on Form 8-K:

     On  April  11, 2003, the Company filed a Current  Report  on
Form  8-K  under Item 9 to disclose recent developments that  the
Company believed may affect its future operating results.

     On  May 12, 2003, the Company filed a Current Report on Form
8-K  under  Items  5  and  7 to disclose the  revisions  made  to
documents  entered into in connection with the Helzer Transaction
described in Item 5(c) "Market For Registrant's Common Equity and
Related  Stockholder  Matters  -  Recent  Sales  of  Unregistered
Securities"  of this Report.  The First Amendment  to  Securities
Purchase  Agreement  and First Amendment to  Warrant  were  filed
therewith as Exhibits 4.1 and 4.2.

     On  May 15, 2003, the Company filed a Current Report on Form
8-K under Item 9 to disclose that the certificates required by 18
U.S.C.  1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley  Act of 2002, were submitted to the Securities and Exchange
Commission  in connection and simultaneously with the  filing  of
the  Company's Form 10-Q for the fiscal quarter ended  March  31,
2003.  The certificates of the Chief Executive Officer and  Chief
Financial Officer were filed therewith as Exhibits 99.1 and 99.2.

       With   the   exception   of   the  information   expressly
incorporated  herein  by  reference,  the  Company's  2003  Proxy
Statement is not to be deemed filed as part of this Annual Report
on Form 10-K.



                             55

<PAGE>

                           SIGNATURES

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

                                     EAGLE SUPPLY GROUP, INC.



Date:  September 29, 2003            By:/s/Douglas P. Fields
                                        ---------------------------
                                        Douglas P. Fields
                                        Chief Executive Officer

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

<TABLE>
<CAPTION>

       Signature                        Title                          Date
       ---------                        -----                          ----
<S>                            <C>                                <C>
 /s/ Douglas P. Fields         Chairman of the Board and Chief    September 29, 2003
 ---------------------------   Executive Officer  (Principal
     Douglas P. Fields         Executive Officer)


/s/ James E. Helzer            President and Director             September 29, 2003
----------------------------
     James E. Helzer

/s/ Frederick M. Friedman      Director and Chief Financial       September 29, 2003
----------------------------   Officer (Principal Financial
    Frederick M. Friedman      Officer)


/s/ Steven R. Andrews          Director                           September 29, 2003
----------------------------
    Steven R. Andrews, Esq.

/s/ Paul D. Finkelstein        Director                           September 29, 2003
----------------------------
     Paul D. Finkelstein

/s/ George Skakel III          Director                           September 29, 2003
----------------------------
    George Skakel III

/s/ John E. Smircina           Director                           September 29, 2003
----------------------------
    John E. Smircina, Esq.
</TABLE>



<PAGE>

                        INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit                                                            Sequentially
Number                       Description of Exhibits               Numbered Pages
-------                      -----------------------               --------------
<S>                          <C>                                   <C>

 3.1  --  Certificate   of   Incorporation   of   the    Company,
          incorporated herein by reference to Exhibit 3.1 to  the
          Company's Form S-1 filed with the Commission on  August
          12, 1996.

 3.2  --  Certificate   of   Amendment  to  the  Certificate   of
          Incorporation  of the Company, incorporated  herein  by
          reference  to Exhibit 3.1(A) to the Company's  Form  S-
          1/A filed with the Commission on May 1, 1998.

 3.3  --  Certificate   of   Amendment  to  the  Certificate   of
          Incorporation  of the Company, incorporated  herein  by
          reference to Exhibit 3.1(B) to the Company's  Form  8-K
          filed with the Commission on December 20, 2002.

 3.4  --  Bylaws,  incorporated  herein by reference  to  Exhibit
          3.2   to   the  Company's  Form  S-1  filed  with   the
          Commission on August 12, 1996.

 4.1  --  See  Exhibits  3.1  and  3.2  for  provisions  of   the
          Certificate   of  Incorporation,   as amended  and  the
          Bylaws of the Company  defining the rights  of  holders
          of the Company's common stock.

 4.2  --  Form of  Common Stock  Certificate, incorporated  herein
          by reference to Exhibit 4.4 to the Company's  Form S-1/A
          filed with the Commission on October 15, 1996.

 4.3  --  Form of Warrant  Agreement  between  the   Company   and
          Continental   Stock   Transfer   and   Trust    Company,
          incorporated herein by reference  to Exhibit 4.7 to  the
          Company's  Form  S-1/A  filed  with  the  Commission  on
          October 15, 1996.

 4.4  --  Form  of  Underwriter's Warrant Agreement by and between
          the Company and Barron Chase Securities, Inc. with  Form
          of   Warrant   Certificate,   incorporated   herein   by
          reference  to  Exhibit  4.1 to  the Company's Form S-1/A
          filed on May 1, 1998.

 4.5  --  Form of  Redeemable  Common  Stock   Purchase   Warrant,
          incorporated  herein by reference to Exhibit 4.6 to  the
          Company's Form  S-1/A filed with the Commission on  July
          1, 1998.

 4.6  --  Form of  Warrant to purchase common stock issued  by the
          Company  to  investors in the May 2002 private placement
          transaction,   incorporated  herein   by  reference   to
          Exhibit  4.1 to the Company's Form  8-K filed  with  the
          Commission on May 22, 2002.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>                                   <C>

 4.7  --  Form of Warrant to purchase common stock  issued by  the
          Company  to  vFinance  Investments, Inc. as compensation
          for   services  in  the  May  2002   private   placement
          transaction,   incorporated   herein  by  reference   to
          Exhibit  4.2 to the Company's  Form 8-K filed  with  the
          Commission on May 22, 2002.

 4.8  --  Securities  Purchase  Agreement dated May 15,  2002,  by
          and  between  the Company  and each of the investors  in
          the    May    2002   private   placement    transaction,
          incorporated herein by  reference to Exhibit 4.3 to  the
          Company's  Form  8-K  filed with the Commission  on  May
          22, 2002.



                             51

<PAGE>

 4.9  --  Registration Rights Agreement, dated May 15,  2002,  by
          and  between  the Company and each of the investors  in
          the    May    2002   private   placement   transaction,
          incorporated herein by reference to Exhibit 4.4 to  the
          Company's  Form  8-K filed with the Commission  on  May
          22, 2002.

4.10  --  Securities Purchase Agreement, dated February 6,  2003,
          by  and  between  the  Company  and  James  E.  Helzer,
          incorporated herein by reference to Exhibit 4.1 to  the
          Company's  Form  8-K  filed  with  the  Commission   on
          February 7, 2003.

4.11  --  First Amendment to Securities Purchase Agreement, dated
          May  5,  2003,  by  and  between the Company,  James E.
          Helzer,and  TDA  Industries, Inc.,  incorporated herein
          by  reference  to  Exhibit 4.1 to  the  Company's  Form
          8-K filed with the Commission on May 12, 2003.

4.12 --   Warrant No. 001, dated February 6, 2003, issued by  the
          Company  to  James  E. Helzer, incorporated  herein  by
          reference  to  Exhibit 4.2 to the  Company's  Form  8-K
          filed with the Commission on February 7, 2003.

4.13 --   First Amendment  to  Warrant, dated May 5, 2003, by and
          between  the  Company and James E. Helzer, incorporated
          herein  by  reference to Exhibit 4.2 to  the  Company's
          Form 8-K filed with the Commission on May 12, 2003.

10.1 --   Amended,    Consolidated   and   Restated    Employment
          Agreement,  dated  as  of  November  1,  2001,  between
          JEH/Eagle  Supply,  Inc. and the Company  and  James  E
          Helzer,  incorporated  herein by reference  to  Exhibit
          10.46  to  the  Company's  Form  10-Q  filed  with  the
          Commission on November 9, 2001.

10.2 --   Modification Agreement to the Employment Agreement,  as
          amended,  with James E. Helzer, incorporated herein  by
          reference  to Exhibit 10.55 to the Company's Form  10-Q
          filed with the Commission on February 14, 2003.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>                                   <C>


10.3 --   Amended,    Restated   and   Consolidated    Employment
          Agreement,  dated  as  of  November  1,  2001,  between
          JEH/Eagle  Supply,  Inc., Eagle Supply,  Inc.  and  the
          Company  and Douglas P. Fields, incorporated herein  by
          reference  to Exhibit 10.47 to the Company's Form  10-Q
          filed with the Commission on November 9, 2001.

10.4 --   Modification Agreement to the Employment Agreement,  as
          amended,  with  Douglas P. Fields, incorporated  herein
          by reference to Exhibit 10.54 to the Company's Form 10-
          Q filed with the Commission on February 14, 2003.

10.5 --   Amended,    Restated   and   Consolidated    Employment
          Agreement,  dated  as  of  November  1,  2001,  between
          JEH/Eagle  Supply,  Inc., Eagle Supply,  Inc.  and  the
          Company and Frederick M. Friedman, incorporated  herein
          by reference to Exhibit 10.48 to the Company's Form 10-
          Q filed with the Commission on November 9, 2001.

10.6 --   Modification Agreement to the Employment Agreement,  as
          amended,   with  Frederick  M.  Friedman,  incorporated
          herein  by  reference to Exhibit 10.56 to the Company's
          Form  10-Q  filed with the Commission on  February  14,
          2003.

10.7 --   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office  and  warehouse  space in  Henderson,  Colorado,
          incorporated  herein by reference to  Exhibit  10.18(A)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.



                             52

<PAGE>


10.8 --   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and  warehouse  space  in  Colorado   Springs,
          Colorado,  incorporated herein by reference to  Exhibit
          10.18(B)  to  the Company's Form S-1/A filed  with  the
          Commission on May 1, 1998.

10.9 --   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and  warehouse  space  in  Mansfield,   Texas,
          incorporated  herein by reference to  Exhibit  10.18(C)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.10--   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office  and  warehouse  space  in  Colleyville,  Texas,
          incorporated  herein by reference to  Exhibit  10.18(D)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.11--   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and   warehouse  space   in   Frisco,   Texas,
          incorporated  herein by reference to  Exhibit  10.18(E)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>                                   <C>


10.12--   Lease,  dated  July 1, 1997, by and  between  James  E.
          Helzer  and  JEH/Eagle Supply, Inc., for the  lease  of
          office   and   warehouse  space  in  Mesquite,   Texas,
          incorporated  herein by reference to  Exhibit  10.18(F)
          to  the  Company's Form S-1/A filed with the Commission
          on May 1, 1998.

10.13--   Lease,  dated  October 22, 1998,  by  and  between  MSI
          Eagle   Supply,   Inc.  and  Gary  and  Linda   Howard,
          incorporated  herein by reference to Exhibit  10.30  to
          the  Company's Form S-1/A filed with the Commission  on
          December 28, 1998.

10.14--   Asset Purchase Agreement, dated July 8, 1997, by and  between
          JEH/Eagle  Supply,  Inc., JEH  Company,  and  James  E.
          Helzer,  incorporated  herein by reference  to  Exhibit
          10.11  to  the  Company's Form  S-1/A  filed  with  the
          Commission on May 1, 1998.

10.15--   Asset Purchase Agreement, dated October 22, 1998, by and
          among  MSI/Eagle  Supply, Inc., Masonry  Supply,  Inc.,
          and  Gary  L. Howard,  incorporated herein by reference
          to  Exhibit  10.19  to the Company's Form  S-1/A  filed
          with the Commission on December 28, 1998.

10.16--   Letter  Amendment, dated April 30, 1999,  amending  the
          Asset  Purchase  Agreement, dated October 22, 1998,  by
          and  among  MSI/Eagle  Supply,  Inc.,  Masonry  Supply,
          Inc.,  and  Gary  L.  Howard,  incorporated  herein  by
          reference  to Exhibit 10.35 to the Company's Form  10-K
          filed with the Commission on September 28, 1999.

10.17--   Purchase  and Non-Competition Agreement, dated  October
          22,  1998,  by and among TUSA, Inc.,  Gary  L.  Howard,
          Patty   L.   Howard,   and  MSI/Eagle   Supply,   Inc.,
          incorporated  herein by reference to Exhibit  10.21  to
          the  Company's Form S-1/A filed with the Commission  on
          December 28, 1998.

10.18--   Subordinate  Security  Agreement,  dated  October   22,
          1998,   by   and  between  Masonry  Supply,  Inc.   and
          MSI/Eagle   Supply,   Inc.,  incorporated   herein   by
          reference to Exhibit 10.22 to the Company's Form  S-1/A
          filed with the Commission on December 28, 1998.

10.19--   Promissory  Note,  dated  October  22,1998,  issued  by
          MSI/Eagle   Supply,  Inc.  by  TDA  Industries,   Inc.,
          incorporated  herein by reference to Exhibit  10.23  to
          the  Company's Form S-1/A filed with the Commission  on
          December 28, 1998.

10.20--   Letter  Agreement, dated September  21,  1999,  by  and
          between   the   Company   and   George   Skakel    III,
          incorporated  herein by reference to Exhibit  10.36  to
          the  Company's  Form 10-K filed with the Commission  on
          September 28, 1999.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>                                   <C>


10.21--   Amended,  Restated and Consolidated Loan  and  Security
          Agreement,   dated  June  20,  2000,  by  and   between
          JEH/Eagle  Supply,  Inc.  and Eagle  Supply,  Inc.,  as
          Borrowers,  and Fleet Capital Corporation, as  Lenders,
          incorporated  herein by reference to Exhibit  10.37  to
          the  Company's  Form 8-K filed with the  Commission  on
          July 10, 2000.

10.22--   Amended,  Restated  and Consolidated  Revolving  Credit
          Note,  dated  June  20, 2000, by and between  JEH/Eagle
          Supply, Inc. and Eagle Supply, Inc., as Borrowers,  and
          Fleet  Capital  Corporation, as  Lenders,  incorporated
          herein  by  reference to Exhibit 10.38 to the Company's
          Form 8-K filed with the Commission on July 10, 2000.

10.23--   Amended,  Restated  and  Consolidated  Equipment   Term
          Note,  dated  June  20, 2000, by and between  JEH/Eagle
          Supply, Inc. and Eagle Supply, Inc., as Borrowers,  and
          Fleet  Capital  Corporation, as  Lenders,  incorporated
          herein  by  reference to Exhibit 10.39 to the Company's
          Form 8-K filed with the Commission on July 10, 2000.

10.24--   Amended,  Restated  and Consolidated  Acquisition  Term
          Note,  dated  June  20, 2000, by and between  JEH/Eagle
          Supply, Inc. and Eagle Supply, Inc., as Borrowers,  and
          Fleet  Capital  Corporation, as  Lenders,  incorporated
          herein  by  reference to Exhibit 10.40 to the Company's
          Form 8-K filed with the Commission on July 10, 2000.

10.25--   First Amendment  to  Amended, Restated and Consolidated  Loan
          and  Security  Agreement; and Subordination  Agreement,
          dated  February  14,  2001, by  and  between  JEH/Eagle
          Supply, Inc., Eagle Supply, Inc., JEH/Eagle, L.P.,  and
          Fleet  Capital  Corporation,  incorporated  herein   by
          reference  to Exhibit 10.45 to the Company's Form  10-Q
          filed with the Commission on February 14, 2001.

10.26--   Fifth Amendment  to Amended, Restated and  Consolidated  Loan
          and   Security   Agreement  and  First   Amendment   to
          Subordination  Agreement, dated May 12,  2003,  by  and
          among  JEH/Eagle  Supply,  Inc.,  Eagle  Supply,  Inc.,
          JEH/Eagle,  L.P., Eagle Supply Group, Inc.,  and  Fleet
          Capital  Corporation, incorporated herein by  reference
          to  Exhibit 10.57 to the Company's Form 10-Q filed with
          the Commission on May 15, 2003.

10.27--   Stock Option Plan of the Company, incorporated herein by
          reference to Exhibit 10.9 to the Company's Form S-1/A
          filed with the Commission on December 28, 1998.

10.28--   Termination and Mutual Release, dated August 28,  2003,
          by and between the Company and Alpha Capital AG.*

10.29--   Termination and Mutual Release, dated August 28,  2003,
          by  and  between  the  Company and  Bristol  Investment
          Fund, Ltd.*

10.30--   Termination and Mutual Release, dated August 28,  2003,
          by and between the Company and Stonestreet LP.*

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>                                   <C>


10.31--   Termination  and  Mutual Release, dated  September  23,
          2003,  by  and between the Company and Seaway Holdings,
          Ltd.*

18.1 --   Letter,  dated  September 29,  2003,  from  Deloitte  &
          Touche LLP regarding change in accounting principle.*

21.1 --   Subsidiaries of the Company.*

23.1 --   Consent of Deloitte & Touche LLP.*

31.1 --   Certification of the Chief Executive Officer pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-
          14(a)).*

31.2 --   Certification of the Chief Financial Officer
          pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule
          13a-14(a)).*

32.1 --   Certificate of the Chief Executive Officer
          Pursuant to 18 U.S.C. Section 1350,  as Adopted
          Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002 (Rule 13a-14(b)).*

32.2 --   Certificate of the Chief Financial Officer
          Pursuant to 18 U.S.C. Section 1350,  as Adopted
          Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002 (Rule 13a-14(b)).*

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

</TABLE>

*   Exhibit filed herewith.


<PAGE>









INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
Eagle Supply Group, Inc.

We have audited the accompanying consolidated balance sheets of
Eagle Supply Group, Inc. (the "Company") and subsidiaries as of
June 30, 2003 and 2002, and the related consolidated statements
of operations, shareholders' equity and cash flows for the three
years ended June 30, 2003.  These financial statements are the
responsibility of the Company's management.  Our responsibility
is to express an opinion on these 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 audits 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 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, such consolidated financial statements present
fairly, in all material respects, the financial position of Eagle
Supply Group, Inc. and subsidiaries as of June 30, 2003 and 2002,
and the results of their operations and their cash flows for the
three years ended June 30, 2003 in conformity with accounting
principles generally accepted in the United States of America.

As described in Note 1 to the consolidated financial statements,
effective July 1, 2001, in connection with the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 142,
Goodwill and Intangible Other Assets, the Company ceased
amortization of goodwill.

As described in Note 1 to the consolidated financial statements,
effective July 1, 2002, the Company  adopted Emerging Issues Task
Force ("EITF") Issue No. 02-16, Accounting by a Customer
(including a Reseller) for Certain Consideration Received from a
Vendor.

As described in Note 3 to the consolidated financial statements ,
the consolidated balance sheet of the Company and subsidiaries as
of June 30, 2002, and the related consolidated statements of
operations, shareholders' equity and cash flows for the two years
ended June 30, 2002 have been restated for the change during the
fourth quarter of 2003 in the method of inventory costing from
last-in-first-out ("LIFO") to the average cost method for the
inventories not previously accounted for on the average cost
method.


/s/Deloitte & Touche LLP


Deloitte & Touche LLP

Fort Worth, Texas
September 29, 2003



<PAGE>



EAGLE SUPPLY GROUP, INC.

CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 AND 2002
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  2003                  2002
                                                                                     (Restated)
<S>                                                            <C>                   <C>
ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                                     $  1,505,408          $  5,355,070
  Accounts and notes receivable - trade (net of allowance
    for doubtful accounts of $2,582,597 and $4,551,675,
    respectively)                                                40,176,822            38,875,947
  Inventories                                                    39,962,678            33,419,546
  Deferred tax asset                                              1,871,000             1,910,000
  Federal and state income taxes receivable                         771,095                  -
  Assets of discontinued operation                                  157,724             1,722,503
  Other current assets                                              881,716             1,072,394
                                                               ------------          ------------
           Total current assets                                  85,326,443            82,355,460

PROPERTY AND EQUIPMENT, Net                                       2,964,635             3,602,897

COST IN EXCESS OF NET ASSETS ACQUIRED
  (net of accumulated amortization of $1,936,216)                14,581,358            14,412,014

NOTES RECEIVABLE (net of allowance for doubtful
  accounts)                                                       2,807,588                  -

DEFERRED FINANCING COSTS                                             15,850                57,664
                                                               ------------          ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt                            $    860,000          $  1,245,000
  Note payable - TDA Industries, Inc.                             1,000,000             1,000,000
  Note payable - related party                                         -                  655,000
  Accounts payable                                               31,876,367            27,695,079
  Due to related party                                              259,778               314,722
  Accrued expenses and other current liabilities                  5,988,543             5,284,787
  Federal and state income taxes payable                               -                  222,444
                                                               ------------          ------------
           Total current liabilities                             39,984,688            36,417,032

LONG-TERM DEBT                                                   42,687,892            40,425,435

DEFERRED TAX LIABILITY                                            1,807,000             1,419,000
                                                               ------------          ------------
           Total liabilities                                     84,479,580            78,261,467
                                                               ------------          ------------

COMMITMENTS AND CONTINGENCIES (Notes 8, 9 and 10)

SHAREHOLDERS' EQUITY:
  Preferred Shares, $.0001 par value per share,
    10,000,000 shares authorized; none issued and
    outstanding                                                        -                     -
  Common Shares, $.0001 par value per share,
    30,000,000 shares authorized; issued and
    outstanding - 2003 - 10,255,455 shares;
      2002 - 9,055,455 shares                                         1,025                   905
  Class A Non-Voting Common Shares, $.0001 par value per
      share, 10,000,000 shares authorized; none issued
      and outstanding                                                   -                    -
       Additional paid-in capital                                19,325,064            18,248,903
                                                               ------------          ------------
  Retained earnings                                               1,890,205             3,916,760
                                                               ------------          ------------
           Total shareholders' equity                            21,216,294            22,166,568
                                                               ------------          ------------
                                                               $105,695,874          $100,428,035
                                                               ============          ============
</TABLE>


See notes to consolidated financial statements.



                                   F-2

<PAGE>


EAGLE SUPPLY GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 2003, 2002 AND 2001
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                 2003                  2002                   2001
                                                                    (Restated)            (Restated)
<S>                                          <C>                   <C>                   <C>
REVENUES                                     $ 226,135,623         $ 230,495,559         $ 189,448,149

COST OF SALES                                  171,220,095           173,941,915           141,187,673
                                             -------------         -------------         -------------
                                                54,915,528            56,553,644            48,260,476
                                             -------------         -------------         -------------

OPERATING EXPENSES (including provisions
  for doubtful accounts of $4,675,262,
  $2,710,741 and $1,413,507, respectively)      54,840,570            50,423,015            41,461,802

DEPRECIATION AND AMORTIZATION                    1,022,952             1,482,208             2,271,827
                                             -------------         -------------         -------------
                                                55,863,522            51,905,223            43,733,629
                                             -------------         -------------         -------------

(LOSS) INCOME FROM
  CONTINUING OPERATIONS                           (947,994)            4,648,421             4,526,847
                                             -------------         -------------         -------------

OTHER INCOME (EXPENSE):
  Investment and other income                      336,785               340,512               481,896
  Interest expense                              (1,666,329)           (2,293,445)           (3,201,013)
                                             -------------         -------------         -------------
                                                (1,329,544)           (1,952,933)           (2,719,117)
                                             -------------         -------------         -------------

(LOSS) INCOME FROM CONTINUING
  OPERATIONS BEFORE (BENEFIT)
  PROVISION FOR INCOME TAXES                    (2,277,538)            2,695,488             1,807,730

(BENEFIT) PROVISION FOR INCOME TAXES              (855,000)              948,000               722,000
                                             -------------         -------------         -------------

NET (LOSS) INCOME FROM
  CONTINUING OPERATIONS                         (1,422,538)            1,747,488             1,085,730
                                             -------------         -------------         -------------

DISCONTINUED OPERATION:
  Loss from discontinued operation
    (including loss on disposal of
    $90,000 in 2003)                              (306,017)             (570,324)             (379,888)

  Benefit for income taxes                        (115,000)             (214,000)             (142,000)
                                             -------------         -------------         -------------
LOSS FROM DISCONTINUED OPERATION                  (191,017)             (356,324)             (237,888)
                                             -------------         -------------         -------------

NET (LOSS) INCOME BEFORE EFFECT OF
  ACCOUNTING CHANGE                             (1,613,555)            1,391,164               847,842

CUMULATIVE EFFECT OF ACCOUNTING
  CHANGE, NET OF TAXES                            (413,000)                 -                     -
                                             -------------         -------------         -------------
NET (LOSS) INCOME                            $  (2,026,555)        $   1,391,164         $     847,842
                                             =============         =============         =============
</TABLE>



See notes to consolidated financial statements.



                                   F-3

<PAGE>


EAGLE SUPPLY GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
YEARS ENDED JUNE 30, 2003, 2002 AND 2001
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                 2003                  2002                   2001
                                                                    (Restated)            (Restated)
<S>                                          <C>                   <C>                   <C>

BASIC AND DILUTED
   NET (LOSS) INCOME PER SHARE:
        Net (loss) income from continuing
          operations                         $        (.15)        $         .20         $        .13

        Loss from discontinued operation              (.02)                 (.04)                (.03)

        Cumulative effect of accounting
          change                                      (.04)                  -                      -
                                             -------------         -------------         -------------
                                             $        (.21)        $         .16         $         .10
                                             =============         =============         =============


COMMON SHARES USED IN BASIC
  AND DILUTED NET (LOSS)
  INCOME PER SHARE                               9,494,359             8,578,742             8,510,000
                                             =============         =============         =============
</TABLE>
























See notes to consolidated financial statements.



                                   F-4

<PAGE>


EAGLE SUPPLY GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS'  EQUITY
YEARS ENDED JUNE 30, 2003, 2002 AND 2001
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                       Class A Non-Voting                     Additional
                                     Preferred Shares   Common Shares      Common Shares        Paid-In    Retained
                                     Shares    Amount  Shares     Amount  Shares      Amount    Capital    Earnings       Total
<S>                                  <C>       <C>     <C>        <C>     <C>         <C>     <C>          <C>         <C>

BALANCE, JULY 1, 2000, as previously
  reported                              -      $  -       -       $  -     8,510,000  $  851  $16,958,141  $1,226,754  $18,185,746

  Change in accounting method, net
  of taxes (Note 3)                     -         -       -          -          -        -           -        451,000      451,000
                                     ------    ------   ------    ------- ----------  ------  -----------  ----------  -----------

BALANCE, JULY 1, 2000                   -         -       -          -     8,510,000     851   16,958,141   1,677,754   18,636,746

  Net income, as restated               -         -       -          -           -        -           -        847,842      847,842
                                     ------    ------   ------    ------- ----------  ------  -----------  ----------  -----------

BALANCE, JUNE 30, 2001                  -         -       -          -     8,510,000     851   16,958,141   2,525,596   19,484,588

  Net income, as restated               -         -       -          -          -        -           -      1,391,164    1,391,164

  Proceeds from private placement of
    common shares and warrants
    - net (Note 10)                     -         -       -          -       545,455      54    1,290,762        -       1,290,816

BALANCE, JUNE 30, 2002                  -         -       -          -     9,055,455     905   18,248,903   3,916,760   22,166,568
                                     ------    ------   ------    ------- ----------  ------  -----------  ----------  -----------
  Net loss                              -         -       -          -          -        -           -     (2,026,555)  (2,026,555)

  Proceeds from private placements
    of common shares and warrants
    - net (Note 10)                     -         -       -          -     1,200,000     120    1,076,161        -       1,076,281

                                     ------    ------   ------    ------- ----------  ------  -----------  ----------  -----------
BALANCE, JUNE 30, 2003                  -      $  -       -       $  -    10,255,455  $1,025  $19,325,064  $1,890,205  $21,216,294
                                     ======    ======   ======    ======= ==========  ======  ===========  ==========  ===========
</TABLE>



See notes to consolidated financial statements.



                                   F-5

<PAGE>

EAGLE SUPPLY GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2003, 2002 AND 2001
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        2003               2002               2001
                                                                         (Restated)        (Restated)
<S>                                                 <C>               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income from continuing operations      $   (1,422,538)    $   1,747,488     $   1,085,730
  Loss from discontinued operation, net of taxes          (191,017)         (356,324)         (237,888)
  Cumulative effect of accounting change, net of
    taxes                                                 (413,000)             -                 -

  Adjustments to reconcile net income to net cash
    used in operating activities:
      Depreciation and amortization                      1,038,006         1,516,007         2,303,247
      Issuance of common shares for employment
        services                                           200,000              -                 -
      Deferred income taxes                                427,000          (597,903)          (28,883)
      Increase (decrease) in allowance for
        doubtful accounts                                  247,414         2,199,184           856,491
      Loss (gain) on sale of equipment                         596            55,888           (15,413)
      Changes in operating assets and liabilities:
        Increase in accounts and notes receivable       (4,355,877)       (6,657,641)       (6,570,229)
        Increase in inventories                         (6,543,132)       (3,357,877)       (4,074,108)
        Decrease (increase) in assets of
          discontinued operation                         1,564,779         1,039,262          (935,529)
        Decrease (increase) in other current assets        190,678          (215,443)          265,480
        Increase in accounts payable                     4,181,288         1,024,519         4,165,667
        Increase in accrued expenses and other
          current liabilities                              794,190           790,838           959,839
        (Decrease) increase in due to related parties      (54,944)          (96,039)           51,891
        Decrease in income taxes due to TDA
          Industries, Inc.                                    -                 -           (1,143,537)
        (Decrease) increase in federal and state
          income taxes                                    (993,539)          670,960          (869,231)
                                                      ------------     -------------     -------------
        Net cash used in operating activities           (5,330,096)       (2,237,081)       (4,186,473)
                                                      ------------     -------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                    (566,658)         (771,430)         (592,045)
  Proceeds from sale of fixed assets                       208,132           184,926           225,411
  Payment of contingent consideration for the
    purchase of JEH Co.                                       -             (314,864)       (2,141,454)
  Payment of contingent consideration for the
    purchase of MSI Co.                                   (259,778)         (225,981)         (215,650)
                                                      ------------     -------------     -------------
        Net cash used in investing activities             (618,304)       (1,127,349)       (2,723,738)
                                                      ------------     -------------     -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from private placements, net of
    related expenses                                       876,281         1,290,816              -
  Principal borrowings on long-term debt               242,382,495       270,234,853       217,424,596
  Principal reductions on long-term debt              (241,160,038)     (268,486,060)     (211,937,408)
  Increase in deferred financing costs                        -                 -              (62,964)
                                                      ------------     -------------     -------------
        Net cash provided by financing activities        2,098,738         3,039,609         5,424,224
                                                      ------------     -------------     -------------

NET DECREASE IN CASH AND CASH EQUIVALENTS               (3,849,662)         (324,821)       (1,485,987)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR             5,355,070         5,679,891         7,165,878
                                                      ------------     -------------     -------------
CASH AND CASH EQUIVALENTS, END OF YEAR                $  1,505,408     $   5,355,070     $   5,679,891
                                                      ============     =============     =============
</TABLE>


See notes to consolidated financial statements.



                                   F-6

<PAGE>


EAGLE SUPPLY GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
YEARS ENDED JUNE 30, 2003, 2002 AND 2001
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        2003               2002               2001
                                                                         (Restated)        (Restated)
<S>                                                 <C>               <C>                <C>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
    Cash paid for interest                            $  1,666,329     $   2,293,445     $   3,201,013
                                                      ============     =============     =============

    Cash paid for income taxes                        $     29,863     $     660,943     $   1,478,114
                                                      ============     =============     =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES:
    Non-cash dividend to TDA Industries, Inc. - net   $          -     $           -     $   3,067,002
                                                      ============     =============     =============

   Additional consideration pursuant to the
     acquisition of JEH Co.                           $          -     $           -     $     314,864
                                                      ============     =============     =============

   Additional consideration pursuant to the
     acquisition of MSI Co.                           $    169,344     $     314,722     $     270,123
                                                      ============     =============     =============

   Common shares issued in lieu of cash compensation  $    200,000     $           -     $           -
                                                      ============     =============     =============
</TABLE>























See notes to consolidated financial statements.



                                   F-7

<PAGE>



EAGLE SUPPLY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2003, 2002 AND 2001


1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

   Business   Description  -  Eagle  Supply  Group,   Inc.   (the
   ----------------------
   "Company")  is a majority-owned subsidiary of TDA  Industries,
   Inc.  ("TDA"  or the "Parent") and was organized  to  acquire,
   integrate   and  operate  seasoned,  privately-held  companies
   which  distribute products to or manufacture products for  the
   building supplies/construction industry.

   Initial  Public  Offering - On March  17,  1999,  the  Company
   -------------------------
   completed the sale of 2,500,000 of its common shares at  $5.00
   per  share  and  2,875,000 Redeemable  Common  Stock  Purchase
   Warrants  at $.125 per warrant in connection with its  initial
   public  offering  (the "Offering").  The net proceeds  to  the
   Company aggregated approximately $10,206,000.

   Acquisitions and Basis of Presentation - Upon consummation  of
   --------------------------------------
   the  Offering,  the  Company acquired all of  the  issued  and
   outstanding  common  shares of Eagle Supply,  Inc.  ("Eagle"),
   JEH/Eagle  Supply,  Inc. ("JEH Eagle") and  MSI/Eagle  Supply,
   Inc.   ("MSI  Eagle")  (the  "Acquisitions")  from   TDA   for
   consideration consisting of 3,000,000 of the Company's  common
   shares.   The  Acquisitions have been  accounted  for  as  the
   combining of four entities under common control, similar to  a
   pooling of interests, with the net assets of Eagle, JEH  Eagle
   and  MSI  Eagle recorded at historical carryover values.   The
   3,000,000  common  shares of the Company issued  to  TDA  were
   recorded  at  Eagle's, JEH Eagle's and MSI Eagle's  historical
   net  book  values  at  the date of acquisition.   Accordingly,
   this  transaction  did  not  result  in  any  revaluation   of
   Eagle's, JEH Eagle's or MSI Eagle's assets or the creation  of
   any  goodwill.   Upon  the consummation of  the  Acquisitions,
   Eagle,   JEH   Eagle   and  MSI  Eagle   became   wholly-owned
   subsidiaries  of  the Company.  Effective May  31,  2000,  MSI
   Eagle  was  merged with and into JEH Eagle.   As  of  July  1,
   2000, the Texas operations of JEH Eagle were transferred to  a
   newly   formed   limited  partnership   owned   directly   and
   indirectly by JEH Eagle.  Accordingly, the Company's  business
   operations  are  presently conducted through two  wholly-owned
   subsidiaries and a limited partnership.  Eagle, JEH Eagle  and
   MSI  Eagle  operate in a single industry segment  and  all  of
   their   revenues  are  derived  from  sales  to  third   party
   customers in the United States.

   Inventories - Inventories are valued at the lower of  cost  or
   -----------
   market.   Cost is determined by using the average cost method.
   During  the fourth quarter of its fiscal year ended  June  30,
   2003,  the  Company  changed its method of  inventory  costing
   from  LIFO to the average cost method for all inventories  not
   previously accounted for on the average cost method (see  Note
   3).

   Depreciation  and Amortization - Depreciation and amortization
   ------------------------------
   of   property  and  equipment  are  provided  principally   by
   straight-line   methods  at  various   rates   calculated   to
   extinguish  the carrying values of the respective assets  over
   their estimated useful lives.
   Cost  in  Excess of Net Assets Acquired - Prior to the  fiscal
   year  ending  June  30,  2002, cost in excess  of  net  assets
   acquired  ("goodwill") had been amortized on  a  straight-line
   method over 15 to 40 years.

   Effective  July  1, 2001, in connection with the  adoption  of
   Statement of Financial Accounting Standards ("SFAS") No.  142,
   Goodwill   and   Intangible   Assets,   the   Company   ceased
   amortization of goodwill.

   Since  goodwill and intangible assets with indeterminate lives
   are   not  currently  being  amortized  but  are  tested   for
   impairment  annually,  except  in  certain  circumstances  and
   whenever there is an impairment, there is a possibility  that,
   as  a result of an annual test for impairment or as the result
   of  the  occurrence of certain circumstances or an impairment,
   the  value of goodwill or intangible assets with indeterminate
   lives may be written down or may be written off either in  one
   write-down or in a number of write-downs, either at  a  fiscal
   year  end or at any time during the fiscal year.  The  Company
   analyzes  the value of goodwill using the related future  cash
   flows    of   the   related   business,   the   total   market
   capitalization  of  the  Company,  and  other   factors,   and
   recognizes any adjustment that may be required to the  asset's
   carrying  value.  Any such write-down or series of write-downs
   could  be substantial and could have a material adverse effect
   on  the Company's reported results of operations, and any such



                                   F-8

<PAGE>


   impairment  could occur in connection with a material  adverse
   event  or  development  or in connection  with  the  Company's
   annual  test for impairment and could have a material  adverse
   impact  on  the Company's financial condition and  results  of
   operations.

   Management  has concluded that no impairment of  the  recorded
   goodwill  existed  at  June 30, 2003.   Subsequent  impairment
   losses, if any, will be reflected in operating income or  loss
   in  the consolidated statement of operations for the period in
   which such loss is identified.

   Had  the  Company been accounting for goodwill under SFAS  No.
   142  for the fiscal year ended June 30, 2001 the Company's net
   income  and basic and diluted net income per share would  have
   been as follows:


   Net income, as restated                      $     847,842
   Add: amortization of cost in excess
          of net assets acquired, net of tax          531,758
                                                -------------
   Pro forma adjusted net income, as restated   $   1,379,600
                                                =============


   Basic and diluted net income per share:
     Net income, as restated     $.10
     Amortization of cost in excess of
       net assets acquired, net of tax                    .06
                                                -------------
   Pro forma basic and diluted
       net income per share, as restated        $         .16
                                                =============


   Deferred  Financing  Costs  -  Deferred  financing  costs  are
   --------------------------
   related  to  the  financing obtained in  connection  with  the
   Acquisitions  described in Note 2 and in connection  with  the
   Company's  subsequent  financing  under  its  credit  facility
   described  in  Note 7 and are being amortized on  a  straight-
   line method over the term of the related debt obligations.

   Income  Taxes  - Prior to the completion of the Offering,  the
   -------------
   Company  was  included in the consolidated federal  and  state
   income   tax  returns  of  its  Parent.   Income  taxes   were
   calculated  on a separate return filing basis.  Subsequent  to
   the  Offering, the Company files a consolidated federal income
   tax  return  with  its  subsidiaries.  The  Company  uses  the
   liability  method of computing deferred income  taxes  on  all
   material  temporary  differences.  Temporary  differences  are
   the  differences  between current taxes payable  versus  taxes
   that  may  be  payable in the future arising as  a  result  of
   differences  between  the  reported  amounts  of  assets   and
   liabilities and their tax bases.

   Net  Income Per Share - Basic net income (loss) per share  was
   ---------------------
   calculated  by  dividing  net income (loss)  by  the  weighted
   average  number  of  shares  outstanding  during  the  periods
   presented  and excluded any potential dilution.   Diluted  net
   income  (loss)  per share was calculated similarly  but  would
   generally  include  potential dilution from  the  exercise  of
   stock  options  and  warrants (see  Note  10).   The  dilutive
   effect  of options and warrants to purchase common shares  are
   excluded  from  the computation of diluted income  (loss)  per
   share  if  their  effect is anti-dilutive. At June  30,  2003,
   394,521  warrants to purchase common shares have been excluded
   from  the diluted income (loss) per share calculation as their
   effect  would  have  been anti-dilutive.  In  2003,  2002  and
   2001,  5,336,781,  4,398,170 and 4,287,040,  respectively,  of
   options  and  warrants have been excluded from the calculation
   of  diluted  net  income  (loss) per  share.  Both  basic  and
   diluted  net income (loss) per share includes, for all periods
   presented,  the 3,000,000 common shares of the Company  issued
   to TDA in connection with the Acquisitions.

   Long-Lived Assets - Long-lived assets are stated at the  lower
   -----------------
   of  the  expected net realizable value or cost.  The  carrying
   value  of  long-lived  assets  is  periodically  reviewed   to
   determine whether impairment exists.  The review is  based  on
   comparing   the   carrying  amount  of  the   asset   to   the
   undiscounted  estimated cash flows over the  remaining  useful
   life.  No impairment is indicated as of June 30, 2003.

   Fair  Value  of  Financial Instruments -  The  estimated  fair
   --------------------------------------
   value  of  financial instruments has been  determined  by  the
   Company   using  certain  market  information  and   valuation
   methodologies  considered  to be reasonable  by  the  Company.
   However,  considerable  judgment is required  in  interpreting
   market   data   to  develop  the  estimates  of  fair   value.
   Accordingly,   the   estimates  presented   herein   are   not
   necessarily  indicative of the amounts that the Company  could


                                   F-9

<PAGE>


   realize  in  a current market exchange.  The use of  different
   market assumptions and/or estimation methodologies may have  a
   material effect on the estimated fair value amounts.

   Cash  and  Cash  Equivalents, Accounts and  Notes  Receivable,
   Accounts  Payable and Accrued Expenses - The carrying  amounts
   of these items are a reasonable estimate of their fair value.
   Long-Term  Debt - Interest rates that are currently  available
   to  the  Company for issuance of debt with similar  terms  and
   remaining maturities are used to estimate fair value for  bank
   and  other  debt.  The carrying amounts comprising  this  item
   are reasonable estimates of fair value.

   The  fair  value estimates are based on information  available
   to  management  as of June 30, 2003 that the Company  believes
   to  be  relevant.   Although management is not  aware  of  any
   factors  that  would significantly affect the  estimated  fair
   value  amounts,  such  amounts have not  been  comprehensively
   revalued  for  purposes  of these financial  statements  since
   that  date  and  current estimates of fair  value  may  differ
   significantly from the amounts presented.

   Concentration  of  Credit  Risk - The  financial  instruments,
   -------------------------------
   which  potentially  subject the Company  to  concentration  of
   credit risk, consist principally of commercial paper which  is
   included  in cash and cash equivalents and accounts and  notes
   receivable.  The Company grants credit to customers  based  on
   an  evaluation  of the customer's financial condition  and  in
   certain  instances obtains collateral in the form of liens  on
   both  business and personal assets of its customers.  Exposure
   to  losses  on  receivables is principally dependent  on  each
   customer's financial condition.  Collection of receivables  is
   dependent upon many factors beyond the control of the  Company
   and,  in  some  cases,  beyond the control  of  the  Company's
   customers, such as the strength of the economy and many  other
   factors.   The  Company controls its exposure to credit  risks
   through   credit  approvals,  credit  limits  and   monitoring
   procedures and establishes allowances for anticipated  losses.
   There can be no assurance the actual future losses will be  in
   amounts  greater or less than amounts that have been  provided
   in  the  financial statements.  If actual future losses  occur
   in  amounts  greater than established allowances, such  losses
   could   have  a  material  adverse  impact  on  the  Company's
   financial condition, results of operations and cash flows.

   Estimates  - The preparation of these financial statements  in
   ---------
   conformity   with  generally  accepted  accounting  principles
   requires  the  Company  to  make  estimates,  assumptions  and
   judgments   that  affect  the  reported  amounts  of   assets,
   liabilities,  revenues and expenses, and  the  disclosure  and
   reported amounts of contingent assets and liabilities  at  the
   dates  of  these financial statements.  Significant  estimates
   which   are   reflected   in   these  Consolidated   Financial
   Statements  relate  to,  among other  things,  allowances  for
   doubtful  accounts and notes receivable, amounts reserved  for
   obsolete and slow-moving inventories, net realizable value  of
   inventories,  estimates of future cash flows  associated  with
   assets,  asset impairments, and useful lives for  depreciation
   and   amortization.   On  an  on-going  basis,   the   Company
   evaluates  its estimates, assumptions and judgments, including
   those  related to allowances for doubtful accounts  and  notes
   receivable,   inventories,  intangible  assets,   investments,
   other  receivables, expenses, income items, income  taxes  and
   contingencies. The Company bases its estimates  on  historical
   experience and on various other assumptions that are  believed
   to  be  reasonable  under the circumstances,  the  results  of
   which  form the basis for making judgments about the  carrying
   values    of   assets,   liabilities,   certain   receivables,
   allowances, income items, expenses, and contingent assets  and
   liabilities that are not readily apparent from other  sources.
   Actual   results   may  differ  from  these  estimates   under
   different  assumptions or conditions,  and  there  can  be  no
   assurance that estimates, assumptions and judgments  that  are
   made will prove to be valid in light of future conditions  and
   developments.   If  such estimates, assumptions  or  judgments
   prove  to  be incorrect in the future, the Company's financial
   condition,  results  of operations and  cash  flows  could  be
   materially adversely affected.

   The   Company  believes  the  following  critical   accounting
   policies  are  based upon its more significant  judgments  and
   estimates   used  in  the  preparation  of  its   Consolidated
   Financial Statements:

   The  Company  maintains allowances for doubtful  accounts  and
   notes  receivable  for  estimated losses  resulting  from  the
   failure  of its customers to make payments when due or  within
   a   reasonable  period  of  time  thereafter.   Although  many
   factors  can affect the failure of customers to make  required
   payments  when due, one of the most unpredictable is  weather,
   which  can have a positive as well as negative impact  on  the
   Company's  customers.   For example,  severe  or  catastrophic
   weather  conditions,  such as hailstorms or  hurricanes,  will
   generally  increase  the level of activity  of  the  Company's
   customers,  thus  enhancing their  ability  to  make  required
   payments.   On  the  other hand, weather  conditions  such  as
   heavy  rain  or  snow  or ice storms will  generally  preclude


                                   F-10

<PAGE>


   customers from installing the Company's products on job  sites
   and  collecting  from  their own customers,  which  conditions
   could  result  in the inability of the Company's customers  to
   make  payments  when  due.   The  reserve  for  allowance  for
   doubtful  accounts and notes receivable is intended to  adjust
   the  value of the Company's accounts and notes receivable  for
   possible  credit  losses  as  of the  balance  sheet  date  in
   accordance  with  generally  accepted  accounting  principles.
   Calculating  such  allowances involves  significant  judgment.
   The  Company estimates its reserves for allowance for doubtful
   accounts  and  notes  receivable by  applying  estimated  loss
   percentages   against   the  Company's   aging   of   accounts
   receivables  and  against its notes receivable  based  on  the
   Company's  estimate of the credit worthiness of  the  customer
   from  which  the note is payable.  Changes to such  allowances
   may  be  required if the financial condition of the  Company's
   customers deteriorates or improves or if the Company   adjusts
   its  credit standards, thereby resulting in reserve or  write-
   off  patterns that differ from historical experience.   Errors
   by  the  Company  in  estimating its  allowance  for  doubtful
   accounts  and  notes receivable could have a material  adverse
   affect  on  the  Company's  financial  condition,  results  of
   operations, and cash flows.

   The   Company  writes  down  its  inventories  for   estimated
   obsolete  or  slow-moving inventories equal to the  difference
   between  the  cost  of inventories and their estimated  market
   value  based upon assumed market conditions.  If actual market
   conditions   are   less  favorable  than  those   assumed   by
   management, additional inventory write-downs may be  required.
   If   inventory   write-downs  are  required,   the   Company's
   financial  condition, results of operations,  and  cash  flows
   could be materially adversely affected.

   The  Company  tests  for impairment of the carrying  value  of
   goodwill  annually  and when indicators of  impairment  occur.
   Indicators of impairment could include, among other things,  a
   significant  change  in  the  business  climate,  including  a
   significant  sustained  decline in an entity's  market  value,
   operating   performance  indicators,  competition,   sale   or
   disposition  of  a significant portion of the business,  legal
   or  other  factors.  In connection with the  annual  test  for
   impairment,  management  reviews  various  generally  accepted
   valuation  methodologies  for  valuing  goodwill.   Management
   reviewed  the  carrying value of the goodwill on  its  balance
   sheet  as  of  June  30, 2003 in light of the  fact  that  the
   Company's  stock  market  capitalization  of  its  outstanding
   equity  securities  as  of  that  date  was  below  its  total
   shareholders' equity (book value).  Management concluded  that
   the  market  price of the Company's common shares is  not  the
   best  indication  of  the fair market value  of  the  Company.
   Management  believes that, with respect to  the  Company,  the
   better indicator of fair market value results from the use  of
   the  discounted  estimated  future  cash  flow  method,  which
   includes  an estimated terminal value component.  This  method
   is  based  on management's estimates, which will vary  if  the
   judgments  and  assumptions  used  to  estimate  the   related
   business's  future  revenues, gross profit margins,  operating
   expenses,  interest  rates, and other  factors,  prove  to  be
   inaccurate.   If  such  judgments, assumptions  and  estimates
   prove  to  be incorrect, then the Company's carrying value  of
   goodwill  may  be overstated on the Company's  balance  sheet,
   and  the  Company's results of operations may not reflect  the
   impairment  charge that would have resulted if such judgments,
   assumptions  and  estimates  had been  correct.   Any  failure
   correctly  to  write down goodwill for impairment  during  any
   period  could have a material adverse effect on the  Company's
   future financial condition and results of operations, as  well
   as   cause  historical  statements  of  operations,  financial
   condition, and cash flows to have been incorrectly  stated  in
   light of the failure correctly to  take any such write downs.

   In  conducting  the required goodwill impairment  test  as  of
   June  30,  2003,  management  identified  reporting  units  by
   determining  the  units  to which the goodwill  applied.   The
   test  was  required  by  only one of the  Company's  operating
   subsidiaries.  As a result of the required test,  the  Company
   determined that no write down of its goodwill was required  at
   June  30,  2003.   While the Company does not  use  its  stock
   market  capitalization  to determine the  fair  value  of  its
   reporting  unit, the Company expects convergence  between  its
   stock  market  value  capitalization and its  discounted  cash
   flow  valuation to occur over time or from time to  time.   If
   this  does  not  occur, it may signal the need for  impairment
   charges.

   The  Company seeks revenue and income growth by expanding  its
   existing  customer base, by opening new distribution  centers,
   and  by  pursuing strategic acquisitions that meet its various
   criteria.   If  the Company's evaluation of the prospects  for
   opening  a  new distribution center or of acquiring a  company
   misjudges  its  estimated  future revenues  or  profitability,
   such  a  misjudgment could impair the carrying  value  of  the
   investment  and  result in operating losses for  the  Company,
   which  could materially adversely affect the Company's results
   of operations, financial condition, and cash flows.


                                   F-11

<PAGE>


   The Company files income tax returns in every jurisdiction  in
   which the Company has reason to believe it is subject to  tax.
   Historically,  the Company has been subject to examination  by
   various   taxing  jurisdictions.   To  date,  none  of   these
   examinations  has  resulted in any  material  additional  tax.
   Nonetheless,  any tax jurisdiction may contend that  a  filing
   position claimed by the Company regarding one or more  of  its
   transactions  is  contrary  to  that  jurisdiction's  laws  or
   regulations.   In  any  such  event,  the  Company  may  incur
   charges   to  its  income  statement  which  could  materially
   adversely affect its net income and may incur liabilities  for
   taxes  and  related  charges which  may  materially  adversely
   affect its financial condition.

   Shipping  and  Handling Fees and Costs - The Company  includes
   --------------------------------------
   shipping   and   handling  charges  billed  to  customers   in
   revenues.   The  related costs associated  with  shipping  and
   handling are included as a component of cost of sales.

   Advertising Costs - The Company expenses advertising costs  as
   -----------------
   incurred.  The Company's advertising expenses are net  of  the
   portion of advertising costs shared with manufacturers.

   Revenue  Recognition  - The Company recognizes  revenues  when
   --------------------
   the  earnings process is complete, title is transferred to the
   customer, and when collectability of the fixed sales price  is
   reasonably  assured.  Title to material  sold  to  a  customer
   transfers to the customer upon delivery to the customer's  job
   site   or   upon  pick  up  by  the  customer  at  a   Company
   distribution center.

   Stock-based  Compensation  -  The Company  applies  Accounting
   -------------------------
   Principles  Board Opinion No. 25, Accounting for Stock  Issued
   to  Employees,  and related interpretations in accounting  for
   its  Stock Option Plan.  Accordingly, no compensation  expense
   has  been  recognized  for the Company's  Stock  Option  Plan,
   since  the exercise price of the Company's stock option grants
   was  the  fair  market value of the underlying  stock  on  the
   dates   of  the  grants.   Had  compensation  costs  for   the
   Company's Stock Option Plan been determined based on the  fair
   value  at the grant dates consistent with the method  of  SFAS
   No.  123,  Accounting for Stock-Based Compensation,  and  SFAS
   No.  148,  Accounting for Stock-Based Compensation -Transition
   and  Disclosure, the Company's net (loss) income and basic and
   diluted  net  (loss) income per share would have been  reduced
   to the pro forma amounts indicated below:

<TABLE>
<CAPTION>

                                             Year Ended June 30,
                                   2003           2002             2001
<S>                            <C>             <C>             <C>
Net (loss) income:
  As restated                  $ (2,026,555)   $ 1,391,164     $   847,842
  Compensation costs               (103,394)      (103,394)        (93,489)
                               ------------    -----------     -----------
  Proforma                     $ (2,129,949)   $ 1,287,770     $   754,353
                               ============    ===========     ===========

Basic and diluted net (loss)
  income per share:
  As restated                  $       (.21)   $       .16     $       .10
  Compensation costs                   (.01)          (.01)           (.01)
                               ============    ===========     ===========
  Proforma                     $       (.22)   $       .15     $       .09
                               ============    ===========     ===========
</TABLE>


   The  Company  used the Black-Scholes model with the  following
   assumptions  in  the  calculation  of  fair  value:  risk-free
   interest  rate of 5.5%, expected life of three years, expected
   volatility of 19.72% and a dividend yield of 0%.

   Reclassifications     and     Restatements      -      Certain
   ------------------------------------------
   reclassifications  have  been  made  in  the  prior   periods'
   financial   statements   in   order   to   conform   to    the
   classifications  in  the  current periods.   The  consolidated
   balance  sheet of the Company and subsidiaries as of June  30,
   2002,  and  the related consolidated statements of operations,
   shareholders'  equity and cash flows for the two  years  ended
   June  30,  2002 have been restated for the change  during  the
   fourth  quarter  of  2003 in the method of  inventory  costing
   from  LIFO to the average cost method for the inventories  not
   previously accounted for on the average cost method.

   Comprehensive  Income  -  The Company  has  no  components  of
   ---------------------
   comprehensive income except for net income.




                                   F-12

<PAGE>


   Significant Vendors - During the fiscal years ended  June  30,
   -------------------
   2003,  2002 and 2001 the Company purchased approximately  19%,
   19%  and  18%,  respectively, of its product  lines  from  one
   supplier,  approximately  10% of  its  product  lines  from  a
   second  supplier in fiscal 2003, and 13% of its product  lines
   from  a third supplier in fiscal 2001.  Since similar products
   are  currently  available from other  suppliers,  the  Company
   believes  that the loss of these suppliers would  not  have  a
   long-term material adverse effect on the Company's business.

   Cash  and Cash Equivalents - The Company considers any  highly
   --------------------------
   liquid  investments with an original maturity of three  months
   or  less at date of acquisition to be cash equivalents.   Cash
   equivalents amounted to approximately $250,000 and  $4,255,000
   at June 30, 2003 and 2002, respectively.

   Risks - The Company purchases the products that it sells  from
   -----
   many  vendors  and sells those products to many  thousands  of
   customers,  primarily building contractors and subcontractors,
   as  well  as  builders.   In doing so, the  Company  maintains
   large   inventories   of  products  and  carries   substantial
   accounts  and  notes  receivable  from  its  customers.    The
   Company  has also built its business through acquisitions  and
   has  substantial amounts of goodwill listed as an asset on its
   financial  statements.  The nature of the  Company's  business
   is  seasonal, and, to some degree, it is weather related.  The
   Company carries insurance to insure against certain risks.
   The  Company's  business is subject to many risks,  including,
   but  not  limited to: changes in the cost or  pricing  of,  or
   demand   for,  the  Company's  or  the  Company's   industry's
   distributed  products; the inability to collect  accounts  and
   notes  receivables when due or within a reasonable  period  of
   time  after  they become due or ever; increases in competitive
   pressures  in some or all of the Company's markets; misjudging
   the  future  profitability  of  an  acquired  company  or  new
   distribution  center;  changes  in  accounting  policies   and
   principles,  or  other laws or rules, as  may  be  adopted  by
   regulatory  agencies or by the Financial Accounting  Standards
   Board;   general   economic  and  market  conditions,   either
   nationally  or  in  the markets in which the Company  conducts
   its business, may be less favorable than expected; changes  in
   terms  of  purchase  of products from the  Company's  vendors;
   interruptions  or cancellations of the supply or  availability
   of  products  or  significant increases in the  cost  of  such
   products;  reductions in the value of the Company's inventory;
   impairment  of the value of the Company's goodwill  and  other
   intangible  assets;  fluctuations in the  Company's  financial
   results  due to the seasonal nature of the Company's business;
   unsatisfactory performance of acquired companies  which  could
   lead  to impairment of the Company's goodwill; the ability  to
   find  and  maintain equity and debt financing when  needed  on
   terms  commercially reasonable to the Company; a loss that  is
   not  covered by the Company's insurance or that is  in  excess
   of  the Company's insurance coverage; changes in the Company's
   cost  of  doing business, including costs of fuel,  labor  and
   related benefits, occupancy, and the cost and availability  of
   insurance;  and the number of common shares that  the  Company
   has  outstanding  and the number of shares used  to  calculate
   its  basic  and diluted earnings per share which may  increase
   and  adversely affect its earnings per share calculation.  The
   occurrence  of any one of these and other risks could  have  a
   material  adverse impact on the Company's financial condition,
   results of operations and cash flows.

   Recently  Issued  Accounting  Pronouncements  -   The  Company
   --------------------------------------------
   adopted  SFAS  No.  144,  Accounting  for  the  Impairment  or
   Disposal of Long-Lived Assets, on July 1, 2002.  SFAS No.  144
   replaces SFAS No. 121, Accounting for the Impairment of  Long-
   Lived Assets and for Long-Lived Assets to be Disposed Of,  and
   establishes accounting and reporting standards for  long-lived
   assets to be disposed of by sale.  SFAS No. 144 requires  that
   those  assets be measured at the lower of carrying  amount  or
   fair value less cost to sell.  SFAS No. 144 also broadens  the
   reporting   of   discontinued  operations   to   include   all
   components   of  an  entity  with  operations  that   can   be
   distinguished  from  the  rest of  the  entity  that  will  be
   eliminated  from  the ongoing operations of the  entity  in  a
   disposal   transaction.   Management  has  made  the  required
   disclosures  for its discontinued operation and believes  that
   the  effect of adopting this pronouncement does not  otherwise
   have  a  material impact on the Company's financial condition,
   results of operations or cash flows.

   In  June  2002,  the FASB issued SFAS No. 146, Accounting  for
   Costs  Associated with Exit or Disposal Activities.  SFAS  No.
   146  addresses  financial accounting and reporting  for  costs
   associated  with  exit  or disposal activities  and  nullifies
   FASB's  EITF Issue No. 94-3, Liability Recognition for Certain
   Employee  Termination  Benefits and Other  Costs  to  Exit  an
   Activity    (including   Certain   Costs   Incurred    in    a
   Restructuring).  SFAS No. 146 requires that a liability for  a
   cost   associated  with  an  exit  or  disposal  activity   be
   recognized  when  the liability is incurred.   This  statement
   also  established that fair value is the objective for initial
   measurement of the liability.  The provisions of SFAS No.  146
   are  effective  for  exit  or  disposal  activities  that  are
   initiated after December 31, 2002.



                                   F-13

<PAGE>


   In  November 2002, the FASB issued Interpretation No. 45 ("FIN
   45"),  Guarantor's Accounting and Disclosure Requirements  for
   Guarantees,  Including Indirect Guarantees of Indebtedness  of
   Others.  This interpretation elaborates on the disclosures  to
   be  made  by  a guarantor in its interim and annual  financial
   statements  about  its  obligations under  certain  guarantees
   that  it  has  issued.  It also clarifies that a guarantor  is
   required  to  recognize, at the inception of  a  guarantee,  a
   liability  for the fair value of the obligation undertaken  in
   issuing the guarantee.  The disclosure requirements of FIN  45
   are   effective   for   interim  and  annual   periods   after
   December   15,  2002,  and  the  Company  has  adopted   those
   requirements  for  its  financial  statements.   The   initial
   recognition  and initial measurement requirements  of  FIN  45
   were   effective  prospectively  for  guarantees   issued   or
   modified after December 31, 2002.  The Company is not a  party
   to  any  agreement in which it is a guarantor of  indebtedness
   of  others.  Accordingly, this pronouncement currently is  not
   applicable to the Company.

   In  January  2003,  the  FASB issued  Interpretation  No.  46,
   Consolidation   of   Variable   Interest   Entities    -    an
   Interpretation  of ARB No. 51 ("FIN 46").   FIN  46  addresses
   consolidation  by  business enterprises of  variable  interest
   entities  (formerly  special purpose entities  or  SPEs).   In
   general,   a   variable  interest  entity  is  a  corporation,
   partnership,  trust  or  any other legal  structure  used  for
   business  purposes  that  either  (a)  does  not  have  equity
   investors with voting rights or (b) has equity investors  that
   do  not  provide sufficient financial resources for the entity
   to  support its activities.  The objective of FIN 46 is not to
   restrict the use of variable interest entities but to  improve
   financial  reporting  by  companies  involved  with   variable
   interest  entities.   FIN  46  requires  a  variable  interest
   entity  to  be  consolidated by a company if that  company  is
   subject  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
   consolidation  requirements  of  FIN  46  apply  to   variable
   interest  entities  created  after  January  31,  2003.    The
   consolidation  requirements apply to  older  entities  in  the
   first  fiscal year or interim period beginning after June  15,
   2003.   However, certain of the disclosure requirements  apply
   to   financial  statements  issued  after  January  31,  2003,
   regardless   of   when  the  variable  interest   entity   was
   established.  The Company does not have any variable  interest
   entities   as   defined   in  FIN   46.    Accordingly,   this
   pronouncement currently is not applicable to the Company.

   In  March  2003,  the  EITF issued final  transition  guidance
   regarding  accounting for vendor allowances  EITF  No.  02-16.
   The  EITF  decision to allow retroactive application was  made
   by  the task force on March 20, 2003.  As a result of the EITF
   change  to  its  transition, the Company has adopted  the  new
   guidance  on  a  retroactive  basis  to  July  1,  2002,   the
   beginning of its fiscal year ending June 30, 2003.

   In   adopting  the  new  guidance,  the  Company  changed  its
   previous  method  of  accounting, which  was  consistent  with
   generally  accepted accounting principles. Under the  previous
   accounting  method,  vendor  allowances  were  treated  as   a
   reduction  of cost of sales when such allowances were  earned.
   Under  the  new  accounting guidance,  vendor  allowances  are
   considered   a   reduction  in  inventory  and  a   subsequent
   reduction  in cost of goods sold when the related  product  is
   sold.

   The  adoption of EITF 02-16, effective July 1, 2002,  resulted
   in  a cumulative effect of accounting change of $413,000,  net
   of  $222,000  of  taxes, to reflect the  deferral  of  certain
   allowances as a reduction of inventory cost.

   In  April  2003,  the FASB issued SFAS No. 149,  Amendment  of
   Statement   133   on   Derivative  Instruments   and   Hedging
   Activities.   SFAS  No.  149 amends  and  clarifies  financial
   accounting   and   reporting   for   derivative   instruments,
   including  certain  derivative instruments embedded  in  other
   contracts  (collectively referred to as derivatives)  and  for
   hedging  activities under SFAS Statement No.  133,  Accounting
   for   Derivative  Instruments  and  Hedging  Activities.   The
   Company  has  not  used derivative instruments  and  does  not
   expect  the  adoption of this statement  to  have  a  material
   effect on the Company.

   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 certain  financial
   instruments  with  characteristics  of  both  liabilities  and
   equity.   It  requires  that an issuer  classify  a  financial
   instrument  that  is within its scope as a  liability  (or  an
   asset  in  some  circumstances).   It  is  effective  at   the
   beginning  of  the first interim period beginning  after  June
   15,   2003.    Management  believes   that   the   effect   of
   implementing  this  pronouncement will  not  have  a  material
   impact  on  the  Company's  financial  condition,  results  of
   operations or cash flows.



                                   F-14

<PAGE>


2.   ACQUISITIONS

   On  July  8,  1997, effective as of July 1,  1997,  JEH  Eagle
   acquired  the business and substantially all of the assets  of
   JEH  Company,  Inc.  ("JEH  Co."), engaged  in  the  wholesale
   distribution   of   roofing  supplies  and  related   products
   utilized   primarily  in  the  construction   industry.    The
   purchase  price, as adjusted, including transaction  expenses,
   was  $14,767,852  consisting of $13,878,000 in  cash,  net  of
   $250,000 due from JEH Co., and a five-year, 6% per annum  note
   in  the original principal amount of $864,852.  As of June 30,
   2002,  the  principal  amount of  the  note  was  adjusted  to
   $655,284  to  reflect  an  offset  of  certain  related  party
   transactions  and was due and paid on October  15,  2002  with
   interest  at  the rate of 8.75% per annum from  July  1,  2002
   (Note  9).   The purchase price and the note were  subject  to
   further  adjustment  under certain conditions.   Further,  JEH
   Eagle  was  obligated for substantial additional payments  if,
   among  other  factors, the business acquired attained  certain
   levels  of  income,  as defined, during the  five-year  period
   ended  June 30, 2002.  Upon consummation of the Offering,  the
   Company  issued  300,000  of its common  shares  to  James  E.
   Helzer, the owner of JEH Co. and President of the Company,  in
   fulfillment    of   certain   of   such   future    additional
   consideration.  For the fiscal years ended June 30,  2001  and
   2000, approximately $315,000 and $1,947,000, respectively,  of
   additional consideration was paid to JEH Co. or its  designee.
   All  of  such additional consideration increased goodwill.  No
   additional  consideration  was  payable  to  JEH  Co.  or  its
   designee  for  fiscal  2002, and the  Company  had  no  future
   obligation  for such additional consideration as of  June  30,
   2002.

   On  October  22,  1998, MSI Eagle acquired  the  business  and
   substantially all of the assets of Masonry Supply, Inc.  ("MSI
   Co."),  engaged  in  the  wholesale  distribution  of  masonry
   supplies  and  related  products  utilized  primarily  in  the
   construction  industry.   The  purchase  price,  as  adjusted,
   including  transaction expenses, was $8,537,972 consisting  of
   $6,492,000 in cash and a five-year, 8% per annum note  in  the
   principal  amount of $2,045,972.  The purchase price  and  the
   note   were  subject  to  further  adjustment  under   certain
   conditions.   The note was paid in full in March 1999  out  of
   the   proceeds  of  the  Offering.   Further,  MSI  Eagle  was
   obligated for potentially substantial additional payments  if,
   among  other  factors, the business acquired attained  certain
   levels  of  income,  as defined, during the  five-year  period
   ended  June 30, 2003.  Upon the consummation of the  Offering,
   the  Company issued 200,000 of its common shares, and,  as  of
   July  1, 1999, the Company issued 60,000 of its common  shares
   to  Gary  L. Howard, the designee and owner of MSI Co.  and  a
   former  executive  officer of the Company, in  fulfillment  of
   certain  of  such  future additional consideration.   For  the
   fiscal  years  ended  June  30, 2002 and  2001,  approximately
   $260,000    and   $226,000,   respectively,   of    additional
   consideration  was paid to MSI Co. or its designee.   For  the
   fiscal  year  ended June 30, 2003, approximately  $260,000  of
   additional  consideration  is  payable  to  MSI  Co.  or   its
   designee.   All  of  such  additional consideration  increased
   goodwill.



                                   F-15

<PAGE>


3. CHANGE IN ACCOUNTING METHOD

   During  the fourth quarter of its fiscal year ended  June  30,
   2003,  the  Company  changed its method of  inventory  costing
   from  LIFO to the average cost method for all inventories  not
   previously accounted for on the average cost method.   Results
   of  continuing operations and discontinued operation for prior
   periods  have  been restated to reflect this change.  The  new
   method  was adopted to provide a better measure of the current
   value  of  inventory,  a  more  accurate  reflection  of   the
   Company's  financial  and liquidity positions,  and  a  better
   matching  of  costs  with revenues. The balances  of  retained
   earnings  as  of  June  30,  2000, 2001  and  2002  have  been
   restated  for  the  effect of applying retroactively  the  new
   method  of  accounting.  This change in  method  of  inventory
   costing  increased retained earnings as of  July  1,  2000  by
   $451,000,  net  of  taxes.  If the Company  had  continued  to
   apply  LIFO  in  fiscal 2003, the impact on net  income  would
   have  been  immaterial.   The  following  table  presents  the
   effect  of  the change on previously reported net  income  and
   basic  and  diluted net income per share for the fiscal  years
   ended June 30, 2002 and 2001:

<TABLE>
<CAPTION>

                                             Year Ended June 30,
                                              2002         2001
<S>                                        <C>           <C>
Net income, as previously reported         $ 1,385,164   $   848,842
Change in accounting method, net of taxes        6,000        (1,000)
                                           -----------   -----------
Net income, as restated                    $ 1,391,164   $   847,842
                                           ===========   ===========


Basic and diluted net income per share,
  as previously reported                   $       .16   $       .10
Change in accounting method                      -             -
                                           -----------   -----------
Basic and diluted net income per share,
  as restated                              $       .16   $       .10
                                           ===========   ===========
</TABLE>


4.   PROPERTY AND EQUIPMENT

   The major classes of property and equipment are as follows:


<TABLE>
<CAPTION>
                                                    June 30,           Estimated
                                               2003          2002     Useful Lives
<S>                                        <C>           <C>          <C>

Furniture, fixtures and equipment          $ 1,973,644   $ 2,037,906     5 years
Automotive equipment                         4,505,564     4,840,314    5-7 years
Leasehold improvements                       2,149,442     2,060,037    10 years
Assets acquired under capitalized leases       692,890       700,267      1 year
                                           -----------   -----------
                                             9,321,540     9,638,524
Less: Accumulated depreciation and
  amortization                               6,356,905     6,035,627
                                           -----------   -----------
                                           $ 2,964,635   $ 3,602,897
                                           ===========   ===========
</TABLE>


5.   ACCOUNTS AND NOTES RECEIVABLE - TRADE

   Accounts and notes receivable - trade are as follows:



                                   F-16

<PAGE>

<TABLE>
<CAPTION>

                                                  June 30,
                                              2003         2002
<S>                                        <C>           <C>

Accounts receivable                        $ 41,597,677   $ 43,320,881
Notes receivable                              6,185,822        106,741
                                           ------------   ------------
                                             47,783,499     43,427,622
Allowance for doubtful accounts              (4,799,089     (4,551,675)
                                           ------------   ------------
                                           $ 42,984,410   $ 38,875,947
                                           ============   ============

Current                                    $ 40,176,822   $ 38,875,947
Long-term                                     2,807,588         -
                                           ------------   ------------
                                           $ 42,984,410   $ 38,875,947
                                           ============   ============
</TABLE>


   During  fiscal  2003,  the Company reclassified  approximately
   $2.8  million,  net  of  allowance for doubtful  accounts  and
   notes  receivable, from current accounts and notes  receivable
   to  long-term  notes  receivable.   Management  met  with  the
   Company's  largest  customers  which  were  unable   to   make
   sufficient  payments on their accounts when due  or  within  a
   reasonable  period of time after they became due to  negotiate
   a  formal  payment  schedule on terms that  would  enable  the
   Company  to  begin collecting on past due accounts  and  notes
   receivable in amounts reasonably satisfactory to the  Company.
   As  a result, the Company accepted notes from these customers,
   with  personal  guarantees and additional collateral  wherever
   possible.  These notes bear interest at rates ranging from  6%
   to  18%  with repayment periods ranging between 6  months  and
   slightly less than 10 years as of June 30, 2003.  Those  notes
   receivable  with  maturity dates longer than  12  months  were
   reclassified  to long-term.  Given the uncertainty  associated
   with  these  notes  receivable,  the  Company  is  recognizing
   interest income on these notes on a cash basis.

6.   INCOME TAXES

   Components of the (benefit) provision for income taxes are  as
   follows:

<TABLE>
<CAPTION>

                                           Year Ended June 30,
                                   2003            2002           2001
<S>                           <C>             <C>              <C>
Current:
  Federal                     $  (871,000)    $  1,406,903     $    637,883
  State and local                 (19,000)         135,000          113,000
Deferred                           35,000         (593,903)         (28,883)
                              -----------     ------------     ------------
                              $  (855,000)    $    948,000     $    722,000
                              ===========     ============     ============
</TABLE>


   A  reconciliation  of  income taxes at the  federal  statutory
   rate and the amounts provided, is as follows:

<TABLE>
<CAPTION>

                                           Year Ended June 30,
                                   2003            2002           2001
<S>                           <C>             <C>              <C>

Tax using the statutory rate  $  (774,000)    $    916,000     $    615,000
State and local income taxes      (13,000)          90,000           74,000
Other                             (68,000)         (58,000)          33,000
                              -----------     ------------     ------------
                              $  (855,000)    $    948,000     $    722,000
                              ===========     ============     ============
</TABLE>


   Temporary  differences which give rise to a net  deferred  tax
   asset are as follows:


                                   F-17

<PAGE>

<TABLE>
<CAPTION>
                                                    June 30,
                                              2003              2002
<S>                                       <C>               <C>

Deferred tax assets:
  Provision for doubtful accounts         $  1,824,000      $  1,730,000
  Inventory capitalization                      -                180,000
  Other                                         47,000              -
                                          ------------      ------------
                                             1,871,000         1,910,000
                                          ------------      ------------
Deferred tax liability:
  Goodwill                                    (998,000)         (676,000)
  Depreciation                                (270,000)         (470,000)
  Inventory valuation allowance               (251,000)             -
  Inventory method change                     (205,000)         (273,000)
  Other                                        (83,000)             -
                                          ------------      ------------
                                            (1,807,000)       (1,419,000)
                                          ------------      ------------

Net deferred tax asset                    $     64,000      $    491,000
                                          ============      ============
</TABLE>






















                                   F-18

<PAGE>


   Management  believes that no valuation allowance  against  the
   net  deferred  tax asset is necessary.  The 2002 deferred  tax
   liability  has been restated to reflect the cumulative  effect
   of  the change in the method of inventory costing from LIFO to
   average  cost.   The  Company has  a  net  operating  loss  of
   approximately  $2.1  million for  2003  which  can  be  offset
   against  prior years' income taxes, resulting in current  year
   federal   and  state  tax  refunds  aggregating  approximately
   $770,000.

 7.   LONG-TERM DEBT

   Long-term debt consists of the following:

<TABLE>
<CAPTION>


                                                                    June 30,
                                                              2003            2002
<S>                                                       <C>             <C>
Variable rate collateralized revolving credit note (A)    $ 41,796,137    $ 38,641,438

Variable rate collateralized equipment note (A)                323,654         804,654

Variable rate collateralized term note (A)                   1,036,900       1,480,900

Capitalized equipment lease obligations, at
  various rates, for various terms through 2003                   -            125,540

8.50% equipment loan, payable in monthly
  installments through February 13, 2003                          -             32,346

8.50% equipment loan, payable in monthly
  installments through April 23, 2003                             -             15,668

8.50% equipment loan, payable in monthly
  installments through April 27, 2003                             -              7,740

9.25% equipment loan, payable in monthly
  installments through November 6, 2004, paid
  in full in August 2002                                          -              8,429

9.25% equipment loan, payable in monthly
  installments through September 4, 2004                         6,584          11,691

8.25% equipment loan, payable in monthly
  installments through July 1, 2003                                662           8,260

8.25% equipment loan, payable in monthly
  installments through August 1, 2003                            2,408          16,177

8.226% equipment loan, payable in monthly
  installments through August 1, 2003                            4,844          61,173

6.50% equipment loan, payable in monthly
  installments through September 4, 2006                        27,830          35,274

7.25% equipment loan, payable in monthly
  installments through May 2, 2007                              11,234          13,627

Variable rate equipment loan, payable in monthly
  installments through May 2, 2007 (4.25% at
  June 30, 2003)                                               337,639         407,518
                                                          ------------    ------------
                                                            43,547,892      41,670,435
Less: Current portion of long-term debt                        860,000       1,245,000
                                                          ------------    ------------
                                                          $ 42,687,892    $ 40,425,435
                                                          ============    ============
</TABLE>


   (A)  In June 2000, and as subsequently amended, with the last
        amendment dated as of May 12, 2003, the Company's credit
        facilities were consolidated into an amended, restated and
        consolidated loan agreement with the Company's subsidiaries and
        limited partnership as borrowers.  The loan agreement provides a
        credit facility of  $44,975,000, including up to $8 million in
        borrowing available for acquisitions (subject to an adequate
        borrowing base and other conditions).  The credit facility bears
        interest as follows (with the alternatives at the borrowers'
        election):


                                   F-19

<PAGE>

        *   Equipment Term Note - Libor (as defined), plus two and one-
            half (2.5%) percent, or the lender's Prime Rate (as defined),
            plus one-half of one (1/2%) percent.
        *   Acquisition Term Note - Libor, plus two and three-fourths
            (2.75%) percent, or the lender's Prime Rate, plus three-
            fourths of one (3/4%) percent.
        *   Revolving Credit Loans - Libor, plus two (2%) percent or the
            lender's Prime Rate.


        The  credit facility is collateralized by substantially
        all  of  the  tangible  and intangible  assets  of  the
        borrowers,  is guaranteed by the Company and originally
        was  to  mature  on  October  21,  2003.    The  credit
        facility   contains   an  evergreen   provision   which
        provides  for  an automatic one-year extension  of  the
        maturity  date  provided either the  borrowers  or  the
        lender  does  not notify the other in  writing  of  its
        intention  not  to  renew  within  180  days   of   the
        scheduled  maturity date.  Since neither the  borrowers
        nor  the  lender provided the other with  the  required
        notice,  the  maturity date of the credit facility  has
        been extended to October 21, 2004.

        The   credit   facility    contained    two    specific
        financial    covenants   in   addition   to    standard
        affirmative  and  negative  covenants.   The   specific
        financial  covenants required that  the  borrowers  (a)
        maintain  minimum  Adjusted  Tangible  Net  Worth,   as
        defined,  of not less than an amount equal  to  80%  of
        the  actual Net Worth, as defined, as shown on the June
        30,  1999  balance  sheets of the  borrowers;  and  (b)
        achieve  Cash  Flow,  as  defined,  of  not  less  than
        $300,000  for the trailing 12-month periods  ending  as
        of  each  calendar  quarter.   The  borrowers  were  in
        compliance  with  the  Minimum  Adjusted  Tangible  Net
        Worth   covenant  but  did  not  meet  the  Cash   Flow
        requirement  as of March 31, 2003.  By an amendment  to
        the  loan  agreement  dated as of  May  12,  2003,  the
        borrowers received a waiver, and certain terms  of  the
        loan  agreement were modified.  The Cash Flow financial
        covenant  was  eliminated in its entirety and  replaced
        with  a  Fixed  Charge Coverage Ratio, as defined;  the
        Applicable   Inventory  Sublimit,   as   defined,   was
        increased  to  $22.5 million from $20  million  through
        July  31,  2003;  the amount of aggregate  Rentals,  as
        defined,  for  property and equipment  under  operating
        leases during any current or future consecutive twelve-
        month  period  was  increased to  $7  million  from  $6
        million;  and  certain definitions were  changed.   The
        Company  was  in compliance with all such covenants  at
        June 30, 2003.

        The   term   loan   is   payable   in   equal   monthly
        installments,  each in the amount of  $42,000,  with  a
        balloon payment due on the earlier of November 1,  2005
        or  the  end of the loan agreement's initial or renewal
        term.

        The   equipment  loan  is  payable  in  equal   monthly
        installments,  each in the amount of  $37,000,  with  a
        balloon  payment due on the earlier of August  1,  2004
        or  the  end of the loan agreement's initial or renewal
        term.

        The  aggregate future maturities of long-term debt  are
        as follows:

        Year Ending
         June 30,                               Amount

          2004                               $    860,000
          2005                                 42,530,000
          2006                                    120,000
          2007                                     37,892
                                             ------------
                                             $ 43,547,892
                                             ============


8.   COMMITMENTS AND CONTINGENCIES

 a.   The Company and its subsidiaries have entered into various
      written employment agreements which expire at various times
      through June 2006.  Pursuant to such agreements, the annual base
      compensation payable aggregates approximately $1,875,000.

 b.   The  Company's subsidiaries have a defined contribution
      retirement plan covering eligible employees.  The plan provides
      for  contributions  at the discretion of the  subsidiaries.
      Contributions in the amounts of approximately $159,000, $126,000
      and $102,000 were made for fiscal years 2003, 2002 and 2001,
      respectively.


                                   F-20

<PAGE>


 c.   At  June 30, 2001, the Company and its subsidiaries were
      liable under various long-term leases for property and automotive
      and other equipment (including leases with related parties) which
      expire on various dates through 2009.  Certain of the leases
      include options to renew.  In addition, real property leases
      generally provide for payment of taxes and other occupancy costs
      and may provide for the payment of costs of maintenance and
      repairs.  Rent expense charged to operations in fiscal years
      2003, 2002 and 2001 was approximately $6,995,000, $6,013,000 and
      $5,099,000, respectively, which includes taxes and  various
      occupancy costs, as well as rent for equipment under short-term
      leases (less than one year).

      The  approximate  future minimum rental  commitments  under
      all of the above leases are as follows:

      Year Ending
       June 30,                                 Amount

        2004                                 $  6,467,000
        2005                                    5,425,000
        2006                                    4,120,000
        2007                                    2,764,000
        2008                                    1,395,000
     Thereafter                                   916,000
                                             ------------
     Total future minimum rental
       commitments                           $ 21,087,000
                                             ============


      See  Note  9  for  information on  lease  obligations  with
      related parties.

  d.  The Company is involved in certain litigation arising in the
      ordinary course of business.  Management believes that  the
      ultimate  resolution of such litigation  will  not  have  a
      significant impact on the Company's financial condition and
      results of operations.

9. TRANSACTIONS WITH THE COMPANY AND OTHER RELATED PARTIES

   The  Chief  Executive Officer and Chairman  of  the  Board  of
   Directors of the Company is an officer and a director of  TDA;
   the  Executive  Vice  President, Secretary,  Treasurer,  Chief
   Financial  Officer and a director of the Company  is  also  an
   officer  and  a director of TDA; and another director  of  the
   Company is also a director of TDA.

   The  Company had entered into an agreement pursuant  to  which
   TDA  provided the Company with certain services including  (i)
   managerial,    (ii)   strategic   planning,   (iii)    banking
   negotiations,  (iv)  investor  relations,  and  (v)   advisory
   services  relating to acquisitions for a five-year term  which
   commenced  in  July  1997.  The monthly fee,  the  payment  of
   which commenced upon the consummation of the Offering and  the
   Acquisitions,  for the foregoing services  was  $3,000.   This
   agreement expired on June 30, 2002.

   The  Company also entered into an agreement pursuant to  which
   TDA  provided the Company with office space and administrative
   services  on  a  month-to-month basis.  The monthly  fee,  the
   payment  of  which  commenced upon  the  consummation  of  the
   Offering and the Acquisitions, for the foregoing services  was
   $3,000.  This agreement was terminated on June 30, 2002.

   Commencing  July  1, 2002, the Company began  to  pay  to  TDA
   seventy-five    (75%)   percent   of   the   occupancy    cost
   (approximately  $4,500 per month) for its New  York  corporate
   executive  offices,  and seventy-five  (75%)  percent  of  the
   remuneration  and  benefits  of its  New  York  administrative
   assistant (approximately $4,500 per month), and TDA  began  to
   pay   twenty-five  (25%)  percent  of  such   occupancy   cost
   (approximately  $1,500  per  month),  and  twenty-five   (25%)
   percent  of  the  remuneration and benefits of  its  New  York
   administrative assistant (approximately $1,500 per  month)  in
   order  to  defray  any  expenses that  may  be  deemed  to  be
   attributable to TDA.  The current lease for the Company's  New
   York  corporate executive offices expired in October 2002 with
   TDA  as the named lessee.  A new lease was entered into by and
   between the Company and the landlord for these premises  at  a
   base  rental of approximately $6,900 per month with  customary
   additional rental charges (proportionate share of real  estate
   taxes,  electricity, etc.), of which TDA will continue to  pay
   twenty-five (25%) percent.

   JEH   Eagle   leases   several  of  its  distribution   center
   facilities  and  its executive offices from the  President  of
   the  Company  pursuant  to five-year written  leases  at  base
   annual rentals aggregating approximately $784,000.


                                   F-21

<PAGE>


   Eagle  operates  a  substantial portion of its  business  from
   facilities  leased from a subsidiary of TDA pursuant  to  ten-
   year   written  leases  at  base  annual  rentals  aggregating
   approximately $790,000.

   JEH  Eagle  leases  offices, showroom, warehouse  and  storage
   space  from a former executive officer of the Company and  his
   spouse  pursuant  to  a three-year written  lease  at  a  base
   annual rental aggregating approximately $112,000.

   JEH   Eagle  leases  a  distribution  center  from  a  limited
   liability  company fifty (50%) percent owned by a wholly-owned
   subsidiary  of TDA and fifty (50%) owned by the  President  of
   the  Company  and  his spouse pursuant to a five-year  written
   lease  at  a  base  annual  rental  aggregating  approximately
   $46,000.

   During  the  fiscal year ended June 30, 2003, JEH  Eagle  made
   sales aggregating approximately $767,000 to entities owned  by
   members  of  the  family  of  the President  of  the  Company.
   Management  believes that such sales were  made  on  terms  no
   less  favorable than sales made to independent third  parties.
   As  of  June  30, 2003, approximately $340,000 of  such  sales
   were owed to JEH Eagle.

   In   October   1998,  in  connection  with  the  purchase   of
   substantially  all of the assets and business of  MSI  Co.  by
   MSI Eagle, TDA lent MSI Eagle $1,000,000 pursuant to a 6% two-
   year note that was due in October 2000.  In October 2000,  the
   note  was converted into a $1,000,000 8.75% demand note.   TDA
   had  agreed  to  defer the interest payable on  the  old  note
   until  its  maturity.  In October 2000, interest on that  note
   was  paid  in  full.  Interest on the demand note  is  payable
   monthly.

   On  February  6, 2003, the Company entered into  a  Securities
   Purchase  Agreement  ("Securities  Purchase  Agreement")  with
   James  E. Helzer, the President, Chief Operating Officer,  and
   Vice  Chairman  of the Board of Directors of the  Company,  to
   sell   in   a  private  placement  transaction  (the   "Helzer
   Transaction"),  for  gross  proceeds  to  the  Company  of  $1
   million  (a)  1,000,000  authorized  but  previously  unissued
   common shares of the Company, and (b) warrants to purchase  up
   to  an additional 1,000,000 authorized but previously unissued
   common  shares  of the Company at an exercise price  of  $1.50
   per  share  exercisable for 5 years from the date of  issuance
   (the  "Helzer Warrant").  Although the closing price  for  the
   Company's  common shares at the close of business on  the  day
   before  the  Helzer  Transaction  closed  was  $0.81  and  the
   Company  received  two separate fairness  opinions  indicating
   that  the consideration received by the Company in the  Helzer
   Transaction was fair, Mr. Helzer will be able to benefit  from
   any  appreciation in the market price of the Company's  common
   shares.  On September 22, 2003, the last reported sales  price
   for the Company's common shares was $2.40 per share.

   In  February 2003, the Chairman and Chief Executive Officer of
   the  Company,  and  the  Executive Vice President,  Secretary,
   Treasurer  and  Chief Financial Officer of the  Company,  each
   agreed  to accept $100,000 of their cash compensation for  the
   fiscal  year ended June 30, 2003 in the form of 100,000  newly
   issued,  unregistered common shares of the Company in lieu  of
   such  cash  compensation.  These shares were issued April  11,
   2003.

10.  SHAREHOLDERS' EQUITY

   Preferred Shares - The preferred shares may be issued  in  one
   ----------------
   or  more series, the terms of which may be determined  at  the
   time  of  issuance by the Board of Directors of  the  Company,
   without  further  action  by  shareholders,  and  may  include
   voting  rights  (including the right to vote as  a  series  on
   particular   matters),  preferences  as   to   dividends   and
   liquidation,  conversion  and redemption  rights  and  sinking
   fund provisions.

   Common  Shares - Holders of common shares are entitled to  one
   --------------
   vote  for  each share held of record on each matter  submitted
   to  a vote of shareholders.  There is no cumulative voting for
   election  of  directors.  Subject to the prior rights  of  any
   series  of  preferred shares which may from time  to  time  be
   outstanding   and  to  limitations  imposed  by   any   credit
   agreements to which the Company is a party, holders of  common
   shares  are entitled to receive dividends when and if declared
   by  the  Board  of  Directors out of funds  legally  available
   therefor and, upon the liquidation, dissolution or winding  up
   of  the  Company, are entitled to share ratably in all  assets
   remaining after payment of liabilities and payment of  accrued
   dividends   and  liquidation  preferences  on  the   preferred
   shares,  if any.  Holders of common shares have no pre-emptive
   rights and have no rights to convert their common shares  into
   any other securities.

   Class  A  Non-Voting Common Shares - Holders of Class  A  Non-
   ----------------------------------
   Voting  Common  Shares are not entitled  to  vote  on  matters
   submitted to a vote of shareholders.  Except for the  lack  of
   voting  rights,  holders  of  the Class  A  Non-Voting  Common
   Shares  have  the  same rights as holders  of  common  shares.
   Without limiting the generality of the foregoing,  subject  to



                                   F-22

<PAGE>


   the  prior rights of any series of preferred shares which  may
   from  time  to time be outstanding and to limitations  imposed
   by  any  credit agreements to which the Company  is  a  party,
   holders  of  Class A Non-Voting Common Shares are entitled  to
   receive  dividends  when  and if  declared  by  the  Board  of
   Directors  out of funds legally available therefor  and,  upon
   the  voluntary  or  involuntary  liquidation,  dissolution  or
   winding  up of the Company or upon distribution of the  assets
   of  the  Company, are entitled to share ratably in all  assets
   remaining after payment of liabilities and payment of  accrued
   dividends   and  liquidation  preferences  on  the   preferred
   shares,  if any.  Holders of Class A Non-Voting Common  Shares
   have  no  pre-emptive  rights and have no  rights  to  convert
   their shares into any other securities.

   Private Placement - On May 15, 2002, the Company entered  into
   -----------------
   a   Securities   Purchase   Agreement  ("Securities   Purchase
   Agreement")   with  certain  accredited  investors   to   sell
   1,090,909  common  shares  and  warrants  to  purchase  up  to
   109,090  common  shares  at $3.50 per  share  (the  "Purchaser
   Warrants")  in  a  private  placement  transaction   ("Private
   Placement") for gross proceeds of $3,000,000.

   The  Securities Purchase Agreement provided for  the  issuance
   and  sale of the common shares and Purchaser Warrants  in  two
   equal and separate tranches.  The first tranche closed on  May
   16,  2002  and consisted of 545,455 common shares  and  54,545
   Purchaser  Warrants.   The Company received  net  proceeds  of
   approximately $1,291,000 from the first tranche.  In  addition
   to  the  payment  of  the expenses of the first  tranche,  the
   Company   issued  warrants  ("Finder  Warrants")  to  purchase
   54,545  common shares at $3.50 per share.  The second  tranche
   was  to  close  September 11, 2002.  The  investors,  however,
   declined to fund the second tranche.  Accordingly, the  second
   tranche  has  not  closed and will not  close.   The  Company,
   subsequent to June 30, 2003, reached settlement with  four  of
   the  five institutional investors in the Private Placement and
   has  obtained the return of 50,090 Purchaser Warrants and  the
   payment  of  $50,000,  exclusive of legal  fees  paid  by  the
   investors.

   Warrants  -  The  Company has outstanding  3,025,000  warrants
   --------
   which  are  exercisable at $5.50 per share through  March  12,
   2004,  provided  that  during such time a  current  prospectus
   relating  to  the  common shares is then  in  effect  and  the
   common   shares  are  qualified  for  sale  or   exempt   from
   qualification under applicable securities laws.

   In  connection  with  the Offering, the  Company  granted  the
   underwriters  warrants  entitling  the  holders   thereof   to
   purchase  an  aggregate  of 500,000 of  the  Company's  common
   shares at an exercise price of $8.25 per share for five  years
   commencing on the date of the Offering.

   The  aggregate  of the 109,090 Purchaser Warrants  and  Finder
   Warrants  outstanding as of June 30, 2003 are  exercisable  at
   $3.50  per  share through May 15, 2007, provided  that  during
   such  time a current prospectus relating to the common  shares
   is  then  in  effect and the common shares are  qualified  for
   sale  or exempt from qualification under applicable securities
   laws.   Subsequent to June 30, 2003, 50,909 of  such  warrants
   were returned to the Company.

   In   connection  with  the  Helzer  Transaction,  the  Company
   granted  James E. Helzer the Helzer Warrant entitling  him  to
   purchase   up  to  an  additional  1,000,000  authorized   but
   previously  unissued  common  shares  of  the  Company  at  an
   exercise  price  of $1.50 per share exercisable  for  5  years
   from the date of issuance.

   All   warrants   are   subject  to   customary   anti-dilutive
   provisions, and the Helzer Warrant provides for an  adjustment
   to  the  exercise price in the event that the  Company  enters
   into  certain  sales transactions in which common  shares  are
   sold  at  a  price  below the current exercise  price  of  the
   Helzer Warrant.

   Stock Option Plan - In August 1996, last amended in 2000,  the
   -----------------
   Board  of  Directors  adopted and  shareholders  approved  the
   Company's  Stock Option Plan (the "Stock Option  Plan").   The
   Stock  Option Plan provides for the grant of options that  are
   intended  to  qualify  as incentive stock options  ("Incentive
   Stock  Options")  within the meaning of Section  422A  of  the
   Internal  Revenue  Code, as amended (the "Code"),  to  certain
   employees,  officers  and  directors.   The  total  number  of
   common  shares  for  which options may be  granted  under  the
   Stock  Option  Plan  is 1,200,000 common shares.   Options  to
   purchase  753,600 common shares have been granted  to  various
   employees  and certain officers and directors,  740,600  at  a
   $5.00  per  share exercise price and 13,000  at  a  $4.00  per
   share exercise price.  All of such options have a term of  ten
   years.    The  options  granted  to  employees  and   officers
   (733,600)  vest  at a rate of 20% per year commencing  on  the
   first  anniversary  of  the date of  grant,  and  the  options
   granted  to two directors (20,000) fully vested one year  from
   the date of the grant.


                                   F-23

<PAGE>


<TABLE>
<CAPTION>

                                                              Weighted Average
                             Number of      Exercise Price     Exercise Price
                              Shares           Per Share         Per Share
<S>                          <C>            <C>               <C>

Outstanding, July 1, 2000       842,540     $       5.00         $     5.00
  Granted                        15,000             4.00               4.00
  Exercised                        -                -                  -
  Forfeited                     (70,500)            5.00               5.00
  Expired                          -                -                  -
                             ----------                          ----------
Outstanding, June 30, 2001      787,040                                4.98
  Granted                          -                 -                 -
  Exercised                        -                 -                 -
  Forfeited                     (22,960)            5.00               5.00
  Expired                          -                 -                 -
                             ----------                          ----------
Outstanding, June 30, 2002      764,080                                4.98
  Granted                          -                 -                 -
  Exercised                        -                 -                 -
  Forfeited                      (2,000)            4.00               4.00
  Forfeited                      (8,480)            5.00               5.00
  Expired                          -                 -                 -
                             ----------                          ----------
Outstanding, June 30, 2003      753,600                          $     4.98
                             ==========                          ==========
</TABLE>


   At  June  30,  2003,  605,200 options  were  vested  and  were
   exercisable  at $5.00 per share and 7,000 options were  vested
   and were exercisable at $4.00 per share.

11.  ALLOWANCE FOR DOUBTFUL ACCOUNTS

   The  activity in the allowance for doubtful accounts  for  the
   fiscal  years  ended  June  30, 2003,  2002  and  2001  is  as
   follows:

<TABLE>
<CAPTION>
                   Balance at
Year Ending        Beginning                                  Balance at
 June 30,           of Year      Provision     Writeoffs      End of Year
<S>               <C>            <C>           <C>            <C>

  2001            $ 1,496,000    $ 1,464,418   $  (607,927)   $ 2,352,491
                  ===========    ===========   ===========    ===========

  2002            $ 2,352,491    $ 2,761,007   $  (561,823)   $ 4,551,675
                  ===========    ===========   ===========    ===========

  2003            $ 4,551,675    $ 4,707,366   $(4,459,952)   $ 4,799,089
                  ===========    ===========   ===========    ===========
</TABLE>




                                   F-24

<PAGE>



12.  QUARTERLY INFORMATION (UNAUDITED)

   Selected  unaudited quarterly financial data, as restated,  is
   as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                Fiscal 2003 Quarter Ended
                                                 Sept. 30        Dec. 31        Mar. 31         June 30
<S>                                             <C>            <C>            <C>            <C>
Revenues                                        $    60,390    $    51,668    $    44,411    $    69,667

Gross profit                                         14,314         12,774         10,122         17,706

Net (loss) income from continuing operations            (72)          (255)        (2,390)         1,295

Loss from discontinued operation,
  net of taxes                                          (77)          (114)          -              -

Cumulative effect of accounting change, net
  of taxes                                             (413)           -             -              -
                                                -----------    -----------    -----------    -----------
Net (loss) income                               $      (562)   $      (369)   $    (2,390)   $     1,295
                                                ===========    ===========    ===========    ===========

Basic and diluted net income (loss) per share:
  Net (loss) income from continuing operations  $     (0.01)   $     (0.03)   $     (0.25)   $       .13
  Loss from discontinued operation                    (0.01)         (0.01)
  Cumulative effect of accounting change              (0.04)           -              -             -
                                                -----------    -----------    -----------    -----------
                                                $     (0.06)   $     (0.04)   $     (0.25)   $       .13
                                                ===========    ===========    ===========    ===========

Common shares used in basic and
  diluted net income (loss) per share                 9,055          9,055          9,644         10,233
                                                ===========    ===========    ===========    ===========
</TABLE>


<TABLE>
<CAPTION>
                                                               Fiscal 2002 Quarter Ended
                                                 Sept. 30        Dec. 31        Mar. 31         June 30
<S>                                             <C>            <C>            <C>            <C>

Revenues                                        $    65,513    $   59,333     $    45,034    $    60,616

Gross profit                                         15,906        14,918          11,597         14,133

Net (loss) income from continuing operations          1,396           911            (317)          (243)

Loss from discontinued operation,
  net of taxes                                          (44)          (88)           (102)          (122)
                                                -----------    -----------    -----------    -----------
Net (loss) income                               $     1,352    $       823    $      (419)   $      (365)
                                                ===========    ===========    ===========    ===========

Basic and diluted net (loss) income per share:
  Net (loss) income from continuing operations  $       .16    $       .11    $     (0.04)   $     (0.03)
  Loss from discontinued operation                    (0.01)         (0.01)         (0.01)         (0.01)
                                                -----------    -----------    -----------    -----------
                                                $       .15    $       .10    $     (0.05)   $     (0.04)
                                                ===========    ===========    ===========    ===========

Common shares used in basic and
  diluted net (loss) income per share                 8,510          8,510          8,510          8,786
                                                ===========    ===========    ===========    ===========
</TABLE>


                               * * * * * *




                                   F-25

<PAGE>