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

                                  FORM 10-KSB/A
                                SECOND AMENDMENT


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[ X ]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF 1934

                   For the fiscal year ended August 31, 2000

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


                       EAGLE WIRELESS INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

                        Commission file number: 000-20011

                    Texas                               76-0494995
                    -----                               ----------
    (State or Other Jurisdiction of                 (I.R.S. Employer
     Incorporation or Organization)                Identification No.)

  101 Courageous Drive, League City, Texas                77573
  -----------------------------------------               -----
  (Address of Principal Executive Office)               (Zip Code)

                                  281-538-6000
                                  ------------
              (Registrant's Telephone Number, Including Area Code)

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

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

Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [X ]

Issuer's revenues for its fiscal year ended August 31, 2000 were $5,239,670.

The aggregate market value of the voting stock held by nonaffiliates of the
registrant, based on the closing price of the common stock on the American
Stock Exchange on November 1, 2001 was $59,210,972. As of November 1, 2001
registrant had 59,210,971 shares of common stock outstanding.

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                                     PART I

         This annual report contains forward-looking statements. These
statements relate to future events or future financial performance and involve
known and unknown risks, uncertainties and other factors that may cause
Eagle's or Eagle's industry's actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by the
forward-looking statements.

         In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," or the
negative of these terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially.

         Although Eagle believes that the expectations reflected in the
forward-looking statements are reasonable, Eagle cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither
Eagle nor any other person assumes responsibility for the accuracy and
completeness of these forward-looking statements. Eagle is under no duty to
update any of the forward- looking statements after the date of this report to
conform its prior statements to actual results.

ITEM 1.  DESCRIPTION OF BUSINESS

         Eagle is a worldwide supplier of telecommunications equipment and
related software used by service providers in the messaging and other wireless
personal communications market. Eagle designs, manufactures, markets, and
services its products under the Eagle name. These products include
transmitters, receivers, controllers, software and other equipment used in
personal communications systems and radio and telephone systems. Most of
Eagle's broad line of products, covering the messaging spectrum as well as
specific personal communication systems, and specialized mobile radio
products, have been tested and approved by the Federal Communications
Commission. Eagle provides service and support for its products, as well as
consulting and research development on a contract basis. In addition, Eagle
has recently introduced a completely new line of multi-media and Internet
products to the telecommunications industry, including a family of convergence
set-top-box products and markets these products under the name of
BroadbandMagic.com. BroadbandMagic.com is a wholly owned subsidiary of Eagle.

         Effective January 1, 2000, Eagle acquired all of the assets and
assumed certain liabilities of Atlanticpacific Communications, Inc.
Atlanticpacific is primarily in the business of nationwide sales and
installation of fiber optic and Internet wiring to commercial customers. Eagle
financed this acquisition through the issuance of 518,919 shares in restricted
common stock and the assumption of notes and accounts payable of $1,304,080.
Additionally, the principal shareholders of Atlanticpacific can earn an
additional 3,000,000 shares of Eagle common stock based on accumulated sales
goals. Under the terms of the agreement, Eagle will issue an additional
500,000 shares for $10,000,000 in accumulated sales, 1,000,000 shares for
$30,000,000 in accumulated sales, and 1,500,000 shares for $60,000,000 in
accumulated sales. These sales have to be achieved within a two-year period.
The total cost of the acquisition exceeded the fair value of the assets by
$3,662,890. This excess is being amortized over twenty years.

         Effective January 1, 2000, Eagle acquired Comtel Communications, Inc.
Comtel is primarily in the business of nationwide sales and installation of
fiber optic and Internet wiring to commercial customers. Eagle issued 300,000
shares in restricted stock for the net assets of Comtel. The total cost of the
acquisition exceeded the fair value of the assets by $1,878,528. This excess
is being amortized over twenty years.

         Eagle was incorporated in May 1993, but did not conduct any
substantive business operations until April 1996. During April 1996, Eagle
commenced operations by the issuance of stock for cash, inventories, test
equipment, and other assets of its principal shareholder. Concurrent with this
transaction, Eagle entered into an asset purchase agreement with a company to
acquire other production equipment, inventories and furniture and equipment.
In August 1997, Eagle amended its articles of incorporation and changed its
name to its current name. Eagle's principal place of business is located at
101 Courageous Drive, League City, Texas 77573 and its telephone number is
(281) 538-6000.

MERGER AGREEMENT

            On September 15, 2000, Eagle entered into a merger agreement with
ClearWorks.net, Inc., whereby it agreed to acquire 100% of the outstanding
common stock of ClearWorks and merge Eagle Acquisition Corporation, a wholly
owned subsidiary of Eagle, into ClearWorks. Eagle agreed to issue 0.8 shares
of Eagle common stock for each share of ClearWorks

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common stock at the closing. In addition to the share issuance, Eagle will
assume all outstanding ClearWorks stock options and warrants based upon the
same 0.8 exchange ratio.

         The business purpose of the merger between Eagle and ClearWorks is to
create a company with unique product and service offerings. This merger
integrates wireless and broadband products and services to a wide range of
customers and applications, which Eagle believes will result in recurring
revenues. The core products to be offered will target end-users of broadband
services, which include Internet, telephone, and bundled digital services or
BDS(SM). Each subscriber gives the company an opportunity to create a
long-term recurring revenue stream and to generate up-front product revenue by
adding a number of current and future hardware and software and service
products, such as the convergence set-top-box to the existing ClearWorks
contracts. This balance of near-term and long-term recurring revenue is a
combination that in the opinion of management is highly desirable. Eagle
believes hardware, installation and home wiring for the current BDS(SM)
contracts alone have the potential to generate near-term revenue for the
company. The company is also looking forward to applying the BDS(SM) concept
to some of the current Eagle contract applications. The combination of Eagle's
convergent hardware products, network services, wireless products, wireless
network and spectrum services, and strong manufacturing and R&D capabilities
and ClearWorks' BDS(SM) "last mile" cable and fiber installation should
provide a well-balanced revenue mix as the combined company provides a full
complement of broadband products and services to its customers.

         The merger is subject to the approval by the stockholders of Eagle of
the proposed share issuance in connection with the merger, and the approval by
the stockholders of ClearWorks of the merger agreement.

PRODUCT CATEGORIES

WIRELESS MESSAGING PRODUCTS

         For the fiscal years ended August 31, 1999 and 2000, infrastructure
equipment, which includes License Starter, transmitters, base stations, power
amplifiers, link products, multi-terminal arbitrator, Extend-a-Page, Hot
Switch Panel, and consulting services, accounted for 67% and 33%,
respectively, of Eagle's net sales.

         Messaging is a method of wireless telecommunication, which uses an
assigned radio frequency to contact a messaging subscriber anywhere within a
service area. A messaging system is generally operated by a service provider
that incurs the cost of building and operating the system. Each service
provider in the United States licenses spectrum from the FCC and elsewhere
from the authorized government body to operate a messaging frequency within
either a local, regional, or national geographical area. Each messaging
subscriber is assigned a distinct telephone number that a caller dials to
activate the subscriber's pager, a pocket-sized radio receiver carried by the
subscriber. A messaging switch receives telephone calls by the subscriber. A
network of transmitters, that broadcast a signal over a specific geographical
area, then receives the information from the messaging switch through the
controller, and a radio signal is sent by the transmitters via antennae to the
subscriber's pager. The transmitters manufactured by Eagle are specifically
designed to simulcast, which is the transmission of the same signal over two
or more transmitters on the same channel at the same time in an overlap area,
resulting in superior voice and data quality and coverage area. The radio
signal causes the messaging device to emit a beep or to vibrate, and to
provide the subscriber with information from the caller in the form of a
voice, tone, numeric or alphanumeric message.

         A messaging device has an advantage over a landline telephone in that
the messaging device's reception is not restricted to a single location, and
has an advantage over a cellular portable telephone in that a messaging device
is smaller, has a much longer battery life, has excellent coverage, and is
less expensive to use. Historically, the principal disadvantage of traditional
messaging service in comparison to landline telephones or cellular portable
telephones has been that messaging provided only one-way communication
capabilities.

         However, this limitation may have been overcome in the United States
as a result of the auction in 1994 by the FCC of nationwide and regional
licenses for designated narrowband personal communication services, radio
frequencies or spectrum to service providers. Many of the nationwide license
holders and many of the regional license holders are current Eagle customers,
directly or indirectly. The cost of the licenses to the narrowband personal
communication services auction winners in 1994 was approximately $1 billion.
The FCC anticipates that these narrowband personal communication services
licenses will be used to provide such new services as pager location, two-way
acknowledgment messaging, advanced voice messaging and data services.

         The narrowband personal communication services radio frequencies or
spectrum are located at three separate points within the total radio spectrum,
at 902-928 MHz, 930-931 MHz and 940-941 MHz. Initially, the radio frequencies
located at

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930-931 MHz and 940-941 MHz have been designated for outbound message
transmission, to the pager, and the 902-928 MHz have been designated response
channels, from the pager. This application is similar to traditional messaging
except that these license holders have been granted wider frequency bandwidth
permitting the user to transmit substantially more information. In addition,
Eagle manufactures other messaging infrastructure products that cater to the
VHF and UHF messaging frequencies in the United States and other areas of the
world as well as supporting most international messaging brands.

         The narrowband personal communication services nationwide licenses
cover all fifty states, the District of Columbia, American Samoa, Guam, the
Northern Marianas Islands, Puerto Rico and the United States Virgin Islands.
These licenses are divided into 50 kHz paired and unpaired channel categories.
Paired channels permit both outbound and inbound signals while unpaired
channels are limited to only outbound signals. The FCC has imposed
infrastructure construction or build-out requirements on all narrowband
personal communication services license holders. Each narrowband personal
communication services license holder must establish minimum service
availability for at least 37.5% of the population in its geographic region
within five years after receiving the license. After ten years, each
narrowband personal communication services license holder must make the
service available to at least 75% of the area's population. If a narrowband
personal communication services license holder fails to achieve these
build-out requirements, it risks cancellation by the FCC of its narrowband
personal communication services license and a forfeiture of any auction monies
paid.

         Eagle manufactures products that will enable messaging license
holders to legally put their systems into operation at a low cost, a strategy
adopted by Eagle to create a "captive" customer in terms of future build-out.

         Eagle offers its customers an end-to-end solution for narrowband
personal communication services applications. Eagle has developed new
technology based products with enhanced architecture and technology from its
existing messaging systems to accommodate the advanced services available
through messaging and PCS. This system approach includes full product lines of
radio frequency network controllers, transmitters, receivers, and a special
satellite receiver system, to receive the response message from the end-user.
Eagle is currently shipping its narrowband personal communication services
products to various beta test sites, based on product development schedules
and the build-out requirements of the narrowband personal communication
services license holders.

         The design of a messaging system is customer specific and depends on:

                o The number of messaging subscribers the service provider
                  desires to accommodate,
                o The operating radio frequency,
                o The geography of the service area,
                o The expected system growth, and o Specific features desired
                  by the customer.

Messaging equipment hardware and software developed by Eagle may be used with
all types of messaging service, including voice, tone numeric (telephone
number display) or alphanumeric messaging (words and numbers display).

SWITCHES

         Eagle is involved at an early stage in the development of industry
wide technology standards and is familiar with developments in messaging
protocol standards throughout the world. Eagle works closely with its
customers in the design of large, complex messaging networks. Eagle believes
that its customers' purchasing decisions are based, in large part, on the
quality and technological capabilities of such networks. Eagle believes that
the advanced hardware and software features of its switches ensure high
reliability and high volume call processing.

RADIO FREQUENCY EQUIPMENT, TRANSMITTERS AND RECEIVERS

         Transmitters are available in frequency ranges of 70 MHz to 960 MHz
and in power levels of 2 watts to 500 watts. Radio link receivers are
available in frequency ranges of 70 MHz to 960 MHz. Satellite link receivers
are available for integration directly with the transmitters at both Ku- and
C- band frequencies.

         Eagle's range of receivers detects the responses back from the
two-way narrowband personal communication services subscriber devices. The
receivers take advantage of Digital Sound Processing demodulation techniques
that maximize receiver

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performance. Depending upon frequency, antenna height, topography and power,
Eagle transmitter systems are designed to cover broadcast cells with a
diameter from 3 to 100 miles. Typical simulcast systems have broadcast cells
that vary from 3 to 15 miles in diameter. Eagle transmitters are designed
specifically for the high performance and reliability required for high speed
simulcast networks.

MULTIMEDIA DEVICES

      Eagle recently developed WebFlyer, a family of Internet Set-Top-Boxes
designed to access the Internet and e-mail through a television set for
individual or commercial use. The WebFlyer is the latest product family to be
introduced into the multimedia home entertainment arena. It uses a standard TV
set as a monitor, allowing the user to connect to their chosen ISP on the
Internet. The multimedia entertainment device can at a minimum:

                o       Receive, write and send e-mail;
                o       Write a letter or work on a spreadsheet;
                o       Play games or use learning tools;
                o       Watch movies from CDs or DVDs; and
                o       Record on the hard drive direct from the TV, providing
                        better quality picture than through a VCR.

CONTROLLERS

         Eagle currently offers products for transmitter control known as
Eagle's L20X transmitter control system, which is a medium-feature transmitter
control system used in domestic and international markets.

CURRENT PRODUCTS AND SERVICES

         The principal products and enhancements currently being manufactured
and sold by Eagle relate to its wireless messaging products and include the
following:

LICENSE STARTER

         This product provides new messaging license holders a method to
install a system that will keep them in compliance with FCC regulations. The
product is expandable, giving the license holder the ability to fund the
expansion from revenues. Installation of this product requires 110-Volt AC
power and a standard telephone line.

BASE STATIONS AND TRANSMITTERS

         Transmitters and full-featured transmitters called Base Stations are
used by messaging carriers to broadcast radio-frequency messages to
subscribers carrying pagers. Eagle offers a slimline Stealth and a larger
Quantum transmitter that is available in the 72MHz, VHF, UHF, and 900MHz
broadcast frequency ranges. Each unit can be equipped to provide an output
power ranging from 15 Watts up to 500 Watts on almost any domestic or
international messaging frequency.

RADIO FREQUENCY POWER AMPLIFIERS

         Radio-frequency power amplifiers are a sub-component of both
messaging and SMR transmitters and base stations. The high, medium and low
power base station and link transmitter power amplifiers are designed to
operate with any FCC type accepted exciter or may be combined with an Eagle
optional plug-in base station in the same space as the power amplifier. All
Eagle power amplifiers above 100 watts are equipped with Eagle "Heat Trap"(TM)
design to provide the user with long life and high reliability performance.

EXTEND-A-PAGE

         Extend-a-Page is a compact lower-power transmitter and receiver set
designed to provide fill-in coverage in fringe locations where normal
messaging service from a wide-area messaging system is not adequate. The
Extend-a-Page receives the messaging data on either a radio frequency control
link or wireline link and converts this information into low power simulcast
compatible messaging transmissions on any of the common messaging frequencies.
The Extend-a-Page transmits the messaging information at a one to two Watt
level directly into hard to reach locations such as hospitals, underground

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structures, large industrial plants, and many locations near the outer
coverage contour of messaging systems.

LINK PRODUCTS

         Radio frequency and wireline communication links are needed to
connect multiple transmitters within a messaging network. Eagle provides both
Link equipment (the Link 20TX, 20RX, 20GX and 20PX) and the Link 20 software
to facilitate this interconnection. Major competitors have licensed the Eagle
Link 20 software and have incorporated it as an industry standard into their
radio-messaging terminals. Customers may also purchase the same software
directly from Eagle as part of an Eagle system at a lesser cost. Management
believes that its software allows the user to mix and match the products of
different vendors on a common radio-messaging system.

MICROBEEP

         The MicroBeep messaging terminal is a small messaging terminal that
can be plugged into the expansion slot of an IBM compatible computer. This
fully-contained messaging terminal includes a low-power transmitter and
subscriber software. This system is used for local messaging applications
within factories, offices, restaurants and campuses.

MULTI-TERMINAL ARBITRATOR

         The Multi-Terminal Arbitrator is a programmable communications switch
that facilitates the sharing of a single radio-frequency transmitter by a
maximum of eight different messaging terminals. A target market for this
product is in private carrier messaging where multiple companies share the
same radio frequency and are required to coordinate the sharing activities.

TWO-WAY MESSAGING DEVICES

         Eagle is a licensed distributor and value added reseller of
spread-spectrum wireless messaging receivers that, when used in conjunction
with Eagle's one-way messaging transmitters, provide a two-way messaging
system for both consumer and industrial applications. In addition to the
receivers, Eagle currently sells and distributes a wireless water meter, a
wireless power meter, a wireless home security alarm, a wireless vehicle
tracking system and a multi-purpose wireless module that can be combined with
a wide variety of switch-type applications.

CONSULTING SERVICES

         Eagle routinely provides consulting services on a contract basis to
support the sale of its main product lines. Examples of these consulting
services include the design and installation of radio messaging systems. Eagle
also performs research and development on a contract basis.

BROADBAND MULTIMEDIA AND INTERNET PRODUCTS

         Eagle developed a complete new line of broadband multimedia
set-top-box products during 1999 and 2000 and has been test marketing and
initially distributing these products under the name of BroadbandMagic.com.
BroadbandMagic.com is a wholly owned subsidiary of Eagle. These new products
are multimedia-based products that provide a user with the ability to
interface their Internet connection, their broadcast video source, their cable
or DSL source, or their satellite video source directly to their television
receiver. Eagle markets the new multimedia and Internet products as
convergence set-top-box products. One version of the convergence set-top-box
includes a DVD player and full high performance computer functionality as well
as all of the other convergence set-top-box capabilities. The marketing plan
of Eagle through BroadbandMagic.com has been to initially focus on the large
Internet service providers or ISP's and OEM customers who typically bundle
Set-Top-Boxes with their service as their own marketing strategy. In addition,
the convergence set-top-box is marketed to large retail distributors, through
the company representative network, as well as through e-commerce web sites
and other e-commerce sites. Eagle is currently negotiating to obtain the
necessary additional large scale financing to mass produce and market these
devices.

FIBER AND CABLING

         Through its subsidiaries Atlanticpacific and Comtel, Eagle resells
and installs fiber and cabling to commercial and

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industrial clients throughout the United States. Eagle's services include
end-to-end project management. Eagle provides project planning, installation,
project management, testing, and documentation. For the year ended August 31,
2000, fiber and cabling sales represented 65% of Eagle's sales. For the year
ended August 31, 2000, Sprint PCS was Eagle's largest customer representing
15% of Eagle's total sales.

WIRELESS BROADBAND CONNECTIVITY

         During 2000, Eagle has developed certain wireless broadband products
and services and is currently testing these products in multiple locations in
the U.S. markets. Eagle plans to introduce these new products in the near
future.

SERVICE AND SUPPORT

         Eagle provides service to customers on a regular basis including
installation, project management of turnkey systems, training, service or
extended warranty contracts with Eagle. Eagle believes that it is essential to
provide reliable service to customers in order to solidify customer
relationships and to be the vendor of choice when a customer seeks new
services or system expansions. This relationship is further developed as
customers come to depend upon Eagle for installation, system optimization,
warranty and post-warranty services.

         Eagle has a warranty and maintenance program for both its hardware
and software products and maintains a customer service network in its
operating locations. Eagle's standard warranty provides its customers with
repair or replacement of any defective Eagle manufactured equipment. The
warranty is valid on all products for the period of one year from the later of
the date of shipment or the installation by an Eagle qualified technician.

CUSTOMERS

         Eagle sells to a broad range of customers worldwide. In the United
States, customers include the regional Bell operating companies,
telecommunications companies, medical messaging operators, and public and
private radio common carriers. Internationally, customers include public
telephone and telegraph companies, as well as private telecommunication
service providers.

         Eagle's second largest customer for 2000, Link-Two Communications,
accounted for approximately 12% of Eagle's sales for the fiscal year ended
August 31, 2000. Link-Two Communications is a common carrier of exclusively
wholesale one-way messaging and two-way messaging network services. Its
customers purchase messaging network services as an aggregator and resell
Link-Two Communication's network services to individual subscribers and other
communications providers. Link-Two Communications has been classified as an
incumbent carrier by the FCC and has secured the rights to use or options to
purchase spectrum in all of the major metropolitan U.S. cities on five PCP
frequencies. Link-Two Communications has also secured several exclusive RCC
frequencies providing regional coverage in two of the top ten markets. More
recently, Link-Two Communications has secured an exclusive block of FCC
spectrum covering a majority of the population centers in the southern and
western United States in a successful bidding at the FCC auction. In addition,
Link-Two Communications has also recently purchased a large block of exclusive
spectrum from another carrier. Link-Two Communications is currently
operational in Houston and Dallas, Texas as well as over much of the remaining
population base of Texas.

MARKETING AND SALES

         Eagle markets its products and services in the United States through
representative organizations and internationally through agents. As Eagle's
business is highly technical, a majority of sales are complete systems with
technical support. A large percentage of Eagle's marketing comes from direct
sales by the employees.

         Eagle also utilizes distributors and agents to sell its products in
certain countries and geographic regions to market outside of Eagle's core
markets. Under the terms of these one year agreements the distributor or sales
agents provide Eagle with manufacturing business. The transactions from these
distributors and agents are subject to Eagle's approval prior to sale. These
distributorships or sales agents receive commissions of approximately five to
ten percent of the sales, when the sale is recognized by Eagle or its
subsidiaries.

         Eagle currently has non-exclusive arrangements with eight
distributors and agents to service selected regions within the United States.
A non-exclusive arrangement is also in effect with one distributor on a
worldwide basis and Eagle has one

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exclusive arrangement with a distributor to service Australia. Terms of these
arrangements provide for payments to the distributors on either a fixed
percentage commission or discount from list price basis. Eagle has an
agreement with Motorola whereby certain products offered by Eagle are listed
in Motorola's product catalog under the Eagle name. In addition, Eagle has
been granted the status of a Value Added Reseller or VAR by Lucent
Technologies, Inc. for all of Lucent's wireless networking or Internet product
lines. Eagle has recently developed a manufacturer's representative for the
new multimedia and Internet product lines. Currently this program consists of
fourteen manufacturers representatives on a worldwide basis.

         Eagle maintains and Internet web sites at www.eglw.com,
www.broadbandmagic.com, www.atlanticpacific.net, and www.etoolz.com where
information can be found on Eagle's and its subsidiaries products and
services. The web site provides customers with a mechanism to request
additional information on products and allows the customer to quickly identify
and obtain contact information for their regional sales representative.
Information on the web site of Eagle or any of its subsidiaries is not part of
this annual report.

INTERNATIONAL BUSINESS RISK

         Eagle generated net sales in markets outside the United States, which
amount to less than 2% of total Eagle net sales in the last two years. Sales
are subject to the customary risks associated with international transactions,
including political risks, local laws and taxes, the potential imposition of
trade or currency exchange restrictions, tariff increases, transportation
delays, difficulties or delays in collecting accounts receivable, and exchange
rate fluctuations. Pre-payments and letters of credit drawn on American or
limited foreign corresponding banks are required from international customers
to reduce the risk of non-payment.

RESEARCH AND DEVELOPMENT

         Eagle believes that a strong commitment to research and development
is essential to the continued growth of its business. One of the key
components of Eagle's development strategy is the promotion of a close
relationship between its development staff, internally with Eagle
manufacturing and marketing personnel, and externally with Eagle customers.
This strategy has allowed Eagle to develop and bring to market customer-driven
products.

         Eagle has focused a large portion of its new development resources
during 1999 and 2000 on the development of the new broadband multimedia and
Internet product line. In addition, Eagle has formed a number of strategic
relationships with other large suppliers and manufacturers that will allow the
latest in technology and techniques to be utilized in the convergence
set-top-box product line. Eagle will continue to incur research and
development expenses with respect to the convergence set-top-box product line
during the current fiscal year.

         Eagle has extensive expertise in the technologies required to develop
wireless communications systems and products including high power, high
frequency RF design digital signal processing, real-time software, high-speed
digital logic, wireless DSL products, radio frequency and data network design.
Eagle believes that by having a research and development staff with expertise
in these key areas, it is well positioned to develop enhancements for its
existing products as well as the next generation of personal communication
products. Investment in advanced computer-aided design tools for simulation
and analysis has allowed Eagle to reduce the time for bringing new products to
market. Research and development expenditures incurred by Eagle for the fiscal
years ended August 31, 2000, and August 31, 1999 were $370,828, and $438,693
respectively.

MANUFACTURING

         Eagle currently manufactures its wireless products at its facilities
in League City, Texas. Some subassemblies are manufactured for Eagle by
subcontractors at various locations throughout the world. Eagle's
manufacturing expertise resides in assembling subassemblies and final systems
that are configured to its customers' specifications. The components and
assemblies used in Eagle's products include electronic components such as
resistors, capacitors, transistors, and semiconductors such as field
programmable gate arrays, digital signal processors and microprocessors, and
mechanical materials such as cabinets in which the systems are built.
Substantially all of the components and parts used in Eagle's products are
available from multiple sources. In those instances where components are
purchased from a single source, the supplier is reviewed frequently for
stability and performance. Additionally, as necessary, Eagle purchases
sufficient quantities of components that have long-lead requirements in the
world market. Eagle ensures that all products are tested, tuned and verified
prior to shipment to the customer.

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         Eagle has determined that the most cost effective manufacturing
method for its high volume multimedia and Internet product line will be to
utilize offshore contract production facilities supplemented with high volume
United States based contract facilities. The high volume requirements of
convergence set-top-box product line are well beyond the capabilities of the
current facilities and would be cost prohibitive to construct. However, in the
selection of a high volume international manufacturer, Eagle has selected SCI,
an United States owned company with manufacturing facilities in over twenty
countries around the world. The initial manufacturing location for the
convergence set-top-box is the SCI facility in Singapore.

COMPETITION

         Eagle supplies transmitters, receivers, controllers and software used
in messaging, voice messaging and message management systems. While the
services from the foregoing products represent a significant portion of the
wireless personal communications industry today, the industry is expanding to
include new services and new markets. The wireless personal communications
industry includes equipment manufacturers that serve many of the same PCS
markets served by Eagle. Many Eagle competitors, and all competitors that have
publicly tradable securities, have significantly greater resources than Eagle,
and there can be no assurance that Eagle will be able to compete successfully
in the future. In addition, manufacturers of wireless telecommunications
equipment, including those in the cellular telephone industry, some of which
are larger and have significantly greater resources than Eagle, could elect to
enter into Eagle's markets and compete with Eagle's products. There can be no
assurance that Eagle will be able to increase its market share in the future.

         Eagle competes with many established companies in the set-top-box
business including Scientific Atlanta, General Instrument, and many smaller
companies. Most of these companies have greater resources available than Eagle
does. The markets that are currently developing for multimedia and other
Internet related products are extremely large and growing daily. Eagle has
studied these markets and is of the belief based on this research that it can
effectively compete in these markets with its new convergence set-top-box
product line. However, there can be no assurance that these conclusions are
correct and that the multimedia and Internet markets will continue to expand
at their current rates and that Eagle can gain significant market share in the
future.

PROPRIETARY INFORMATION

         Eagle attempts to protect its proprietary technology through a
combination of trade secrets, non-disclosure agreements, patent applications,
copyright filings, technical measures, and common law remedies with respect to
its proprietary technology. This protection may not preclude competitors from
developing products with features similar to Eagle's products. The laws of
some foreign countries in which Eagle sells or may sell its products do not
protect Eagle's proprietary rights in the products to the same extent as do
the laws of the United States. Although Eagle believes that its products and
technology do not infringe on the proprietary rights of others, there can be
no assurance that third parties will not assert infringement claims against
Eagle in the future. If litigation resulted in Eagle's inability to use
technology, Eagle might be required to expend substantial resources to develop
alternative technology. There can be no assurance that Eagle could
successfully develop alternative technology on commercially reasonable terms.
More recently, Eagle has registered and trademarked the name of
BroadbandMagic.com for its new wholly owned subsidiary. This name is thought
by Eagle to be a valuable addition to the intellectual property rights of
Eagle.

REGULATION

         Many of Eagle's products operate on radio frequencies. Radio
frequency transmissions and emissions, and certain equipment used in
connection therewith, are regulated in the United States and internationally.
Regulatory approvals generally must be obtained by Eagle in connection with
the manufacture and sale of its products, and by customers to operate Eagle's
products. There can be no assurance that appropriate regulatory approvals will
continue to be obtained, or that approvals required with respect to products
being developed for the personal communications services market will be
obtained. The enactment by federal, state, local or international governments
of new laws or regulations or a change in the interpretation of existing
regulations could affect the market for Eagle's products. Although recent
deregulation of international telecommunications industries along with recent
radio frequency spectrum allocations made by the FCC have increased the demand
for Eagle's products by providing users of those products with opportunities
to establish new messaging and other wireless personal communications
services, there can be no assurance that the trend toward deregulation and
current regulatory developments favorable to the promotion of new and expanded
personal communications services will continue or that future regulatory
changes will have a positive impact on Eagle.

EMPLOYEES

<Page>

         At September 1, 2000, Eagle employed approximately 125 persons and
retained three independent contractors. Eagle believes its employee relations
to be good. Eagle enters into independent contractual relationships with
various individuals, from time to time, as needed.

         Eagle intends to hire new personnel to support the growth of Eagle.
The key positions that will emerge from this growth include all areas of
management from administration through marketing, sales, financial controller,
and personnel director to quality director.

RISK FACTORS THAT MAY AFFECT EAGLE'S RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.

         You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not
the only ones facing the company. Additional risks and uncertainties not
presently known to or that are currently deem immaterial also may impair
Eagle's business operations. If any of the following risks actually occur,
Eagle's business could be harmed.

EAGLE'S FAILURE TO COMPLETE THE MERGER AGREEMENT WITH CLEARWORKS COULD
NEGATIVELY IMPACT EAGLE'S STOCK PRICE AND FUTURE BUSINESS AND OPERATIONS.

            If Eagle's merger with ClearWorks is not completed for any reason,
Eagle may be subject to a number of material risks. For example, the price of
Eagle common stock may decline to the extent, if any, that the current market
price of Eagle common stock reflects an assumption by investors that the
merger agreement will be completed. Also, the costs incurred by Eagle related
to the merger agreement, including legal and accounting fees, and a portion of
financial advisor fees, must be paid even if the merger agreement is not
completed.

IF EAGLE CANNOT SUCCESSFULLY INTEGRATE CLEARWORKS AND ITSELF, THE ANTICIPATED
ADVANTAGES OF THE BUSINESS COMBINATION BETWEEN EAGLE AND CLEARWORKS MAY NOT BE
REALIZED, IN FULL, IF AT ALL.

         The integration of ClearWorks and its subsidiaries into Eagle will
require the dedication of Eagle management resources. This may distract
management's attention from management of the day-to-day business of Eagle.
Retention of key employees by Eagle and the combined company of ClearWorks and
its subsidiaries and Eagle have been, and will remain critical to ensure
continued advancement, development and support of the companies' technologies,
and ongoing sales and market efforts. The inability to retain key technical,
sales, or marketing personnel after the merger would adversely affect the
combined company's business.

CUSTOMERS OF EAGLE AND CLEARWORKS MAY DELAY OR CANCEL ORDERS AS A RESULT OF
CONCERNS OVER THE MERGER.

         The announcement and closing of the merger agreement could cause
customers and potential customers of Eagle and ClearWorks to delay and cancel
orders for products or services as a result of customer concerns and
uncertainty over the evolution, integration and support of Eagle's or
ClearWorks' products and services. A delay or cancellation of orders could
have a material adverse effect on the business of Eagle and ClearWorks.

EAGLE HAS A LIMITED OPERATING HISTORY AND EXPECTS TO ENCOUNTER RISKS
FREQUENTLY FACED BY SUCH COMPANIES.

         Eagle has a limited operating history and, accordingly, is subject to
all of the substantial risks inherent in the commencement of an early-stage
business enterprise. Additionally, Eagle has a limited business history that
investors can analyze to aid them in making an informed judgment as to the
merits of an investment in Eagle. Any investment in Eagle should be considered
a high-risk investment because it is an early-stage company with unforeseen
costs, expenses, competition and other problems to which such ventures are
often subject.

EAGLE'S PRODUCTS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND AN INABILITY ON
ITS PART TO ADAPT OR ADJUST ITS TECHNOLOGY TO THESE DEVELOPMENTS MAY HAVE A
MATERIAL ADVERSE EFFECT ON ITS BUSINESS.

         The design, development, and manufacturing of personal communication
systems, specialized mobile radio products, and multimedia entertainment
products are highly competitive and characterized by rapid technology changes.
Eagle will compete with other existing products and may compete against other
development technology. Development by others of new or improved products or
technologies may make Eagle's products obsolete or less competitive. While
management believes

<Page>

that Eagle's products are based on established state-of-the-art technology,
there can be no assurance that they will not be obsolete in the near future or
that Eagle will be able to develop a commercial market for its products in
response to future technology advances and developments.

EAGLE'S CONVERGENT SET-TOP BOXES ARE IN THE INITIAL STAGES OF DEVELOPMENT, AND
EAGLE MAY NOT BE ABLE TO EFFECTIVELY MASS-PRODUCE OR MASS MARKET THESE NEW
PRODUCTS.

         Eagle has developed several models of its convergent set-top box
product line, and is currently in negotiations to obtain the necessary
additional financing to mass-produce and market these devices. Eagle may not
be able to obtain such financing, and even if it does may not be able to
continue to effectively mass-produce or mass market these products.

EAGLE'S SUCCESS DEPENDS UPON ITS ABILITY TO PROTECT ITS PROPRIETARY
TECHNOLOGIES.

         Eagle relies on non-disclosure agreements with employees, and common
law remedies with respect to its proprietary technology and the filing of
patents on its key technology. There can be no assurance that others will not
misappropriate Eagle's proprietary technologies or develop competitive
technologies or products that could adversely affect Eagle. In addition,
although Eagle is not aware of any infringement claims against it or any
circumstances that could lead to such claims, there can be no assurance that
these claims could not be made which could adversely affect its business.

         Eagle's efforts to protect its intellectual property may cause it to
become involved in costly and lengthy litigation, which could seriously harm
its business. In recent years, there has been significant litigation in the
United States involving patents and other intellectual property rights.
Although it has not become involved in intellectual property litigation, it
may become involved in litigation in the future to protect its intellectual
property or defend allegations of infringement asserted by others. Legal
proceedings could subject it to significant liability for damages or
invalidate Eagle's proprietary rights. Any litigation, regardless of its
outcome, would likely be time consuming and expensive to resolve and would
divert management's time and attention. Any potential intellectual property
litigation also could force Eagle to take specific actions, including:

o      Cease selling its products that use the challenged intellectual property;
o      Obtain from the owner of the infringed intellectual property a license
       to sell or use the relevant technology, which license may not be
       available on reasonable terms, or at all; or
o      Redesign those products that use infringing intellectual property.

EAGLE FACES SUBSTANTIAL COMPETITION FROM COMPETITORS WITH SIGNIFICANTLY
GREATER RESOURCES.

         The wireless personal communications industry includes equipment
manufacturers that serve many of the same customers served by Eagle.
Substantially all of Eagle's competitors have significantly greater resources,
including financial, technical and marketing, than Eagle, and there can be no
assurance that Eagle will be able to compete successfully in the future.

         Eagle faces competition from many entities with significantly greater
financial resources, well-established brand names, and larger customer bases.
The numerous companies that may seek to enter its industry may expose Eagle to
severe price competition for its products and services. Eagle expects
competition to intensify in the future and expects significant competition
from traditional and new telecommunications companies including, local, long
distance, cable modem, Internet, digital subscriber line, microwave, mobile
and satellite data providers.

A SYSTEM FAILURE COULD DELAY OR INTERRUPT EAGLE'S ABILITY TO PROVIDE PRODUCTS
OR SERVICES AND HAVE A MATERIALLY ADVERSE EFFECT ON EAGLE'S BUSINESS.

         Eagle's operations are dependant upon its ability to support its
highly complex network infrastructure. Many of its customers are particularly
dependent on an uninterrupted supply of services. Any damage or failure that
causes interruptions in its operations could result in loss of these
customers. Because of the nature of the services Eagle supplies and the
complexity of Eagle's network, it is not feasible to maintain backup systems,
and the occurrence of a natural disaster, operational disruption or other
unanticipated problem could cause interruptions in the services it provides.

         Additionally, the failure of a major supplier to provide the
components and parts necessary for its products and services, or of a major
customer to continue buying its goods and services, as a result of a natural
disaster, operational

<Page>

disruption or any other reason, could cause interruptions in the service Eagle
provides and adversely affect its business prospects, financial condition and
results of operations.

STOCKHOLDERS FACE POSSIBLE VOLATILITY OF STOCK PRICE FOR EAGLE STOCK.

         The market price of the common stock may experience fluctuations that
are unrelated to the operating performance of Eagle. Eagle recently
experienced a decrease in the market price of its common stock and the market
price of its common stock has been quite volatile in the last 12 months. Eagle
can provide no assurance that the current price will be maintained.

ITEM 2.   DESCRIPTION OF PROPERTY

         Eagle's headquarters are located in League City, Texas and include
approximately 23,000 square feet of leased office and production space. The
lease is at market rate and expires in 2001. Eagle has insured its facilities
in an amount that it believes is adequate and customary in the industry. In
addition, Eagle maintains subsidiary offices in two other Houston area
locations, in San Antonio, Texas, in Chicago, Illinois, and in Oxnard,
California. Eagle believes that its existing facilities are adequate to meet
its current requirements but anticipates the need to acquire additional space
within the next two years. Eagle believes that suitable additional space in
close proximity to its existing headquarters will be available as needed to
accommodate the growth of its operations through the foreseeable future.

ITEM 3.   LEGAL PROCEEDINGS

         In connection with the anticipated merger between Eagle and
ClearWorks, Eagle has been added as defendant to the lawsuit invoked by
Sherman, Gerald Mason d/b/a Castle Developments, Ltd. against ClearWorks. The
suit alleges that ClearWorks breached a contract whereby it failed to pay
consulting fees. Castle is seeking from Eagle a temporary injunction
preventing the merger between Eagle and ClearWorks. Eagle intends to
vigorously defend this matter.

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

         None.

<Page>

                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

            Shares of Eagle common stock are listed on the American Stock
Exchange under the symbol "EAG." On November 28, 2000, Eagle's common stock
closed at $3.00 per share. Eagle is authorized to issue 100,000,000 shares of
common stock, 26,568,763 of which were issued and outstanding at November 28,
2000. At November 28, 2000, there were approximately 411 holders of record of
Eagle common stock.

            The table set forth below, for the periods indicated, lists the
reported high and low sale prices per share of Eagle common stock on the
American Stock Exchange.

<Table>
<Caption>
                                                                      Eagle Common Stock
                                                                      ------------------
                                                                    High                  Low
-------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                   <C>
FISCAL 1999
-------------------------------------------------------------------------------------------------------------
       Quarter ended November 30, 1998                           $2.00                 $1.09
-------------------------------------------------------------------------------------------------------------
       Quarter ended February 28, 1999                           $3.06                 $1.53
-------------------------------------------------------------------------------------------------------------
       Quarter ended May 31, 1999                                $2.81                 $1.66
-------------------------------------------------------------------------------------------------------------
       Quarter ended August 31, 1999                             $2.75                 $1.03
-------------------------------------------------------------------------------------------------------------
FISCAL 2000
-------------------------------------------------------------------------------------------------------------
        Quarter ended November 30, 1999                          $2.00                 $1.00
-------------------------------------------------------------------------------------------------------------
        Quarter ended February 29, 2000                          $19.00                $1.13
-------------------------------------------------------------------------------------------------------------
        Quarter ended May 31, 2000                               $19.50                $5.62
-------------------------------------------------------------------------------------------------------------
        Quarter ended August 31, 2000                            $8.75                 $5.62
-------------------------------------------------------------------------------------------------------------
</Table>

         Eagle has never paid any cash dividends on its common stock and does
not anticipate paying cash dividends within the next two years. Eagle
anticipates that all earnings, if any, will be retained for development of its
business. Any future dividends will be subject to the discretion of the board
of directors and will depend on, among other things, future earnings, Eagle's
operating and financial condition, Eagle's capital requirements and general
business conditions.

RECENT SALES OF UNREGISTERED SECURITIES

         The following sets forth information for all securities issued during
the last fiscal year without registration under the Securities Act.

         In January and March 2000, Eagle issued 868,919 shares of common
stock to the shareholders of Atlanticpacific, Comtel, and eToolz. Eagle
believes the transactions were exempt from registration pursuant to Section
4(2) of the Securities Act, as the issuances were to accredited investors and
since the transactions were non-recurring and privately negotiated.

         Between September 1999 and August 2000, Eagle issued an aggregate of
10,238,511 shares of common stock on the exercise of outstanding derivative
securities previously issued pursuant to Section 4(2) of the Securities Act.
Eagle believes the transactions were exempt from registration pursuant to
Section 4(2) of the Securities Act, as the issuances were to accredited
investors and since the transactions were non-recurring and privately
negotiated.

         Between September 1999 and August 2000, Eagle issued employees and
consultants an aggregate of 981,392 shares of common stock for services
rendered. Eagle believes the transactions were exempt from registration
pursuant to Section 4(2) of the Securities Act, as the issuances were to
accredited investors or sophisticated investors and since the transactions
were non-recurring and privately negotiated. The sophisticated investors had
specific knowledge of Eagle and had general expertise in financial and
business matters that they were able to evaluate the merits and risks of an
investment in Eagle.

         In May 2000, Eagle issued 450,000 shares of common stock to a
consultant in exchange for previously issued warrants to purchase an aggregate
of 1,300,000 shares of common stock at exercise prices ranging from $1.50 to
$11.00 per share. Eagle believes the transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act, as the issuance was to an
accredited investor and since the transaction was non-recurring and privately
negotiated.

<Page>

         Between January and August 2000, in exchange for financial,
investment, and acquisition consulting services, Eagle issued three
consultants warrants to purchase an aggregate of 1,163,641 shares of common
stock at exercise prices ranging from $1.54 to $25.00 per share, expiring
between March 2002 and July 2003. Eagle believes the transactions were exempt
from registration pursuant to Section 4(2) of the Securities Act, as the
issuances were to accredited investors and since the transactions were
non-recurring and privately negotiated.

         Between September 1999 and August 2000, in exchange for marketing and
consulting services, Eagle issued two consultants warrants to purchase an
aggregate of 1,350,000 shares of common stock at exercise prices ranging from
$1.50 to $18.00 per share, expiring between September 2001 and July 2003.
Eagle believes the transactions were exempt from registration pursuant to
Section 4(2) of the Securities Act, as the issuances were to accredited
investors and since the transactions were non-recurring and privately
negotiated.

         Between January and August 2000, in exchange for legal services,
Eagle issued one consultant warrants to purchase an aggregate of 150,000
shares of common stock at exercise prices ranging from $1.55 to $9.68 per
share, expiring between June 2002 and July 2003. Eagle believes the
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act, as the issuances were to accredited investors and since the
transactions were non-recurring and privately negotiated.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

         The following discussion should be read in conjunction with Eagle's
financial statements and accompanying notes to the financial statements.

OVERVIEW

         During the year ended August 31, 2000, 65% of Eagle's revenues were
derived from the fiber and cabling operations of Atlanticpacific and Comtel.
Other sales during this period were to Eagle's broader customer base and were
comprised principally of paging infrastructure products. During the year,
Eagle began taking steps to diversify its product and service offerings beyond
the paging infrastructure market. Examples of new products either in
development or in production are wireless set top devices and utility meters,
vehicle tracking systems and wireless backups for residential security
monitoring systems. In accordance with this strategy, Eagle entered into an
acquisition agreement with ClearWorks that, if closed, Eagle believes will
integrate their wireless and broadband products and services to a wide range
of customers and applications.

         REVENUE RECOGNITION

The Company designs, manufactures, markets and services its products and
services under the Eagle Wireless International, Inc., Broadband Magic.com,
Inc., AtlanticPacific Communications, Inc. names.

EAGLE WIRELESS INTERNATIONAL
Eagle designs, manufactures and markets transmitters, receivers, controllers and
software, along with other equipment used in commercial and personal
communication systems, radio and telephone systems. Revenues from these products
are recognized when the product is shipped.

BROADBAND MAGIC.COM
Broadband Magic.com, Inc. designs, manufactures and markets the convergent
set-top boxes. Revenue from these products is recognized when the product is
shipped.

Eagle Wireless International and Broadband Magic.com engage independent agents
for sales principally in foreign countries and certain geographic regions in
the United States. Under the terms of these one-year agreements the
distributor or sales agents provide the companies with manufacturing business
sales leads. The transactions from these distributors and agents are subject
to the companies' approval prior to sale. The distributorship or sales agent
receives commissions based on the amount of the sales invoice from the
companies to the customer. The sale is recognized at the time of shipment to
the customer. These sales agents and distributors are not a significant
portion of total sales in any of the periods presented.

ATLANTIC PACIFIC COMMUNICATIONS
AtlanticPacific provides project planning, installation, project management,
testing and documentation of fiber and cable to commercial and industrial
clients throughout the United States. The revenue from the fiber and cable
installation and services is recognized upon percentage of completion of the
project. Most projects are completed in less than one month, therefore,


<Page>

matching revenue and expense in the period incurred. Service, training and
extended warranty contract revenues are recognized as earned.

ETOOLZ
Etoolz, Inc. provides research and development support for all Eagle companies
and does not currently provide billable services to independent third parties.

Earnings are charged with a provision for doubtful accounts based on
collection experience and current review of the collectability of accounts
receivable. Accounts receivable deemed uncollectable are charged against the
allowance for doubtful accounts.

         RECEIVABLES

         For fiscal 2000, Eagle accounts receivables increased to $1,247,113
from $286,269 for fiscal 1999. This $960,844 increase is primarily due to
increased sales from Atlanticpacific and Comtel. A note receivable from
Link-Two Communications for $8,655,126 represents a substantial portion of
Eagle's assets for fiscal 2000. Subsequent to the end of fiscal 2000, this
note receivable was repaid by ClearWorks, which owns a majority of Link Two
Communications, in the form of 2,856,000 shares of ClearWorks common stock.

         RECENT ACQUISITIONS; GOODWILL

         During the year ended August 31, 2000, Eagle recognized goodwill of
$5,965,437 due primarily to the acquisitions of Atlanticpacific, Comtel, and
eToolz. Goodwill represented the excess of the cost of the acquired companies
over the fair value of their net assets on the date of acquisition. Eagle
amortizes goodwill over a twenty-year period.

         In September 2000, Eagle entered into a merger agreement with
ClearWorks, whereby it agreed to acquire 100% of the outstanding common stock
of ClearWorks in exchange for 0.8 shares of Eagle common stock for each share
of ClearWorks common stock at the closing. In addition to the share issuance,
Eagle will assume all outstanding ClearWorks stock options and warrants based
upon the same 0.8 exchange ratio. Eagle has set the date of its meeting to
vote on the merger for January 31, 2001. The merger requires the vote of a
majority of Eagle shareholders voting at the meeting, and a majority of the
ClearWorks shareholders entitled to vote at the meeting. Eagle can provide no
assurance that the merger will be completed.

         MARKETABLE SECURITIES

         Eagle has adopted the provisions of SFA No. 115, as amended by SFAS
130, which provides that all marketable equity securities be classified as
available-for-sale or trading securities, and be carried on the balance sheet
at fair market value. Any unrealized holding gains or losses affiliated to
these securities are carried below net income under the caption "Other
Comprehensive Income," net of tax.

         INVENTORY

         Inventories are valued at the lower of cost or market. The cost is
determined by using the first-in first-out method. At August 31, 2000, Eagle's
inventory consisted of $5,755,778, as compared to $2,355,861 at August 31,
1999. The additional inventory is primarily attributable to Eagle's set top
devices and cabling held for sale.

RESULTS OF OPERATIONS

YEAR ENDED AUGUST 31, 2000 COMPARED TO THE YEAR ENDED AUGUST 31, 1999

NET SALES. For the year ended August 31, 2000, net sales increased to
$5,239,670 from $2,217,275 during the year ended August 31, 1999. The increase
of 136% was primarily attributable to added sales from Atlanticpacific and
Comtel. These subsidiaries provide project planning, installation, project
management, testing and documentation of fiber and cable to commercial and
industrial clients throughout the United States. Accounts Receivable Trade,
net increased $960,844, of which, $865,311 is directly attributable to the
acquisition, sales and accounts receivable activity.

COST OF GOODS SOLD. For the year ended August 31, 2000, cost of goods sold on
Eagle's product sales increased to $2,481,695 from $1,336,502 during the year
ended August 31, 1999. The increase of 86% is primarily associated with the
cable and fiber products. Although Eagle's cost of sales increased, Eagle's
gross profit percentage for products sold increased to 53% from

<Page>

40% during the year ended August 31, 1999.

OPERATING EXPENSES. For the year ended August 31, 2000, operating expenses
increased to $3,984,767 from $1,318,981 during the year ended August 31, 1999,
an increase of 219%. The primary portions of the increase are discussed below:

        o      A $1,365,194 increase in salaries, or 2,319%, as a result of its
               acquisitions and expanded business.

        o      A $263,893 increase in advertising and promotion, or 636%, due
               primarily to increased attendance at conventions and trade shows
               on a worldwide basis.

        o      A $438,605 increase in depreciation and amortization, or 674%,
               due to an increase in amortization of goodwill and purchase of
               additional assets.

        o      A $665,959 increase in other support costs, or 98%.

NET EARNINGS. For the year ended August 31, 2000, Eagle's net earnings
increased to $193,040 from $168,271 during the year ended August 31, 1999.

CHANGES IN CASH FLOW. Eagle's operating activities used net cash of $5,299,367
in fiscal 2000, compared to $1,901,656 in fiscal 1999. The increase in net
cash used by operating activities in fiscal 2000 was primarily attributable to
an increase in receivables and inventory. Eagle's investing activities used
net cash of $2,223,570 in fiscal 2000, compared to $32,559 in fiscal 1999. The
increase was due primarily to investment in acquisitions and purchase of
equipment. Eagle's financing activities provided cash of $39,681,262, in
fiscal 2000, compared to $1,024,935 in fiscal 1999. The increase was primarily
the result the exercise of outstanding warrants during fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES.

         Current assets for the fiscal year ended August 31, 2000 totaled
$49,305,912 as compared to $9,714,538 reported in the fiscal year ended August
31, 1999. Of this amount, $32,346,289 consisted of cash and cash equivalents,
$8,655,126 consisted of other receivables that were converted into ClearWorks
common stock subsequent to the end of the fiscal year, and $5,775,778
consisted of inventory. Eagle's increase in current assets is primarily due to
its substantial increase in cash received from the exercise of outstanding
warrants during the fiscal year ended August 31, 2000. Eagle believes that its
working capital of $45,798,424 as of August 31, 2000 should be sufficient to
fund operations through the end of the fiscal year 2001. Historically, Eagle
has financed its operations through the sale of debt and equity securities. As
such, if its current cash is insufficient to fund its long-term capital needs,
Eagle will rely on future best-efforts financings for capital. As of August
31, 2000, Eagle had no material capital commitments other than its federal
income and state franchise tax liabilities.

ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS

         The financial statements commencing on page F-1 have been audited by
McManus & Co., P.C., independent certified public accountants, to the extent
and for the periods set forth in their reports appearing elsewhere herein and
are included in reliance upon such reports given upon the authority of said
firm as experts in auditing and accounting.

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

         None.

<Page>

                                    PART III

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

Eagle's directors and executive officers are:

<Table>
<Caption>
NAME                              AGE     POSITION
<S>                               <C>     <C>
H. Dean Cubley                    59      Chairman of the board of directors,
                                          president, and chief executive officer

Christopher W. "James" Futer      60      Director, executive vice president
                                          and chief operataing officer

A. L. Clifford                    55      Director

Dr. Glenn Allan Goerke            69      Director

Richard Royall                    54      Chief financial officer
</Table>

         DR. H. DEAN CUBLEY has served as chairman of the board, president and
chief executive officer of Eagle since March 1996. Before that, Dr. Cubley
served as vice-president of Eagle Telecom, Inc. from 1993 to March 1996. Dr.
Cubley is also a member of the Oversight Committee for the University of
Houston Epitaxy Center which managed the Wake Shield Flight aboard the Shuttle
in September 1995. Dr. Cubley has over 35 years of extensive experience in the
field of telecommunications. From 1965 to 1984, Dr. Cubley worked for the NASA
Manned Spacecraft Center in the Electromagnetic Systems Branch of the
Engineering and Development Directorate. For a five-year portion of that
period, Dr. Cubley was the Antenna Subsystems Manager for all spacecraft
antennas for the Shuttle Program. Dr. Cubley's duties included overall
responsibility for the design, development, costs schedules and testing of the
antennas and hardware for all Shuttle flights. Throughout his career, Dr.
Cubley has authored or co-authored over fifty publications. In addition, he
has a total of eight patents and patents-pending registered in his name. Dr.
Cubley received a bachelor of science degree in electrical engineering from
the University of Texas in 1964 and a masters degree in electrical engineering
from the University of Texas in 1965. In 1970, Dr. Cubley received his Ph.D.
in electrical engineering from the University of Houston.

         CHRISTOPHER W. "JAMES" FUTER has served as a director, chief
operating officer and vice president of Eagle since March 1996. Before that,
Mr. Futer served as sales manager of Eagle Aerospace, Inc. Telecom Division
from November 1994 until February 1996. From May 1993 to November 1994, Mr.
Futer was employed as a vice president of operations with Starcom, Inc. Before
May 1993, he was employed with Paging Products International. Mr. Futer was a
manager of Universal Cellular, Inc., a California corporation ("UCI"), from
October 1990 until February 1991. Mr. Futer resigned from UCI in February 1991
due to his disagreement with UCI management over its business policy and
practices. In June 1993, UCI filed for protection under the federal bankruptcy
laws. Mr. Futer's spectrum of experience has included work in the fields of
hi-tech flight simulation and display technologies (especially those of light
emitting diodes and liquid crystal displays), and in consumer electronics.
Most recently, he has been involved in pager design, manufacture and
marketing, as well as the wider field of messaging equipment. His
international background includes work with Hatfield Instrument, Canadian
Aviation Electronics, located in Montreal, Canada, General Instruments,
Litronix, and Siemens. In 1975, he was instrumental in implementing a major
"turn-key" technology transfer from Canada to the (then) Soviet Union for the
manufacture of hand-held electronic calculators, an operation which the
Soviets then improved from the consumer level and adapted to suit their
particular requirements. Since 1975, Mr. Futer has had extensive in-depth
experience of interfacing with Pacific Rim countries. In 1992 and 1993, he
spent time in the People's Republic of China coordinating a successful
technology transfer for one of the first pager manufacturing facilities.

         A. L. CLIFFORD has served as a director since December 1996. Mr.
Clifford has served as president of Clifford & Associates for over five years,
a company involved in the distribution of electrical and electronic products
throughout the Midwest since 1920. Mr. Clifford is a graduate of the
University of Miami, where he studied business and attended law school.

         DR. GLENN ALLAN GOERKE has served as a director since March 2000. Dr.
Goerke is president emeritus of the University of Houston and currently serves
a director of The Institute for the Future of Higher Education. The
institute's mission is to provide research and policy analysis on higher
education issues within state, national, and international contexts.

<Page>

Prior to his current position, Dr. Goerke served as president of the
University of Houston from June 1995 to September 1997, and president of the
University of Houston - Clear Lake from August 1991 to June 1995 and has been
associated with the University of Houston system since 1986. While at the
University of Houston, Dr. Goerke initiated significant international program
development with particular focus on Mexico and Taiwan and received the
"Breaking the Mold" award given by the Texas Comptroller's Office for
responsible fiscal planning efforts. Dr. Goerke was named "Manager of the
Year" by the Texas Gulf Coast Council of the National Management Association
in 1992. Dr. Goerke received his Ph.D. in Adult and Higher Education from
Michigan State University in 1962. Dr. Goerke received his M.A. and B.A.
degrees from Eastern Michigan University in 1955 and 1952, respectively.

         RICHARD R. ROYALL has served as chief financial officer since March
1996. Mr. Royall has been a certified public accountant since 1971. From 1971
to 1976, Mr. Royall was employed with Haskins & Sells, Laventhol & Horwath (a
partner from 1976 to 1986), and Bracken, Krutilek & Royall (1986). In 1986,
Mr. Royall practiced accounting as a sole proprietor. Since 1987, Mr. Royall
has been a partner in Royall & Fleschler, certified public accountants. In
addition, Mr. Royall serves as financial officer and director of companies
operating in the finance and chemical industries, including Fleetclean
Systems, Inc., none of which are affiliated with Eagle.

         Eagle's directors hold office until the next annual meeting of the
stockholders and until their successors are duly elected and qualified.
Directors are reimbursed for out-of-pocket expenses to attend meetings. Eagle
has established and does maintain compensation, audit, executive and
nominating committees. There are no family relationships among any of the
directors and executive officers of Eagle.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires Eagle's
directors and executive officers, and persons who own beneficially more than
ten percent of the common stock of Eagle, to file reports of ownership and
changes of ownership with the Securities and Exchange Commission. Based solely
on the reports received by Eagle and on written representations from certain
reporting persons, Eagle believes that the directors, executive officers, and
greater than ten percent beneficial owners have complied with all applicable
filing requirements.

ITEM 10.  EXECUTIVE COMPENSATION

         The following table provides information regarding compensation paid to
Eagle's chief executive officer. No other executive officer received in excess
of $100,000 in compensation during the fiscal year ended August 31, 2000.

                           SUMMARY COMPENSATION TABLE
<Table>
<Caption>
                                         Annual
                                       Compensation        Long Term Compensation Award
                                       ------------        ----------------------------
                                                                                Securities
Name and                                                   Restricted           Underlying          All Other
Principal Positions           Year      Salary ($)     Stock Award(s) ($)    Options/SARs (#)    Compensation ($)
-------------------           ----      ----------     ------------------    ----------------    ----------------
<S>                           <C>       <C>            <C>                   <C>                 <C>
H. Dean Cubley,
Chief Executive Officer       2000       $100,000              --                   --                  --
                              1999       $100,000              --                   --                  --
                              1998       $ 91,923              --                   --                  --
</Table>

Eagle has not entered into employment agreements with any of its executive
officers.

STOCK OPTIONS

         Eagle's 1996 Stock Option Plan provides for the issuance of an
aggregate 400,000 shares of common stock upon the exercise of options granted
under the plan. As of August 31, 2000, options to purchase an aggregate of
242,607 shares of common stock were outstanding under the plan.

                        OPTION GRANTS IN LAST FISCAL YEAR

<Page>
<Table>
<Caption>
                                  Number of                   Percent of
                                  Securities               Total Options/
                                  Underlying                 SARs Granted       Exercise or
                                 Options/SARs                to Employees        Base Price     Expiration
          Name                   Granted (#)                in Fiscal Year         ($/Sh)          Date
          ----                   -----------                --------------         ------          ----
<S>                              <C>                      <C>                   <C>             <C>
H. Dean Cubley,
Chief Executive Officer             3,333                        3.5%              $ 1.50        12/17/04
</Table>

                                       AGGREGATED OPTION EXERCISES IN 2000
                                           AND YEAR-END OPTION VALUES
<Table>
<Caption>
                               Shares
                             Acquired
                                 on          Value           Number of Unexercised           Value of Unexercised
           Name             Exercise (#)  Realized ($)         Options At FY-end             In-the-Money Options
           ----             ------------- ------------         -----------------             --------------------
                                                          Exercisable    Unexercisable   Exercisable   Unexercisable
                                                          -----------    -------------   -----------   -------------
<S>                         <C>           <C>             <C>            <C>             <C>           <C>
H. Dean Cubley,
Chief Executive Officer          -              -            3,333             -           $ 16,042          -
</Table>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of November 28, 2000, the number
and percentage of outstanding shares of Eagle; common stock owned by (i) each
person known to beneficially own more than 5% of Eagle's outstanding common
stock, (ii) each director, (iii) each named executive officer, and (iv) all
officers and directors as a group.
<Table>
<Caption>
                                            Shares of Common Stock
Name and Address                            Beneficially Owned             % Of Voting Power
<S>                                         <C>                            <C>
H. Dean Cubley
101 Courageous Drive
League City, TX  77573                             3,333                   less than 1%

Futer Family Trust
1331 Lamar, Suite 1375
Houston, TX 77010                              1,076,500                           4.1%

Christopher W. Futer
101 Courageous Drive
League City, TX 77573                              5,000                   less than 1%

A.L. Clifford
101 Courageous Drive
League City, TX  77573                           412,667                           1.6%

Glenn Allan Goerke
911 Live Oak Lane
Seabrook, TX  77586                               25,000                   less than 1%

Richard Royall
1331 Lamar, Suite 1375
Houston, TX  77010                               131,710                   less than 1%

All officers and directors
as a group (5 persons)                           577,710                           2.2%
</Table>

         Dr. Cubley's ownership consists of options to purchase 3,333 shares
of common stock issued under Eagle's employee stock option program at $1.50
per share and which will expire on December 15, 2004.
<Page>

         Mr. Futer disclaims beneficial ownership, as well as voting and
disposition power of the shares of common stock owned by the Futer Family
Trust. Mr. Futer's ownership consists of options to purchase 5,000 shares of
common stock at $1.25 per share, which will expire on August 3, 2003, issued
under Eagle's employee stock option program.

         Mr. Clifford's ownership includes 141,000 shares, which are held in
the name of The Clifford Family Trust, and 61,667 held by his wife.

         Dr. Glenn Goerke holds options to purchase 25,000 shares of Eagle
common stock at $2.00 per share. These options expire April 10, 2002 and have
piggyback registration rights after March 10, 2001.

         The total number of shares held by officers and directors include
options and warrants to purchase 33,333 shares of common stock that are
currently exercisable.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Certain of Eagle's principal stockholders, or their affiliates,
including Messrs. Futer and Clifford, are also principal stockholders of Link
Two Communications, which is one of Eagle's principal customers. Mr. Clifford
is also the chairman, and chief executive officer of Link Two Communications
and Dr. Cubley is a director of Link Two Communications. During the last two
fiscal years, Link Two Communications issued Eagle an aggregate of 240,000
shares of its common stock as a result of accrued finance charges on its
outstanding account payable to Eagle. In October 1999, Link Two Communications
refinanced this account payable to Eagle through the issuance of notes
maturing in September 2001, which amount equaled $8,655,126 at August 31,
2000. As a result of ClearWorks acquiring control of Link Two Communications
in November 2000, ClearWorks discharged this Link Two Communications
indebtedness in full through the issuance of 2,856,000 shares of its common
stock to Eagle.

         In October and November 2000, Eagle advanced an aggregate of
$2,000,000 to ClearWorks, maturing in December 2001, secured by substantially
all of ClearWorks assets. Additionally, ClearWorks issued Eagle an aggregate
of 1,500,000 shares of its common stock in connection therewith.

         In April 2000, Eagle entered into a one-year agreement Synchton,
Inc., an entity owned by Dr. Cubley's son, to provide professional business
services to Eagle. As compensation for these services, Eagle agreed to pay
Synchton $10,000 per month and issued a three year warrant to purchase 100,000
shares of common stock, which shares vest and become exercisable at the then
market price throughout the term of the consulting arrangement.

         In July 1999, Mr. Royall exchanged $.05 warrants to purchase 12,500
shares of common stock, and $5.00 warrants to purchase 12,500 shares of common
stock and $8,400 for 12,500 shares of Eagle common stock. In July 1999, Mr.
Futer exchanged 110,000 $.05 warrants, 110,000 $0,50 warrants, and $147,000
for 220,000 shares of Eagle common stock. In July 1999, Mr. Clifford exchanged
166,667, $.05 warrants, 166,667, $.50 warrants, and $223,334 for 333,334
shares of Eagle common stock. In July 1999 Hou-Tex Trust exchanged 350,000,
$.05 warrants, 350,000, $.50 warrants, and $469,000 for 700,000 shares of
Eagle common stock. In July 1999, Futer Family Partnership exchanged 110,000,
$.05 warrants, 110,000, $.50 warrants, and $147,400 for 220,000 shares of
Eagle common stock.

<Page>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      The following exhibits are to be filed as part of the annual
report:
<Table>
<Caption>
         EXHIBIT NO.          IDENTIFICATION OF EXHIBIT
<S>                        <C>
         Exhibit 3.1       Eagle Wireless International, Inc. Articles of
                           Incorporation, as Amended (incorporated by reference
                           to Exhibit 3.1 of Form SB-2 file no. 333-20011)
         Exhibit 3.2       Eagle Wireless International, Inc. Bylaws
                           (incorporated by reference to Exhibit 3.2 of Form
                           SB-2 file no. 333-20011)
         Exhibit 4.1       Form of Common Stock Certificate (incorporated by
                           reference to Exhibit 4.1 of Form SB-2 file no.
                           333-20011)
         Exhibit 10.1      Asset Purchase Agreement between Eagle Telecom
                           International, Inc., a Delaware corporation and Eagle
                           Telecom International, Inc., a Texas corporation
                           (incorporated by reference to Exhibit 10.1 of Form
                           SB-2 file no. 333-20011)
         Exhibit 10.2      Stock Option Plan (incorporated by reference to
                           Exhibit 10.2 of Form SB-2 file no. 333-20011)
         Exhibit 10.3      Agreement and Plan of Reorganization dated September
                           15, 2000 (incorporated by reference to Exhibit 10.1
                           of Form S-4 file no. 333-49688)
         Exhibit 10.4      Stock Purchase Agreement between Eagle Wireless
                           International, Inc. and the shareholders of Comtel
                           Communications, Inc. (incorporated by  reference to
                           Exhibit 10.4 of Form 10-KSB filed on  December 13,
                           2000)
         Exhibit 10.5      Stock Purchase Agreement between Eagle Wireless
                           International, Inc. and the shareholders of Atlantic
                           Pacific Communications, Inc. (incorporated by
                           reference to Exhibit 10.4 of Form 10-KSB filed on
                           December 13, 2000)
         Exhibit 10.6      Stock Purchase Agreement between Eagle Wireless
                           International, Inc. and the shareholders of eToolz,
                           Inc. (incorporated by  reference to Exhibit 10.4 of
                           Form 10-KSB filed on  December 13, 2000)
         Exhibit 21.1      List of Subsidiaries (incorporated by reference to
                           Exhibit 21.1 of Form S-4 file no. 333-49688)
         Exhibit 23.1      Consent of McManus & Co., P.C.
         Exhibit 27.1      Financial Data Schedule
</Table>

         (b) There have been no reports filed on Form 8-K during the last
quarter of the period covered by this report.

<Page>

                                   SIGNATURES

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

                                Eagle Wireless International, Inc.


                                By: /s/ Dr. H. Dean Cubley
                                    ------------------------------
                                Dr. H. Dean Cubley,
                                Chief Executive Officer, President, and Director


         In accordance with the Exchange Act, 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/ H. Dean Cubley                          Chairman of the Board                       November 2, 2001
----------------------------                Chief Executive Officer and President
H. Dean Cubley


/s/ Richard R. Royall                       Chief Financial Officer                     November 2, 2001
----------------------------
Richard R. Royall


/s/ Christopher W. Futer                    Director and Vice-President                 November 2, 2001
----------------------------
Christopher W. Futer


/s/ A.L. Clifford                           Director                                    November 2, 2001
----------------------------
A.L. Clifford


/s/ Glenn A. Goerke                         Director                                    November 2, 2001
----------------------------
Glenn A. Goerke

</Table>

<Page>


                         INDEPENDENT ACCOUNTANT'S REPORT


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF EAGLE WIRELESS INTERNATIONAL, INC.:

We have audited the accompanying consolidated balance sheets of Eagle Wireless
International, Inc. and subsidiaries as of August 31, 2000 and 1999 and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of Eagle Wireless International, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.

In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Eagle Wireless International, Inc. and subsidiaries as of August 31,
2000 and 1999 and the results of their earnings, shareholders' equity, and their
cash flows for the years then ended are in conformity with generally accepted
accounting principles.




MCMANUS & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
MORRIS PLAINS, NEW JERSEY

November 26, 2000

                                       F-1

<Page>

               EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>

                                                      ASSETS
                                                                                               AUGUST 31,
                                                                                       2000                1999
                                                                                   -----------------------------------
<S>                                                                               <C>               <C>
CURRENT ASSETS:
   Cash and Cash Equivalents (Note 1)                                             $   32,346,290    $         187,965
   Accounts Receivable (Note 2)                                                        1,247,113              286,269
   Other Receivables (Note 21)                                                         8,655,126            6,641,892
   Inventories (Note 1)                                                                5,755,778            2,355,861
   Marketable Securities (Notes 1 & 9)                                                   970,701                    0
   Prepaid Expenses                                                                      330,904              242,551
                                                                                   --------------    -----------------
      Total Current Assets                                                            49,305,912            9,714,538

PROPERTY AND EQUIPMENT (NOTES 1 & 3):
   Operating Equipment                                                                 2,702,948              922,204
   Less: Accumulated Depreciation                                                    (1,023,153)            (333,474)
                                                                                   --------------    -----------------
      Total Property and Equipment                                                     1,679,795              588,730

OTHER ASSETS:
   Security Deposits                                                                      32,415               17,014
   Deferred Advertising Costs (Note 1)                                                   384,463                    0
   Deferred Syndication Costs (Note 1)                                                   270,389                    0
   Goodwill (Notes 1 & 4)                                                              5,965,437                    0
   Less: Accumulated Amortization                                                      (193,718)                    0
   Other Intangible Assets (Note 1)                                                      171,118                    0
   Other Assets                                                                           25,000                    0
                                                                                   --------------    -----------------
      Total Other Assets                                                               6,655,104               17,014
                                                                                   --------------    -----------------
TOTAL ASSETS                                                                      $   57,640,811    $      10,320,282
                                                                                   ==============    =================

                                       LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts Payable                                                               $    2,007,422    $         207,949
   Accrued Expenses                                                                      308,346              106,355
   Notes Payable (Note 5)                                                                 41,607               16,643
   Line of Credit (Note 7)                                                               265,830                    0
   Capital Lease Obligations (Note 6)                                                     58,995               14,962
   Deferred Revenues                                                                           0              532,772
   Federal Income Taxes Payable (Notes 1 & 10)                                           736,292              468,064
   Franchise Taxes Payable                                                                17,161               13,108
   Sales Taxes Payable                                                                    56,722               48,348
   Deferred Taxes (Note 10)                                                               15,114                6,142
                                                                                   --------------    -----------------
      Total Current Liabilities                                                        3,507,489            1,414,343

LONG - TERM LIABILITIES:
   Capital Lease Obligations
      (net of current maturities) (Note 6)                                                40,988                3,939
   Deferred Taxes (Note 10)                                                               32,366                7,683
                                                                                   --------------    -----------------
      Total Long - Term Liabilities                                                       73,354               11,622

COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 17)

SHAREHOLDERS' EQUITY:
   Preferred Stock - $.001 par value
      Authorized 5,000,000 shares
      Issued -0- shares                                                                        0                    0
   Common Stock - $.001 par value
      Authorized 100,000,000 shares
      Issued and Outstanding at 2000 and 1999
      25,609,263 and 13,479,833, respectively                                             25,609               13,480
   Paid in Capital                                                                    52,159,531            7,180,900
   Retained Earnings                                                                   1,874,828            1,699,937
                                                                                   --------------    -----------------
      Total Shareholders' Equity                                                      54,059,968            8,894,317
                                                                                   --------------    -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $   57,640,811    $      10,320,282
                                                                                   ==============    =================

</Table>

See accompanying notes to consolidated financial statements.

                                                            F-2

<Page>




               EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS

<Table>
<Caption>

                                                                                   FOR THE YEARS ENDED AUGUST 31,
                                                                             2000              1999                 1998
                                                                      ------------------------------------------------------
<S>                                                                  <C>                <C>                <C>
NET SALES                                                            $     5,239,670    $    2,217,275     $      4,827,434
COST OF GOODS SOLD
   Materials and Supplies                                                  1,063,802           542,515            1,181,776
   Direct Labor and Related Costs                                          1,118,648           219,285              355,644
   Depreciation and Amortization                                              72,983            80,069               17,542
   Other Manufacturing Costs                                                 226,261           494,633              409,992
                                                                      ---------------    --------------     ----------------
      Total Cost of Goods Sold                                             2,481,694         1,336,502            1,964,954
                                                                      ---------------    --------------     ----------------

GROSS PROFIT                                                               2,757,976           880,773            2,862,480
                                                                      ---------------    --------------     ----------------
OPERATING EXPENSES
   Selling, General and Administrative
      Salaries and Related Costs                                           1,424,074            58,880              736,734
      Advertising and Promotion                                              339,709            75,816              193,172
      Depreciation and Amortization                                          503,700            65,095              128,997
      Research & Development                                                 370,828           438,693              236,869
      Other Support Costs                                                  1,346,456           680,497              811,286
                                                                      ---------------    --------------     ----------------
      Total Operating Expenses                                             3,984,767         1,318,981            2,107,058
                                                                      ---------------    --------------     ----------------
EARNINGS / (LOSS) FROM OPERATIONS BEFORE OTHER
REVENUES / (EXPENSES), LOSS FROM MINORITY
INTEREST IN AFFILIATE, INCOME TAXES AND OTHER
COMPREHENSIVE INCOME                                                      (1,226,791)         (438,208)             755,422

OTHER REVENUES / (EXPENSES)
   Interest Income - net                                                   1,506,436           799,098              427,144
   Other Income                                                                9,357          (10,081)              (5,451)
                                                                      ---------------    --------------     ----------------
      Total Other Revenues                                                 1,515,793           789,017              421,693
                                                                      ---------------    --------------     ----------------
EARNINGS BEFORE MINORITY INTEREST IN
AFFILIATE, INCOME TAXES & OTHER
COMPREHENSIVE INCOME                                                         289,002           350,809            1,177,115
   Gain / (Loss) From Minority Interest in Affiliate                              (0)          (91,678)             (28,663)
                                                                      ---------------    --------------     ----------------
EARNINGS BEFORE INCOME TAXES                                                 289,002           259,131            1,148,452
   Provision For Income Taxes                                                 95,961            90,860              377,484
                                                                      ---------------    --------------     ----------------
NET EARNINGS                                                                 193,041           168,271              770,968

OTHER COMPREHENSIVE INCOME, NET OF TAXES
   Unrealized Holding Loss                                                   (18,150)                0                    0
                                                                      ---------------    --------------     ----------------
OTHER COMPREHENSIVE INCOME                                           $       174,891    $      168,271     $        770,968
                                                                      ===============    ==============     ================
   Net Earnings Per Common Share:
      Primary (Note 1 & 18)                                          $          0.01    $         0.01     $           0.07
      Fully Diluted (Note 1 & 18)                                    $          0.01    $         0.01     $           0.05
      Comprehensive Income (Note 1)                                  $          0.01    $         0.01     $           0.07

</Table>

See accompanying notes to consolidated financial statements.


                                       F-3

<Page>

               EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<Table>
<Caption>

                                                                                  Additional                      Total
   September 1, 1997                       Common Stock              Preferred     Paid In      Retained      Shareholders'
   To August 31, 2000                 Shares            Value          Stock       Capital      Earnings         Equity
------------------------          ---------------    -------------   ----------   ----------   -----------    --------------
<S>                               <C>               <C>             <C>          <C>          <C>            <C>
Total Shareholders' Equity
As Of September 1, 1997               11,510,334    $      11,510   $    0       $5,820,180   $   760,698    $    6,592,388
                                  ---------------    -------------   ----------   ----------   -----------    --------------

Net Earnings 1998                                                                           770,968           770,968

New Stock Issued to Shareholders
   J. Hamilton (Nov. 1997)                39,820               40        0           59,960             0            60,000
   D. Walker (Nov. 1997)                  55,000               55        0           82,445             0            82,500
   D. Walker (Aug. 1998)                  65,000               65        0           95,564             0            95,629

Syndication Costs                              0                0        0         (85,317)             0          (85,317)
                                  ---------------    -------------   ----------   ----------   -----------    --------------


Total Shareholders' Equity
As Of August 31, 1998                 11,670,154           11,670        0        5,972,832     1,531,666         7,516,168
                                  ---------------    -------------   ----------   ----------   -----------    --------------

Net Earnings 1999                                                                           168,271           168,271

New Stock Issued to Shareholders
   Issuance of Common Stock
      For Services Rendered               34,470               34        0          163,457             0           163,491
      For Exercise of Warrants         1,775,209            1,776        0        1,044,611             0         1,046,387
                                  ---------------    -------------   ----------   ----------   -----------    --------------


Total Shareholders' Equity
As Of August 31, 1999                 13,479,833           13,480        0        7,180,900     1,699,937         8,894,317

Net Earnings 2000                              0                0        0                0       193,041           193,041

New Stock Issued to Shareholders
   Issuance of Common Stock
      For Acquisitions                   868,919              869        0        3,661,125             0         3,661,994
      For Services and Compensation      981,392              981        0        1,641,990             0         1,642,971
      For Warrant Conversion           9,410,954            9,411        0        38,558,726            0        38,568,137
      For Debt Conversion                827,557              827        0        1,611,782             0         1,612,609
      For Employee Stock Option Plan      40,608               41        0          158,037             0           158,078


Syndication Costs                              0                0        0        (653,029)             0         (653,029)

Unrealized Holding Loss                        0                0        0                0      (18,150)          (18,150)
                                  ---------------    -------------   ----------   ----------   -----------    --------------

Total Shareholders' Equity
As Of August 31, 2000                 25,609,263    $      25,609   $        0   $52,159,531  $ 1,874,828    $   54,059,968
                                  ===============    =============   ==========   ==========   ===========    ==============

</Table>

See accompanying notes to the consolidated financial statements.

                                       F-4

<Page>

<Table>
<Caption>
                                    EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                            2000              1999                 1998
                                                                        --------------   ---------------   ---------------------
<S>                                                                    <C>              <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Earnings                                                        $      193,041   $       168,271   $             770,968
   Adjustments To Reconcile Net Earnings To Net Cash
    Used By Operating Activities:
      Depreciation and Amortization                                           576,683           145,164                 146,539
      Stock Issued for Services Rendered                                            0           163,491                       0
      Unrealized Holding Loss on Marketable Securities                        (18,150)                0                       0
      (Increase) / Decrease in Marketable Securities                         (970,701)                0                       0
      (Increase) / Decrease in Accounts Receivable                            (87,471)          (40,380)             (2,496,797)
      (Increase) / Decrease in Other Receivables                           (2,013,234)       (1,495,703)                 28,663
      (Increase) / Decrease in Inventories                                 (3,082,510)       (1,082,580)               (261,063)
      (Increase) / Decrease in Prepaid Expenses                               (74,521)         (173,061)                (12,021)
      Increase / (Decrease) in Accounts Payable                               539,707          (128,833)                 19,613
      Increase / (Decrease) in Accrued Expenses                              (125,306)          (11,560)                117,915
      Increase / (Decrease) in Deferred Taxes                                  33,655             2,755                 (14,147)
      Increase / (Decrease) in Deferred Revenues                             (532,772)          476,268                  56,504
      Increase / (Decrease) in Sales Tax Payable                              (10,067)           10,365                  37,983
      Increase / (Decrease) in Federal Income Taxes Payable                   268,227            92,893                 114,259
      Increase / (Decrease) in Franchise Taxes Payable                          4,053           (28,746)                 21,854
                                                                        --------------   ---------------   ---------------------
      Total Adjustments                                                    (5,492,407)       (2,069,927)             (2,240,698)
                                                                        --------------   ---------------   ---------------------
   Net Cash Used By Operating Activities                                   (5,299,365)       (1,901,656)             (1,469,730)

CASH FLOWS FROM INVESTING ACTIVITIES
      (Purchase) / Disposal of Property and Equipment                      (1,358,298)          (24,489)               (377,247)
      (Increase) / Decrease in Security Deposits                              (14,302)           (8,070)                  4,065
      (Increase) / Decrease in Deferred Advertising Costs                    (384,463)                0                       0
      (Increase) / Decrease in Deferred Syndication Costs                    (270,389)                0                       0
      (Increase) / Decrease in Other Intangible Assets                       (171,118)                0                       0
      (Increase) / Decrease in Other Assets                                   (25,000)                0                       0
                                                                        --------------   ---------------   ---------------------

   Net Cash Used By Investing Activities                                   (2,223,570)          (32,559)               (373,182)

CASH FLOWS FROM FINANCING ACTIVITIES
      Increase / (Decrease) in Notes Payable (Short-Term)                   1,287,209             3,912                  12,731
      Increase / (Decrease) in Capital Leases                                  51,341              (845)                (15,094)
      Increase / (Decrease) in Line of Credit                                  (7,170)                0                       0
      Increase / (Decrease) in Shareholders' Advances                               0           (24,519)               (104,853)
      Proceeds From Sale of Common Stock, Net                              38,349,880         1,046,387                 152,812
                                                                        --------------   ---------------   ---------------------
   Net Cash Provided By Financing Activities                               39,681,260         1,024,935                  45,596

   Net Increase / (Decrease) in Cash                                       32,158,325          (909,280)             (1,797,316)

CASH AT THE BEGINNING OF THE YEAR                                             187,965         1,097,245               2,894,561
                                                                        --------------   ---------------   ---------------------

CASH AT THE END OF THE YEAR                                            $   32,346,290   $       187,965   $           1,097,245
                                                                        ==============   ===============   =====================

      Supplemental Disclosures of Cash Flow Information:
      Net cash paid during the year for:
         Interest                                                      $       94,381   $        10,081   $               5,451
         Income Taxes                                                          24,054            75,051                 338,688


      Supplemental Non-cash Investing Activities - See Note 4.

</Table>

See accompanying notes to the consolidated financial statements.

                                       F-5


<Page>



              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000

















                                       F-6


<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:

         Eagle Wireless International, Inc., (the Company), incorporated as a
         Texas corporation on May 24, 1993 and commenced business in April of
         1996. The Company is a worldwide supplier of broadband and
         telecommunications equipment with related software, broadband products,
         and fiber and cable as used by service providers in the paging and
         other wireless personal communications markets.

A)       Consolidation

         At August 31, 2000, the Company has three wholly owned subsidiaries:
         AtlanticPacific Communications, Inc., eToolz, Inc., and Broadband
         Magic.com, Inc. The consolidated financial statements include the
         accounts of the Company and its subsidiaries. All significant
         inter-company transactions and balances have been eliminated in
         consolidation.

B)       Cash and Cash Equivalents

         The Company has $26,319,359 and $29,059 invested in interest bearing
         accounts at August 31, 2000 and 1999, respectively.

C)       Property and Equipment

         Property and equipment are carried at cost less accumulated
         depreciation. Depreciation is calculated by using the straight-line
         method for financial reporting and accelerated methods for income tax
         purposes. The recovery classifications for these assets are listed as
         follows:

<Table>
<Caption>

                                                                     Years
                                                                     -----
                           <S>                                  <C>
                           Manufacturing Equipment                     7
                           Furniture and Fixtures                      7
                           Office Equipment                            5
                           Leasehold Improvements               Life of Lease
                           Property and Equipment                      5
                           Vehicles                                    5

</Table>

         Expenditures for maintenance and repairs are charged against income as
         incurred whereas major improvements are capitalized.








                                     F-6

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


D)       Inventories

         Inventories are valued at the lower of cost or market. The cost is
         determined by using the FIFO method. Inventories consist of the
         following items:

<Table>
<Caption>

                                                       August 31,
                                             ------------------------------
                                             2000                     1999
                                             ----                     ----
                  <S>                   <C>                      <C>
                  Raw Materials         $  2,822,568             $  1,215,003
                  Work in Process          2,933,210                1,119,672
                  Finished Goods             - 0 -                     21,186
                                         ------------              ------------
                                        $  5,755,778             $  2,355,861
                                         ============              ============

</Table>

E)       Revenue Recognition

         The Company designs, manufactures, markets and services its products
         and services under the Eagle Wireless International, Inc., Broadband
         Magic.com, Inc., AtlanticPacific Communications, Inc. names.

         EAGLE WIRELESS INTERNATIONAL
         Eagle designs, manufactures and markets transmitters, receivers,
         controllers and software, along with other equipment used in commercial
         and personal communication systems, radio and telephone systems.
         Revenues from these products are recognized when the product is
         shipped.

         BROADBAND MAGIC.COM
         Broadband Magic.com, Inc. designs, manufactures and markets the
         convergent set-top boxes. Products are sent principally to commercial
         customers for a pre-sale test period of 90-days. Upon the end of the
         pre-sale test period, the customer either returns the product or
         accepts the product, at which time the Company recognizes the revenue.

         Eagle Wireless International and Broadband Magic.com engage independent
         agents for sales principally in foreign countries and certain
         geographic regions in the United States. Under the terms of these
         one-year agreements the distributor or sales agents provide the
         companies with manufacturing business sales leads. The transactions
         from these distributors and agents are subject to the companies'
         approval prior to sale. The distributorship or sales agent receives
         commissions based on the amount of the sales invoice from the companies
         to the customer. The sale is recognized at the time of shipment to the
         customer. These sales agents and distributors are not a significant
         portion of total sales in any of the periods presented.

         ATLANTIC PACIFIC COMMUNICATIONS
         AtlanticPacific provides project planning, installation, project
         management, testing and documentation of fiber and cable to commercial
         and industrial clients throughout the United States. The revenue from
         the fiber and cable installation and services is recognized upon
         percentage of completion of the project. Most projects are completed in
         less than one month,


                                     F-7

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


         therefore, matching revenue and expense in the period incurred.
         Service, training and extended warranty contract revenues are
         recognized as earned.

         ETOOLZ
         Etoolz, Inc. provides research and development support for all Eagle
         companies and does not currently provide billable services to
         independent third parties.

         Earnings are charged with a provision for doubtful accounts based on
         collection experience and current review of the collectability of
         accounts receivable. Accounts receivable deemed uncollectable are
         charged against the allowance for doubtful accounts.

F)       Research and Development Costs

         For the year ended August 31, 2000, the Company commenced research and
         development activities for internal projects related to its convergent
         set-top boxes as well as its multi-media entertainment centers.
         Research and development costs of $370,828 were expensed for the year
         ended August 31, 2000.

         Prior to this fiscal year, the Company's research and development costs
         included obligations to perform contractual services for outside
         parties. These costs were expensed as contract revenues were earned.
         Research and development costs of $438,693 were expensed for the year
         ended August 31, 1999. Contract revenues earned for the year ended
         August 31, 1999 were approximately $755,771. No research and
         development services were performed for outside parties for the year
         ended August 31, 2000.

G)       Income Taxes

         The Company adopted the provisions of Statement of Financial Accounting
         Standards (SFAS) No. 109, "Accounting for Income Taxes", which requires
         a change from the deferral method to assets and liability method of
         accounting for income taxes. Timing differences exist between book
         income and tax income, which relate primarily to depreciation methods.

H)       Net Earnings Per Common Share

         Net earnings per common share is shown as both basic and diluted. Basic
         earnings per common share are computed by dividing net income less any
         preferred stock dividends (if applicable) by the weighted average
         number of shares of common stock outstanding. Diluted earnings per
         common share are computed by dividing net income less any preferred
         stock dividends (if applicable) by the weighted average number of
         shares of common stock outstanding plus any dilutive common stock
         equivalents. The components used for the computations are shown as
         follows:

<Table>
<Caption>

                                                                  August 31, 2000       August 31, 1999
                                                                 ----------------       ---------------
                  <S>                                            <C>                    <C>
                  Weighted Average Number of Common
                      Shares Outstanding Including:

                  Primary Common Stock Equivalents                   19,073,071           11,980,911
                  Fully Dilutive Common Stock Equivalents            22,379,254           12,049,911

</Table>

                                     F-8

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


I)       Impairment of Long Lived and Identifiable Intangible Assets

         The Company evaluates the carrying value of long-lived assets and
         identifiable intangible assets for potential impairment on an ongoing
         basis. An impairment loss would be deemed necessary when the estimated
         non-discounted future cash flows are less than the carrying net amount
         of the asset. If an asset were deemed to be impaired, the asset's
         recorded value would be reduced to fair market value. In determining
         the amount of the charge to be recorded, the following methods would be
         utilized to determine fair market value:

              1)    Quoted market prices in active markets.
              2)    Estimate based on prices of similar assets
              3)    Estimate based on valuation techniques

         As of August 31, 2000 and 1999, no impairment existed.

J)       Intangible Assets

         Goodwill represents the excess of the cost of companies acquired over
         the fair value of their net assets at the dates of acquisition and is
         being amortized using the straight-line method over twenty (20) years.

J)       Intangible Assets (continued)

         Other intangible assets consist of patents and the intrinsic value
         trade-show costs. Patents and trade show costs are being amortized
         using the straight-line method over ten (10) years and eighteen (18)
         months, respectively.

K)       Deferred Advertising Costs

         Beginning in fiscal 2000, advertising costs have been capitalized and
         amortized on the basis of contractual agreements entered into by the
         Company. These contracts are amortized over the life of the individual
         contracts. For the year ended August 31, 2000, the Company has expensed
         $297,599 whereas $384,463 in costs has been deferred

         Prior to fiscal 2000, the Company had no contractual arrangements,
         therefore all advertising related costs were expensed as incurred. For
         the year ended August 31, 1999, the Company had expensed $75,816.

L)       Deferred Revenues

         The Company recognized deferred revenues by matching the revenues with
         the completion and delivery of the equipment, which are generally
         completed within thirty to sixty days. Service revenues, which are
         billed and collected in advance are matched with expenses in the period
         incurred.


                                     F-9

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


M)       Deferred Syndication Costs

         Deferred syndication costs consist of those expenditures incurred that
         are directly attributable to fundraising and the collection thereto.
         Upon successful collection of the funds, all expenses incurred will be
         reclassified to additional paid in capital and treated as syndication
         costs; netted against the funds raised.

N)       Use of Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent asset and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

O)       Marketable Securities

         In May 1993, the Financial Accounting Standards Board issued Statements
         of Financial Accounting Standards No. 115, "Accounting for Certain
         Investments in Debt and Equity Securities", effective for fiscal years
         beginning after December 15, 1993. This statement considers debt
         securities that the Company has both the positive intent and ability to
         hold to maturity are carried at amortized cost. Debt securities that
         the company does not have the positive intent and ability to hold to
         maturity and all marketable equity securities are classified as
         available-for-sale or trading securities and are carried at fair market
         value. Unrealized holding gains and losses on securities classified as
         trading are reported in earnings. Unrealized holding gains and losses
         on securities classified as available-for-sale were previously carried
         as a separate component of stockholders' equity. SFAS No. 115 as
         amended by Financial Accounting Standards Board issued Statement of
         Financial Accounting Standards No. 130, "Other Comprehensive Income".
         Management determines the appropriate classification of marketable
         equity and debt securities at the time of purchase and re-evaluates
         such designation as of each balance sheet date.

P)       Other Comprehensive Income

         In 1997, the Financial Accounting Standards Board issued Statement of
         Financial Accounting Standards No. 130, "Other Comprehensive Income,"
         effective for fiscal years beginning after December 15, 1997. This
         statement considers the presentation of unrealized holding gains and
         losses attributable to debt and equity securities classified as
         available-for-sale. As stated, any unrealized holding gains or losses
         affiliated to these securities are carried below net income under the
         caption "Other Comprehensive Income." For the fiscal year ended August
         31, 1999, no other comprehensive income existed.

Q)       Supporting Costs in Selling, General & Administrative Expenses


                                     F-10

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


         Other support costs consist of the following:

<Table>
<Caption>

                                                                  August 31,
                                                   2000              1999              1998
                                              -------------------------------------------------
                  <S>                       <C>               <C>               <C>
                  Rent                      $    385,659      $    154,354      $     99,015
                  Travel                         325,952            70,696           127,605
                  Utilities                      157,785            87,019           109,531
                  Professional Fees              190,094           257,033           249,740
                  Office Supplies                 96,667            21,309            20,789
                  Insurance                       67,794            49,729            43,766
                  Advertising / Conventions       64,026             9,710            36,402
                  Postage / Delivery              30,138            25,198            26,403
                  Taxes                           22,277           (14,811)           63,953
                  Misc. / Other                    6,064            20,260            34,082
                                              ----------        -----------       -----------
                           Total            $  1,346,456      $    680,497      $    811,286
                                              ==========        ===========       ===========

</Table>

R)       Reclassification

         The Company has reclassified certain costs and expenses for the year
         ended August 31, 1999 to facilitate comparison to the year ended August
         31, 2000.


NOTE 2 - ACCOUNTS RECEIVABLE:

         Accounts receivable consist of the following:

<Table>
<Caption>

                                                             August 31,
                                                        2000           1999
                                                        ----           ----
         <S>                                    <C>                <C>
         Accounts Receivable                    $  1,335,888       $   286,269
         Allowance for Doubtful Accounts              88,775            - 0 -
                                                  ----------          ---------
         Net Accounts Receivable                $  1,247,113       $   286,269
                                                  ==========          =========

</Table>

NOTE 3 - PROPERTY, PLANT & EQUIPMENT:

         Components of property, plant & equipment are as follows:

<Table>
<Caption>

                                                                                   August 31,
                                                                             2000               1999
                                                                             ----               ----
                  <S>                                                  <C>                  <C>
                  Automobile                                           $     58,094         $   - 0 -
                  Furniture & Fixtures                                      140,090             32,900
                  Leasehold Improvements                                     24,282              9,282
                  Manufacturing Equipment                                 1,383,903            482,359
                  Office Equipment                                          721,289             78,332
                  Property & Equipment                                      375,290            319,331
                                                                         -----------         ----------
                      Total Property, Plant & Equipment                   2,702,948            922,204

                  Less:  Accumulated Depreciation                        (1,023,153)          (333,474)
                                                                         -----------         ----------
                      Net Property, Plant & Equipment                 $   1,679,795         $  588,730
                                                                         ===========         ==========

</Table>

                                     F-11

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


NOTE 4 - BUSINESS COMBINATIONS:

         On January 1, 2000, the Company acquired APC in a business combination
         accounted for as a purchase. APC is primarily engaged in the nationwide
         sales and installation of fiber and cable to commercial enterprises.
         The Company issued 518,919 shares of common stock valued at $2,044,541
         to acquire the net assets of APC. The Company allocated (in thousands)
         the acquisition costs to current assets of $395, property, plant and
         equipment of $125, intangible assets of $3,663, other assets of $1 and
         assumed liabilities of accounts payable and accrued expenses of $1,760,
         bank lines of credit and notes of $380 for a total acquisition of
         $2,044. The allocation of the purchase price is based on the fair value
         of assets and liabilities assumed as determined by independent third
         parties or management's estimates, based on existing contracts, recent
         purchases of assets and underlying loan documents.

         Concurrently with the closing of this acquisition we entered into a
         two-year agreement with the former principals of APC. These principals
         may earn up to 3,000,000 shares of common stock based on APC
         accumulated sales goals. Under the terms of the agreement, we will
         issue an additional 500,000 shares for $10,000,000 in accumulated
         sales, 1,000,000 shares for $30,000,000 in accumulated sales and
         1,500,000 shares for $60,000,000 in accumulated sales. These sales have
         to be achieved within a two-year period commencing January 1, 2000. In
         addition, the principals must maintain a "Gross Profit Margin" of 25%
         and an "EBITDA Profit" of 10%. These contingencies and attainment
         thereof are considered remote and, accordingly, have been excluded from
         the determination of the acquisition price.

         On January 1, 2000, the Company acquired Comtel in a business
         combination accounted for as a purchase. Comtel is primarily engaged in
         the sales and installation of fiber and cable to commercial enterprises
         in Texas and Louisiana. The Company issued 300,000 shares of common
         stock valued at $1,182,000 to acquire the net assets of Comtel. The
         Company allocated (in thousands) the acquisition costs to current
         assets of $968, property, plant and equipment of $67, intangible assets
         of $1,879, and assumed liabilities of accounts payable and accrued
         expenses of $1,459, bank lines of credit and notes of $273 for a total
         acquisition of $1,182. The allocation of the purchase price is based on
         the fair value of assets and liabilities assumed as determined by
         independent third parties or management's estimates, based on existing
         contracts, recent purchases of assets and underlying loan documents.

         On March 17, 2000, the Company acquired ETI in a business combination
         accounted for as a purchase. ETI specializes in the development of
         leading edge, innovative, commercial, industrial and military
         technologies. The Company issued 50,000 shares of common stock valued
         at $437,500 to acquire the net assets of ETI. The Company allocated (in
         thousands) the acquisition costs to property, plant and equipment of
         $13, intangible assets of $424, for a total acquisition of $437. The
         allocation of the purchase price is based on the fair value of assets
         and liabilities assumed as determined by independent third parties or
         management's estimates, based on existing contracts, recent purchases
         of assets and underlying loan documents.

         The following unaudited pro forma combined condensed financial
         statement has been prepared to give effect to the acquisition of
         AtlanticPacific, Inc. (APC) and Comtel Communications, Inc.


                                     F-12

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


         (Comtel). The acquisition of APC and Comtel has been accounted for
         using the purchase method of accounting pursuant to APB 16, the effects
         of which are reflected in the accompanying pro forma financial
         statement.

         The unaudited pro forma combined condensed statement of operation
         combines the historical consolidated statement of operations of Eagle,
         APC and Comtel as if the acquisition had occurred as of September 1,
         1999 and September 1, 1998.

         Unaudited pro forma combined condensed financial information is
         presented for illustrative purposes only and is not necessarily
         indicative of the financial position or result of operations that would
         have actually been reported had the merger occurred at the beginning of
         the period presented, nor is it necessarily indicative of future
         financial position or results of operations. The unaudited pro forma
         combined condensed financial statement is based upon the respective
         historical consolidated financial statements of Eagle, APC and Comtel
         and notes thereto. The unaudited pro forma combined condensed financial
         statement does not incorporate, nor does it assume any benefits from
         cost savings or synergies of operations of the combined company. This
         transaction is reflected in the Eagle Wireless International, Inc.
         balance sheet at August 31, 2000, and accordingly any reference to
         balance sheet information is included in the form 10KSB.

<Table>
<Caption>

                           Unaudited Pro Forma Combined Condensed Statement of Operation
                                        For the Year Ended August 31, 2000

                     (IN THOUSANDS, EXCEPT NET LOSS PER SHARE INFORMATION)

                            Eagle           APC / Comtel          Adjustments          Total
                         ------------    -------------------    -----------------    -----------
<S>                   <C>             <C>                    <C>                  <C>
Revenues              $        1,826  $               5,922  $               ---  $       7,748
Net loss A            $        (413)  $             (1,081)  $             (115)  $     (1,609)

Net loss per share:
Basic                                                                             $      (0.10)
Diluted                                                                           $      (0.10)

Share data: B
Basic                                                                                    16,201
Diluted                                                                                  16,201

</Table>


                                     F-13

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000

<Table>
<Caption>

                           Unaudited Pro Forma Combined Condensed Statement of Operation
                                        For the Year Ended August 31, 1999

                        (IN THOUSANDS, EXCEPT NET LOSS PER SHARE INFORMATION)

                                   Eagle           APC / Comtel          Adjustments          Total
                                ------------    -------------------    -----------------    -----------
<S>                          <C>             <C>                    <C>                  <C>
Revenues                     $        4,827  $               5,937  $               ---  $      10,764
Net profit / (loss) A        $          771  $               (820)  $             (277)  $       (326)

Net loss per share:
Basic                                                                                    $     (0.004)
Diluted                                                                                  $     (0.004)

Share data: B
Basic                                                                                           12,634
Diluted                                                                                         12,634

</Table>

         Due to failure of meeting the significance test, eToolz, Inc. (ETI) is
         not required to be included in the unaudited pro forma combined
         condensed financial statement.

         The following pro forma adjustments were applied to the historical
         consolidated financial statements of Eagle, APC and Comtel to arrive at
         the unaudited pro forma combined condensed financial information. This
         transaction was recorded using the purchase method of accounting. The
         allocation of the aggregate purchase price to the tangible and
         identifiable intangible assets acquired and liabilities assumed in
         connection with this acquisition was based on the estimated fair values
         as determined by Eagle's management. The purchase price allocation
         resulted in $5,541,418 of goodwill, which will be amortized over twenty
         (20) years.

         A)   Pro forma adjustment to record additional five and twelve months
              amortization of the intangible assets as if the acquisition had
              consummated at the beginning of fiscal year 2000 and 1999,
              respectively.

         B)   Includes weighted average number of shares issued to APC and
              Comtel as if they had been outstanding since September 1, 1999 and
              September 1, 1998, respectively.

         Basic and diluted weighted average shares outstanding were calculated
         based upon the historical basic and diluted weighted average shares
         outstanding of Eagle, increased by the shares Eagle shares issued upon
         acquisition of APC and Comtel, which assumes the shares had been
         outstanding during all of fiscal year 2000 and 1999.



                                     F-14

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


NOTE 5 - NOTES PAYABLE:

<Table>
<Caption>

                                                                             AUGUST 31,
                                                                 ------------------------------
                                                                  2000                   1999
                                                                  ----                   ----
         <S>                                                   <C>                     <C>
         Unsecured note to Imperial Premium
         Finance bearing interest at 14.9%,
         due $1,690 monthly until February 2001.               $  5,070                $ 5,386

         Unsecured note to Central Insurance
         bearing no interest, due $886 monthly
         until March 2001.                                        4,428                  5,220

         Unsecured note to Kemper Insurance
         bearing no interest, due $694 monthly
         until March 2001.                                        2,082                  1,124

         Unsecured note to West Coast Life
         Insurance bearing no interest, due
         $2,457 quarterly until May 2001.                         4,913                  4,913

         Unsecured note to All American Insurance
         bearing interest at 9.6%, due $317 monthly
         until June 2001.                                           635                  - 0 -

         Note payable to Wells Fargo Bank
         bearing interest at 10.5%, due
         $2,849 monthly until January, 2001.                     14,517                  - 0 -

         Note payable to Compass Bank
         bearing interest at 9.5%, due $1,150
         monthly until April 2001.                            $   9,962               $  - 0 -
                                                                -------                -------

                  Total                                          41,607                 16,643
                  Less Current Portion of
                     Long - Term Debt                            41,607                 16,643
                                                                -------                -------
                  Total Long - Term Debt                      $   - 0 -               $  - 0 -
                                                                =======                ========

</Table>

                                     F-15

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000


NOTE 6 - CAPITAL LEASE OBLIGATIONS:

<Table>
<Caption>

                                                                                 AUGUST 31,
                                                                        -------------------------
                                                                         2000               1999
                                                                         ----               ----
         <S>                                                           <C>                <C>
         Equipment lease with Konica bearing
         interest at 8.9%, payable in monthly
         installments of $445; due Aug. 2001.                          $   5,486          $  9,720

         Equipment lease with Agilent Technologies
         bearing no interest, payable in monthly
         installments of $1,076; due April 2003.                       $  34,440          $  - 0 -

         Equipment lease with IKON Office
         Solutions bearing interest at 18%
         payable in monthly installments of
         $105; due March 2000.                                             - 0 -               695

         Software lease with Manifest Group
         bearing interest at 14%, payable in
         monthly installments of $751; due
         August 2000.                                                      - 0 -             8,487

         Equipment lease with Mellon Leasing
         bearing interest at 11.19%, payable in
         monthly installments of $2,149; due May 2002.                    40,816             - 0 -

         Auto lease with GE Capital bearing interest
         at 11.5%, payable in monthly installments
         of $465; due June 2002.                                           9,193             - 0 -

         Equipment lease with Fleet Leasing Corp
         payable in monthly installments of $133;
         due February 2002.                                                1,933             - 0 -

         Equipment lease with Fleet Leasing Corp
         payable in monthly installments of $137;
         due February 2002.                                                1,980             - 0 -

         Equipment lease with Fleet Leasing Corp
         payable in monthly installments of $269;
         due May 2001.                                                     2,172             - 0 -

         Equipment lease with Master Lease bearing
         interest at 6.1%, payable in monthly
         installments of $249; due May 2001.                          $    3,963          $  - 0 -
                                                                         -------            -------

</Table>

                                     F-16

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                AUGUST 31, 2000

<Table>
<Caption>

                                                                             AUGUST 31,
                                                                 ------------------------------
                                                                  2000                   1999
                                                                  ----                   ----
                 <S>                                          <C>                     <C>
                 Total Obligations                            $   99,983              $  18,902
                 Less Current Portion of
                    Lease Obligations                             58,995                 15,047
                                                                 -------                -------
                 Total Long - Term Capital

                    Lease Obligations                          $  40,988              $   3,855
                                                                 =======                =======

</Table>

         The capitalized lease obligations are collateralized by the related
         equipment acquired with a net book value of approximately $ 116,494 and
         $ 29,600 at August 31, 2000 and 1999, respectively. The future minimum
         lease payments under the capital leases and the net present value of
         the future lease payments at August 31, 2000 and 1999 are as follows:

<Table>
<Caption>

                                                             Aug. 31, 2000      Aug. 31, 1999
                                                             -------------      -------------
         <S>                                                 <C>                <C>
         Total minimum lease payments                         $   111,406        $    20,405
         Less:  Amount representing interest                       11,423              1,503
                                                                 --------            -------
         Present value of net minimum
             lease payments                                   $    99,983        $    18,902
                                                                 =========           =======

</Table>

                  Future obligations under the lease terms are as follows:

<Table>
<Caption>

                             August 31,                                 Amount
                             ----------                                 ------
                             <S>                                       <C>
                                 2001                                  $   58,995
                                 2002                                      32,372
                                 2003                                       8,616
                                                                         --------
                                    Total                              $   99,983
                                                                         ========

</Table>

NOTE 7 - LINE OF CREDIT:

         The Company maintains a $250,000 line of credit with Wells Fargo Bank
         bearing a variable rate of interest. At August 31, 2000 and 1999,
         balances of $225,140 and $0 existed, respectively. Interest is due
         monthly whereas principal is payable upon demand. Subsequent to August
         31, 2000, this amount was repaid (see Note 23).

         The Company also has a $50,000 line of credit with Compass Bank bearing
         a variable rate of interest. At August 31, 2000 and 1999, balances of
         $40,690 and $0 existed, respectively. Interest is due monthly whereas
         principal is payable upon demand. Subsequent to August 31, 2000, this
         amount was repaid (see Note 23).


                                     F-17
<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000

NOTE 8 - CONVERTIBLE DEBENTURES:

         The Company entered into a convertible debenture arrangement with
         Global Capital Advisors, LTD (GCA) to fund up to $4,500,000 over a
         two-year period. On October 7, 1999 the Company borrowed $1,500,000
         under this agreement which was repaid in fiscal 2000.

         In conjunction with the $1,500,000 borrowed, the Company issued
         warrants to purchase 100,000 shares of common stock at $1.54 per share
         to GCA which warrants were exercised during fiscal 2000. In addition to
         the note being converted into common stock, GCA exercised the 100,000
         warrants during the fiscal year ended August 31, 2000. Although
         additional funds are available, management does not intend to draw
         further funds from this agreement.


NOTE 9 - MARKETABLE SECURITIES:

         As discussed in Note 1, the Company adopted the provisions of SFAS No.
         115, "Accounting for Certain Investments in Debt and Equity Securities"
         and SFAS No. 130, "Accounting for Other Comprehensive Income." At
         August 31, 2000, all of the Company's marketable equity securities are
         classified as available-for-sale; they were acquired with the intent to
         dispose of them within the next year. For the year ended August 31,
         1999, no marketable securities were held.

         At August 31, 2000, the securities had an original basis of $998,201;
         determined by multiplying the number of shares being acquired by the
         fair market value of those shares. At the August 31, 2000 balance sheet
         date, the fair market value of these securities was $970,701;
         determined by multiplying the number of shares held by the fair market
         value of those shares at the balance sheet date. The difference between
         the cost and fair market value represents an unrealized holding loss
         and is included below current earnings in "Other Comprehensive Income".
         This unrealized holding loss of $27,500 is reported on the balance
         sheet netted against marketable securities. The statement of operations
         however, carries this loss net of $9,350 tax.

<Table>
<Caption>
                  SECURITY NAME                        SHARES          COST BASIS    CURRENT FMV
                  --------------------------------------------------------------------------------
                  <S>                                 <C>              <C>           <C>
                  CMC Security                         17,000          $  16,660     $   16,448
                  Countrywide                          18,000             17,348         17,055
                  CWMBS                                46,000             44,655         43,800
                  FAIC                                 16,000             11,715         11,302
                  Fannie Mae                          100,000             26,263         25,715
                  FHLMC                               610,000            318,617        301,954
                  FNMA                                648,000            131,118        129,271
                  GE Capital                          160,000            154,192        152,444
                  GNMA                                 50,000             27,167         27,352
                  Headlands                            43,000             41,732         40,850
                  Norwest                              13,000             12,717         12,253
                  PNC Mortgage                         36,000             33,885         33,840
                  Prudential                          171,000            143,458        140,217

                                              F-18

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                  Westam                               20,000             18,674         18,200
                                                                       ---------       ---------

                           Totals                                     $  998,201     $  970,701
                                                                       =========       =========
</Table>

NOTE 10 - INCOME TAXES:

         As discussed in note 1, the Company adopted the provisions of Statement
         of Financial Accounting Standards (SFAS) No. 109, "Accounting for
         Income Taxes". Implementation of SFAS 109 did not have a material
         cumulative effect on prior periods nor did it result in a change to the
         current year's provision.

A)       The effective tax rate for the Company is reconcilable to statutory tax
         rates as follows:

<Table>
<Caption>
                                                                    August 31,
                                                                 ----------------
                                                                  2000       1999
                                                                  ----       ----
                                                                    %          %
<S>                                                              <C>        <C>
                  U.S. Federal Statutory Tax Rate                  34         34
                  U.S. Valuation Difference                        (1)         1
                                                                 -----      -----
                  Effective U.S. Tax Rate                          33         35
                  Foreign Tax Valuation                          - 0 -      - 0 -
                                                                 -----      -----
                  Effective Tax Rate                               33         35
                                                                 =====      =====
</Table>

B) Items giving rise to deferred tax assets / liabilities are as follows:

<Table>
<Caption>
                                                                                August 31,
                                                                           2000             1999
                                                                           ---------------------
<S>                                                                     <C>            <C>
                  Deferred Tax Assets:

                       Tax Loss Carry-forward                          $   - 0 -       $   - 0 -
                                                                         ---------         -------

                  Deferred Tax Liability:

                       Depreciation                                        47,480           11,070
                                                                          -------          -------

                  Valuation Allowance                                      - 0 -            - 0 -
                                                                          -------           ------

                       Net Deferred Tax Asset / Liability               $  47,480        $  11,070
                                                                          =======          =======
</Table>

NOTE 11 - ISSUANCE OF COMMON STOCK:

         During the fiscal year ended August 31, 2000, the Company issued
         12,129,430 shares of common stock. The following table summarizes the
         shares of common stock issued.

<Table>
<Caption>

<S>                                                                               <C>
                  Shares Outstanding August 31, 1999                              13,479,833
                                                                                  ----------
                       Shares issued for acquisitions                                868,919
                       Shares issued for services and compensation                   981,392
                       Shares issued for warrant conversion                        9,410,954

                                          F-19

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                       Shares issued for conversion of debt                          827,557
                       Shares issued for Employee Stock Option Plan                   40,608
                                                                                  ----------
                  Shares Outstanding August 31, 2000                              25,609,263
</Table>

         The Company issued 868,919 shares of its common stock for the
         acquisitions of AtlanticPacific Communications, Inc., Comtel
         Communications, Inc. and eToolz, Inc.

         The Company issued 981,392 shares of common stock for compensation and
         services performed on the Company's behalf.

         The Company issued 9,410,954 shares of common stock associated with the
         conversion of various outstanding warrants.

         The Company issued 827,557 shares of common stock for conversion of
         various debt to GCA DWACS and C. Brazier.

         The Company issued 40,608 shares of common stock to the members of its
         Employee Stock Option Plan.


NOTE 12 - PREFERRED STOCK, STOCK OPTIONS AND WARRANTS:


         In July 1996, the Board of Directors and majority shareholders adopted
         an employee stock option plan under which 400,000 shares of Common
         Stock have been reserved for issuance. The options granted for under
         this plan are to purchase fully paid and non-assessable shares of the
         Common Stock, par value $.001 per share at a price equal to the
         underlying common stock's market price at the date of issuance. These
         options may be redeemed six months after issuance, expire five years
         from the date of issuance and contain a cash-less exercise feature. The
         underlying shares of common stock were registered for resale under the
         Securities Act of 1933 on February 19, 1999. As of August 31, 2000,
         242,607 options have been granted pursuant to such plan with 42,999
         being exercised and 10,250 being cancelled.

         In May of 1996, the Company received an aggregate of $375,000 in bridge
         financing in the form of interest-free convertible notes from
         unaffiliated individuals. Holders of $369,000 of these notes converted
         into 369,000 shares of Company common stock, and the balance of $6,000
         was retired in November of 1996. In conjunction with the issuance of
         such indebtedness, the Company has issued such investors $.50 Warrants
         to purchase 375,000 shares of common stock, and $5.00 Warrants to
         purchase up to 375,000 shares of common stock.

                                          F-20

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         The Company has issued the following warrants that have since been
exercised or expired:

                1,050,000 stock purchase warrants which expire July 1999. The
                warrants are to purchase fully paid and non-assessable shares of
                the common stock, par value $.001 per share at a purchase price
                of $.05 per share. These warrants, however, are not exercisable
                until and unless the shares of Common Stock trade at a minimum
                of $5.50 per share for twenty consecutive trading days, yet
                still expire July 1999 if not exercised. During April 1999, the
                Company's Board of Directors removed the requirement that the
                Company's common stock trade at a price of no less than $5.50
                per share for twenty consecutive trading days provided that the
                holders of the warrants exercise the warrants prior to the
                expiration date and remit to the Company a fee of $.70 per
                underlying share upon exercise of the warrants. Prior to
                expiration, 1,037,500 warrants had been exercised whereas 12,500
                warrants expired.

                1,375,000 stock purchase warrants which expire July 1999. The
                warrants are to purchase fully paid and non-assessable shares of
                the common stock, par value $.001 per share at a purchase price
                of $.50 per share. These warrants, however, are not exercisable
                until and unless the shares of Common Stock trade at a minimum
                of $5.50 per share for twenty consecutive trading days, yet
                still expire July 1999 if not exercised. During April 1999, the
                Company's Board of Directors removed the requirement that the
                Company's common stock trade at a price of no less than $5.50
                per share for twenty consecutive trading days provided that the
                holders of the warrants exercise the warrants prior to the
                expiration date and remit to the Company a fee of $.25 per
                underlying share upon exercise of the warrants. Prior to
                expiration, 1,325,000 warrants had been exercised whereas 50,000
                warrants expired.

                425,000 stock purchases warrants that expire July 1999. The
                warrants are to purchase fully paid and non-assessable shares of
                the common stock, par value $.001 per share at a purchase price
                of $5.00 per share. These warrants are subject to restrictions
                regarding the timing of exercise. The underlying shares of
                common stock were registered for resale on September 4, 1997
                under the Securities Act of 1933. Prior to expiration, no
                warrants had been exercised whereas 425,000 warrants expired.

                100,000 stock purchase warrants issued to Global Capital
                Advisors, LTD expiring October 7, 2002. The warrants are to
                purchase fully paid and non-assessable shares of common stock,
                par value $.001 per share, at a purchase price of $1.54 per
                share. The shares of common stock underlying these warrants were
                registered for resale on January 10, 2000, under the Securities
                Act of 1933. Prior to expiration, all 100,000 warrants were
                exercised resulting in cash proceeds of $154,000.

                43,641 stock purchase warrants issued to Midori Capital Corp.
                expiring October 7, 2002. The warrants are to purchase fully
                paid and non-assessable shares of common stock, par value $.001
                per share, at a purchase price of $1.75 per share. The shares of
                common stock underlying these warrants were registered for
                resale on January 10, 2000, under the Securities Act of 1933.
                Prior to expiration, all 43,641 warrants were exercised
                resulting in cash proceeds of $76,372.

                50,000 stock purchase warrants that expire August 31 2000. The
                warrants are to purchase fully paid and non-assessable shares of
                the common stock, par value $.001 per share, at a purchase price
                of $2.00 per share. If, however, the closing bid price of the
                Common Stock shall have equaled or exceeded $5.50 per share for
                a period of twenty consecutive trading days at any time, the
                Company may redeem the warrants by paying holders $.05 per
                warrant. As of August 31, 1999, the underlying shares of common
                stock have not yet been registered for resale under the
                Securities Act of 1933. Prior to expiration, no warrants had
                been exercised whereas 50,000 warrants expired.

                                          F-21

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                1,050,000 Class C stock purchase warrants that expire August 31
                2000. The warrants are to purchase fully paid and non-assessable
                shares of the common stock, par value $.001 per share, at a
                purchase price of $2.00 per share. If, however, the closing bid
                price of the Common Stock shall have equaled or exceeded $5.50
                per share for a period of twenty consecutive trading days at any
                time, the Company may redeem the Class C Warrants by paying
                holders $.05 per Class C Warrant. The underlying shares of
                common stock were registered for resale on September 4, 1997
                under the Securities Act of 1933. Prior to expiration, all
                1,050,000 warrants were exercised resulting in cash proceeds of
                $2,100,000.

                100,000 stock purchase warrants issued to National Financial
                Communications Corp. expiring July 1, 2003. The warrants are to
                purchase fully paid and non-assessable shares of the common
                stock, par value $.001 per share at a purchase price of $1.92
                per share. The shares of common stock underlying these warrants
                were registered for resale on August 3, 2000, under the
                Securities Act of 1933. Prior to expiration, all 100,000
                warrants were exercised resulting in cash proceeds of $192,000.

         During 1998, the Company issued the following 1,300,000 warrants with
         various strike prices to Mega Holding Corp (Mega) for services
         rendered. Syndication costs were recorded during 1998. Services
         rendered consisted of raising money for the company. During fiscal
         1999, a dispute arose between the Company and Mega as to whether full
         services were rendered as per the agreement. During fiscal 2000, the
         two parties settled the dispute whereby 500,000 wrrants were exercised
         (on a cashless basis) for 450,000 shares of the Company's free trading
         common stock. In addition as part of the settlement the additional
         800,000 warrants were cancelled.

                150,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $1.50 per share.
                These warrants, however, are not exercisable until and unless
                the shares of Common Stock trade at a minimum of $4.00 per share
                for sixty-one consecutive trading days. The underlying shares of
                common stock were registered for resale under the Securities Act
                of 1933 on March 19, 1999. These warrants will expire on March
                19, 2000. These warrants were exercised during 2000.

                150,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $2.00 per share.
                These warrants, however, are not exercisable until and unless
                the shares of Common Stock trade at a minimum of $5.50 per share
                for sixty-one consecutive trading days. The underlying shares of
                common stock were registered for resale under the Securities Act
                of 1933 on March 19, 1999. These warrants will expire on March
                19, 2000. These warrants were exercised during 2000.

                200,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $3.00 per share.
                These warrants, however, are not exercisable until and unless
                the shares of Common Stock trade at a minimum of $7.50 per share
                for sixty-one consecutive trading days. The underlying shares of
                common stock were registered for resale under the Securities Act
                of 1933 on March 19, 1999. These warrants will expire on March
                19, 2000. These warrants were exercised during 2000.

                200,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $5.00 per share.
                These warrants, however, are not exercisable until and unless
                the shares of Common Stock trade at a minimum of $10.00 per
                share for thirty-one consecutive trading days. These warrants
                will expire three years from the date of effective registration
                of the underlying shares of common stock. As of August 31, 1999,
                the underlying shares of common stock have not yet been
                registered for resale under the Securities Act of 1933 and thus
                have no set expiration date. These warrants were cancelled
                during 2000.

                200,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $7.00 per share.
                These

                                          F-22

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                warrants, however, are not exercisable until and unless the
                shares of Common Stock trade at a minimum of $12.00 per share
                for thirty-one consecutive trading days. These warrants will
                expire three years from the date of effective registration of
                the underlying shares of common stock. As of August 31, 1999,
                the underlying shares of common stock have not yet been
                registered for resale under the Securities Act of 1933 and thus
                have no set expiration date. These warrants were cancelled
                during 2000.

                200,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $9.00 per share.
                These warrants, however, are not exercisable until and unless
                the shares of Common Stock trade at a minimum of $14.00 per
                share for thirty-one consecutive trading days. These warrants
                will expire five years from the date of effective registration
                of the underlying shares of common stock. As of August 31, 1999,
                the underlying shares of common stock have not yet been
                registered for resale under the Securities Act of 1933 and thus
                have no set expiration date. These warrants were cancelled
                during 2000.

                200,000 stock purchase warrants. The warrants are to purchase
                fully paid and non-assessable shares of the common stock, par
                value $.001 per share at a purchase price of $11.00 per share.
                These warrants, however, are not exercisable until and unless
                the shares of Common Stock trade at a minimum of $16.00 per
                share for thirty-one consecutive trading days. These warrants
                will expire five years from the date of effective registration
                of the underlying shares of common stock. As of August 31, 1999,
                the underlying shares of common stock have not yet been
                registered for resale under the Securities Act of 1933 and thus
                have no set expiration date. These warrants were cancelled
                during 2000.

         The Company has issued and outstanding the following warrants which
         have not yet been exercised at August 31, 2000:

                5,033,334 Class A stock purchase warrants which expire August
                31, 2000. The warrants are to purchase fully paid and
                non-assessable shares of the common stock, par value $.001 per
                share at a purchase price of $4.00 per share. If, however, the
                closing bid price of the Common Stock shall have equaled or
                exceeded $5.50 per share for a period of twenty consecutive
                trading days at any time, the Company may redeem the Class A
                Warrants by paying holders $.05 per Class A Warrant. The
                underlying shares of common stock were registered for resale on
                September 4, 1997 under the Securities Act of 1933. As of August
                31, 2000, 4,716,833 warrants were exercised resulting in cash
                proceeds of $18,867,332. Management decided to extend the
                expiration date by two weeks to allow further exercise. As a
                result, subsequent to August 31, 2000, 40,000 warrants were
                exercised resulting in cash proceeds of $160,000 with 276,501
                warrants expiring.

                5,033,334 Class B stock purchase warrants which expire August
                31, 2000. The warrants are to purchase fully paid and
                non-assessable shares of the common stock, par value $.001 per
                share, at a purchase price of $6.00 per share. If, however, the
                closing bid price of the Common Stock shall have equaled or
                exceeded $7.50 per share for a period of twenty consecutive
                trading days at any time, the Company may redeem the Class B
                Warrants by paying holders $.05 per Class B Warrant. The
                underlying shares of common stock and Class B Warrants were
                registered for resale on September 4, 1997 under the Securities
                Act of 1933. These warrants trade under the symbol "EGLWZ". As
                of August 31, 2000, 2,842,576 warrants were exercised resulting
                in cash proceeds of $17,055,456. Management decided to extend
                the expiration date by two weeks to allow further exercise. As a
                result, subsequent to August 31, 2000, 557,830 warrants were
                exercised resulting in cash proceeds of $3,346,980 with
                1,632,928 warrants expiring.

                600,000 stock purchase warrants issued to Paladin Associates
                expiring September 1, 2001. The warrants are to purchase fully
                paid and non-assessable shares of the common stock, par value
                $.001 per share at a purchase price of $1.50 per share. 166,667
                warrants are not exercisable until and unless the shares of
                Common Stock trade at a minimum of $4.00 per share for
                twenty-one consecutive trading days. 166,667 warrants are not
                exercisable until and unless the shares of Common Stock

                                          F-23

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                trade at a minimum of $6.00 per share for twenty-one consecutive
                trading days.

                166,666 warrants are not exercisable until and unless the shares
                of Common Stock trade at a minimum of $8.00 per share for
                twenty-one consecutive trading days. The shares of common stock
                underlying 350,000 warrants were registered for resale on August
                3, 2000, under the Securities Act of 1933. 100,000 incentive
                warrants will be made available and will vest at the end of
                October 2000 if the first objective of $4.00 is achieved before
                the end of October. As of August 31, 2000, 250,000 of the
                underlying shares of common stock have not yet been registered
                for resale under the Securities Act of 1933.

                50,000 stock purchase warrants issued to Weed & Co. L.P.
                expiring December 10, 2002. The warrants are to purchase fully
                paid and non-assessable shares of the common stock, par value
                $.001 per share at a purchase price of $1.55 per share. The
                shares of common stock underlying the se warrants were
                registered for resale on August 3, 2000, under the Securities
                Act of 1933. As of August 31, 2000, 25,000 warrants have been
                exercised resulting in cash proceeds of $38,750.

                20,000 stock purchase warrants issued to Kason, Inc. expiring
                October 7, 2002. The warrants are to purchase fully paid and
                non-assessable shares of the common stock, par value $.001 per
                share at a purchase price of $1.75 per share. The shares of
                common stock underlying these warrants were registered for
                resale on August 31, 2000, under the Securities Act of 1933. As
                of August 31, 2000, 6,234 warrants have been exercised resulting
                cash proceeds of $10,910.

                50,000 stock purchase warrants issued to Weed & Co. L.P.
                expiring June 10, 2002. The warrants are to purchase fully paid
                and non-assessable shares of the common stock, par value $.001
                per share at a purchase price of $3.00 per share. The shares of
                common stock underlying these warrants were registered for
                resale on August 3, 2000, under the Securities Act of 1933. As
                of August 31, 2000, none of these warrants have been exercised.

                100,000 stock purchase warrants issued to National Financial
                Communications Corp. expiring June 2003. The warrants are to
                purchase fully paid and non-assessable shares of the common
                stock, par value $.001 per share at a purchase price of $7.00
                per share. As of August 31, 2000, the underlying shares of
                common stock have not yet been registered for resale under the
                Securities Act of 1933.

                250,000 stock purchase warrants issued to Sands Brothers & Co.,
                LTD. expiring July 13, 2003. The warrants are to purchase fully
                paid and non-assessable shares of the common stock, par value
                $.001 per share at a purchase price of $7.49 per share. As of
                August 31, 2000, the underlying shares of common stock have not
                yet been registered for resale under the Securities Act of 1933.

                25,000 stock purchase warrants issued to Synchton, Inc. expiring
                July 1, 2003. The warrants are to purchase fully paid and
                non-assessable shares of the common stock, par value $.001 per
                share at a purchase price of $7.50 per share. The shares of
                common stock underlying these warrants were registered for
                resale on August 3, 2000, under the Securities Act of 1933. As
                of August 31, 2000, none of these warrants have been exercised.

                50,000 stock purchase warrants issued to Weed & Co. L.P.
                expiring June 10, 2003. The warrants are to purchase fully paid
                and non-assessable shares of the common stock, par value $.001
                per share at a purchase price of $9.68 per share. The shares of
                common stock underlying these warrants were registered for
                resale on August 3, 2000, under the Securities Act of 1933. As
                of August 31, 2000, none of these warrants have been exercised.

                25,000 stock purchase warrants issued to Synchton, Inc. expiring
                April 1, 2003. The warrants are to purchase fully paid and
                non-assessable shares of the common stock, par value $.001 per
                share at a purchase price of $10.00 per share. The shares of
                common stock underlying these warrants were registered for
                resale on August 3, 2000, under the Securities Act of 1933. As
                of August 31, 2000, none of these warrants have been exercised .

                                          F-24

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                250,000 stock purchase warrants issued to Sands Brothers & Co.,
                LTD. expiring July 13, 2003. The warrants are to purchase fully
                paid and non-assessable shares of the common stock, par value
                $.001 per share at a purchase price of $10.00 per share. These
                warrants, however are not exercisable until and unless the
                closing price of Common Stock at any time during the exercise
                period reaches $10.00 per share. As of August 31, 2000, the
                underlying shares of common stock have not yet been registered
                for resale under the Securities Act of 1933.

                250,000 stock purchase warrants issued to Hampton-Porter
                Investment Bankers LLC expiring June 27, 2003. The warrants are
                to purchase fully paid and non-assessable shares of the common
                stock, par value $.001 per share at a purchase price of $12.00
                per share. The shares of common stock underlying these warrants
                were registered for resale on August 3, 2000, under the
                Securities Act of 1933. As of August 31, 2000, none of these
                warrants have been exercised.

                350,000 stock purchase warrants issued to Sands Brothers & Co.,
                LTD. expiring July 13, 2003. The warrants are to purchase fully
                paid and non-assessable shares of the common stock, par value
                $.001 per share at a purchase price of $14.00 per share. These
                warrants, however, are not exercisable until and unless the
                closing price of the Common Stock at any time during the
                exercise period reaches $14.00 per share. As of August 31, 2000,
                the underlying shares of common stock have not yet been
                registered for resale under the Securities Act of 1933.

                250,000 stock purchase warrants issued to Hampton-Porter
                Investment Bankers LLC expiring June 27, 2003. The warrants are
                to purchase fully paid and non-assessable shares of the common
                stock, par value $.001 per share at a purchase price of $18.00
                per share. The shares of common stock underlying these warrants
                were registered for resale on August 3, 2000, under the
                Securities Act of 1933. As of August 31, 2000, none of these
                warrants have been exercised.

                150,000 stock purchase warrants issued to Sands Brothers & Co.,
                LTD. expiring July 13, 2003. The warrants are to purchase fully
                paid and non-assessable shares of the common stock, par value
                $.001 per share at a purchase price of $25.00 per share. These
                warrants, however, are not exercisable until and unless the
                closing price of the Common Stock at any time during the
                exercise period reaches $25.00 per share. As of August 31, 2000,
                the underlying shares of common stock have not yet been
                registered for resale under the Securities Act of 1933.

         The warrants outstanding are segregated into four categories
         (exercisable, non-exercisable, non-registered, and expired). They are
         summarized as follows:


                                          F-25

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         An asterisk (*) denotes warrants which would have an anti-dilutive
         effect if currently used to calculate earnings per share for the years
         ended August 31, 2000 and 1999, respectively.

<Table>
<caption>

                      Warrants Issued         Warrants Exercisable                                           Warrants Expired
         Class of        August 31,               August 31,                        Warrants                    August 31,
         Warrants   2000        1999           2000       1999          Non-Exercisable  Non-Registered      2000        1999
         --------- -----------------------    ----------------------  ----------------------------------  ---------------------
         <S>       <C>          <C>           <C>         <C>          <C>               <C>               <C>         <C>
           0.01     Exercised   Exercised         --         --             --             --                 --          --
           0.05     Exercised   Exercised         --         --             --             --                 --        12,500
           0.50     Exercised   Exercised         --         --             --             --                 --        50,000
           5.00      Expired     Expired          --         --             --             --                 --       425,000
           4.00      316,501    5,033,334 *     316,501  5,033,334          --             --                 --          --
           6.00     2,190,758   5,033,334 *    2,190,758 5,033,334          --             --                 --          --
           2.00     Exercised   1,050,000 *       --     1,050,000          --             --                 --          --

           1.50     Cancelled    150,000  *       --      150,000           --             --                 --          --
           2.00     Cancelled    150,000  *       --      150,000           --             --                 --          --
           3.00     Cancelled    200,000  *       --      200,000           --             --                 --          --
           5.00     Cancelled    200,000          --         --             --           200,000              --          --
           7.00     Cancelled    200,000          --         --             --           200,000              --          --
           9.00     Cancelled    200,000          --         --             --           200,000              --          --
          11.00     Cancelled    200,000          --         --             --           200,000              --          --

           1.50      600,000       --             --         --          350,000         250,000              --          --
           1.54      100,000       --             --         --             --             --                 --          --
           1.55      50,000        --           25,000       --             --             --                 --          --
           1.75      43,641        --             --         --             --             --                 --          --
           1.75      20,000        --           13,766       --             --             --                 --          --
           1.92      100,000       --             --         --             --             --                 --          --
           3.00      50,000        --           50,000       --             --             --                 --          --
           7.00      100,000       --             --         --             --           100,000              --          --
           7.49      250,000       --             --         --             --           250,000              --          --
           7.50      25,000   *    --           25,000       --             --             --                 --          --
           9.68      50,000   *    --           50,000       --             --             --                 --          --
          10.00      25,000   *    --           25,000       --             --             --                 --          --
          10.00      250,000       --             --         --             --           250,000              --          --
          12.00      250,000  *    --           250,000      --             --             --                 --          --
          14.00      350,000       --             --         --             --           350,000              --          --
          18.00      250,000  *    --           250,000      --             --             --                 --          --
          25.00      150,000       --             --         --             --           150,000              --          --

           2.00      Expired     50,000   *       --       50,000           --             --               50,000        --
           ESOP      40,200   *  27,375   *       --       13,625         40,200           --               --        10,250
           ESOP      202,407     119,000        110,158    69,000         10,000           --               10,250        --
                   -----------------------    ----------------------  --------------- --------------    ----------  -----------
                    5,413,507   12,613,043     3,306,183 11,749,293      400,200        2,150,000        60,250      497,750
                   ========================== ======================  =============== ==============    ==========  ===========

</Table>

NOTE 13 - CAPITALIZATION ACTIVITIES:

         On July 10, 2000, AtlanticPacific Communications, Inc. (a wholly-owned
         subsidiary) initiated a stock offering in accordance with the
         Securities and Exchange Commission under the Securities act of 1933.
         AtlanticPacific is offering units at $25,000 per unit. Each unit
         consists of 10,000 shares of common stock and 10,000 Class A warrants
         to purchase AtlanticPacific common stock at a price of $6.00 per share
         with one warrant being issued as a unit with each common share sold.
         AtlanticPacific will sell up to 4,000,000 shares of common stock and up
         to 4,000,000 Class A warrants; 400 units. As of August 31, 2000, no
         units had been sold. Subsequent to August 31, 2000, 13.25 units have
         been sold totaling 132,500 shares and resulting in proceeds of
         $331,250.

NOTE 14 - INVESTMENT IN LINK - TWO COMMUNICATIONS, INC.:

         The Company and Link - Two Communications, Inc. (Link II) have executed
         an agreement, whereby the Company would receive up to an eight percent
         equity interest in Link II in lieu of accruing finance charges on the
         outstanding balance owed by Link II to the Company. Under the
         agreement, equity in Link II was earned at a rate of 0.2% per month per
         $100,000 payable and

                                     F-26

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         outstanding for more than thirty days. At August 31, 1999 the Company
         had earned a 5.0% minority equity interest in Link II. This is
         evidenced by the issuance of 240,000 shares of Link II common stock to
         the Company. As of August 31, 1999, the Company has recorded its share
         of losses in this unconsolidated affiliate. The loss as a minority
         shareholder totaled $91,678. The Company has reclassified its balances
         due from Link II as other receivables.

         Certain principal stockholders (or affiliates thereof) of the Company,
         including James Futer, executive vice president, director, and chief
         operating officer, and A.L. Clifford, a director of the Company, are
         also principal stockholders of Link II. Mr. Clifford is also the
         chairman, president, and chief executive officer of Link II and Dr.
         Cubley is a director of Link II.

         In October 1999, Link II refinanced its existing accounts payable to
         Eagle Wireless International through the issuance of a promissory note
         that amounted to $8,655,126 at August 31, 2000. Subsequent to August
         31, 2000, Clearworks.net, Inc. acquired control of Link II and in
         conjunction therewith issued to the Company 2,856,000 shares of
         Clearworks.net, Inc. common stock in satisfaction of the Link II
         indebtedness.


NOTE 15 - RISK FACTORS:

         For the years ended August 31, 2000 and 1999, substantially all of the
         Company's business activities have remained within the United States
         and have been extended to the wireless infrastructure industry.
         Approximately forty-six percent of the Company's revenues and
         receivables have been created solely in the state of Texas, five
         percent have been created in the international market, and the
         approximate forty-nine percent remainder have been created relatively
         evenly over the rest of the nation during the year ended August 31,
         2000 whereas approximately eighty-four percent of the Company's
         revenues and receivables have been created solely in the state of
         Texas, one-half percent have been created in the international market,
         and the approximate fifteen and one-half percent remainder has been
         created relatively evenly over the rest of the nation for the year
         ended August 31, 1999.

         Through the normal course of business, the Company generally does not
         require its customers to post any collateral.

         Although the Company concentrated its efforts in the wireless
         infrastructure industry for the year ended August 31, 1999 and has
         since expanded into the fiber, cable and broadband markets for the year
         ended August 31, 2000, it is management's belief that the Company faces
         little credit or economic risk due to the continuous growth the market
         is experiencing.


NOTE 16 - FOREIGN OPERATIONS:

         Although the Company is based in the United States, its product is sold
         on the international market. Presently, international sales total
         approximately 4.8% and 0.5 % at August 31, 2000 and 1999, respectively.

                                     F-27

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


NOTE 17 - COMMITMENTS AND CONTINGENT LIABILITIES:

         The Company leases its primary office space in League City, Texas for
         $10,000 per month with Space Industries, Inc. ("Space"). This
         non-cancelable lease commenced on July 1, 1999 and expires on March 29,
         2001. In addition to the monthly rental, the Company will issue 100,000
         shares of its common stock to Space. Space will have the right to sell
         no more than 10,000 shares per month until all shares have been sold.
         Additionally, Space will have the right to put to the Company all
         unsold shares held by Space in exchange for a payment calculated using
         the following formula:

                  $173,000 - (gross proceeds from stock sales above $1.70 per
                  share) minus ($1.73 x quantity of shares sold below $1.70 per
                  share)

         For the periods ending August 31, 2000 and 1999, rental expenses of
         $258,196 and $120,906, respectively, were incurred. Of the $258,196 in
         rental expense for the period ended August 31, 2000, $138,196 was
         attributable to the amortization of the stock issued to Space.

         The Company also leases office space in Oxnard, California with Tiger
         Ventura County, L.P. This three-year non-cancelable lease commenced
         August 1, 2000 and expires July 31, 2003. Under the terms of the lease,
         monthly payments will be $2,130 for the first twelve months whereat the
         monthly payments will increase by 3.5% at the beginning of both the
         second and third years. For the periods ended August 31, 2000 and 1999,
         rental expense of $2,130 and $0, respectively were incurred.

         The Company's wholly owned subsidiary, AtlanticPacific, leases office
         space in Houston, Texas with Houston Industrial Partners, Ltd. This
         non-cancelable lease expires October 2001. The monthly payments through
         October 2000 are $1,420 whereat they will increase to $1,498 for the
         remaining twelve months. Additionally, AtlanticPacific is responsible
         for monthly CAM fees of approximately $450. For the periods ended
         August 31, 2000 and 1999, rental expense of $22,240 and $0,
         respectively were incurred.

         AtlanticPacific also leases office space in Chicago, Illinois with
         Lasalle Bank National Association. This twenty-nine month lease
         commenced on October 1, 2000 and expires February 28, 2003. Under the
         terms of the lease, monthly payments will be $2,220 for the first
         twelve months whereat they will increase by 3.2% at the thirteenth and
         twenty-fifth months.

         AtlanticPacific also leases office space in Houston, Texas with WL and
         Deborah Miller in the amount of $4,500 per month. This non-cancelable
         lease expiring September 2002 maintains a five-year renewal option.
         Rental expense for the period ended August 31, 2000 of $54,000 was
         incurred.

                  Future obligations under the non-cancelable lease terms are:
                           Period Ending

<Table>
<Caption>
                              August 31,          Amount
                              ----------          ------
                              <S>               <C>


                                     F-28

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


                                 2001           $  197,275
                                 2002              111,854
                                 2003           $   43,358
</Table>

         On July 13, 2000, the Company entered into an agreement with Sands
         Brothers & Co., LTD. (Sands) whereby Sands will perform financial
         advisory services and assist the Company with mergers and acquisitions,
         corporate finances and other related matters for a period of two years.
         As compensation for these services, the Company will immediately pay
         Sands $50,000 and issue them 10,000 shares of the Company's common
         stock. As an additional inducement, the Company has issued Sands
         1,000,000 stock purchase warrants to be exercisable for a three-year
         period expiring July 13, 2003. These warrants shall vest and be
         exercisable as follows: 25% of such warrants shall vest upon execution
         of this agreement and shall have an exercise price per share of $7.49;
         an additional 25% shall vest when and if the closing price of the
         common stock at any time during the exercise period reaches $10.00 per
         share and shall be exercisable at $10.00 per share; an additional 35%
         shall vest when and if the closing price of the common stock at any
         time during the exercise period reaches $14.00 per share and shall be
         exercisable at $14.00 per share; an additional 15% shall vest at any
         time during the exercise period when the closing price of the common
         stock at any time reaches $25.00 per share and shall be exercisable at
         $25.00 per share. Additionally, Sands shall receive further
         compensation for other activities such as fund raising based upon a
         percent of all monies raised.

         On May 25, 2000, the Company entered into an agreement with
         Hampton-Porter Investment Bankers LLC.(Hampton) whereby Hampton will
         provide a variety of professional services. As compensation for this
         agreement, the Company will issue 100,000 restricted shares of the
         Company's common stock and 500,000 stock purchase warrants of which
         250,000 are exercisable at $12.00 per share and 250,000 are exercisable
         at $18.00 per share. Additionally, these warrants expire three years
         from the signing of this contract. Hampton shall receive further
         compensation for other activities such as fund raising based upon an
         escalating percentage of all monies raised. This agreement is
         terminable by either party upon giving five days written notice to the
         other party.

         On April 1, 2000, the Company entered a one-year agreement with
         Synchton, Inc. whereby Synchton, Inc. will provide professional
         business services. As compensation for these services, the Company will
         pay $10,000 per month as well as issue 100,000 stock purchase warrants.
         These warrants shall be issued in 25,000 increments on the first day of
         each quarter of the agreement with an exercise price equal to the
         closing price of the Company's common stock of the prior day to
         issuance. Additionally, these warrants are not exercisable until six
         months after issuance and expire three years after said issuance.
         Although this agreement shall automatically renew on an annual basis,
         it is terminable by the Company prior to the annual renewal by
         providing Synchton, Inc. with ninety days advance written notice.

         On February 7, 2000, the Company entered into an agreement with
         StockNorth Associates (SNA) whereby SNA will assist the Company with
         various aspects of investor relations. As compensation for these
         services, the Company will pay $3,500 per month and issue 5,000 shares
         of the Company's restricted common stock quarterly. These shares are to
         be issued the first day of each quarter and are dependent upon the
         ability of SNA to introduce a minimum of four

                                     F-29

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         broker-dealers to the Company each month. This agreement is a
         semi-annual agreement for the term of one year and shall terminate
         automatically on February 7, 2001. Either party may, however, terminate
         the balance of the agreement at any time provided written notice is
         given to the other party of the agreement.

         On January 26, 2000, the Company entered into an agreement with Kason,
         Inc. (Kason), a public relations firm, whereby Kason will assist the
         Company in developing relationships with internet e-commerce companies
         and electronics retail outlets in the United States and
         Internationally. As compensation for these services, the Company will
         pay $5,000 monthly in addition to 100,000 shares of common stock. Of
         this stock to be issued, 50,000 shares will be issued immediately in
         the form of 144 stock with the balance of 50,000 to be held in escrow
         and be released in twelve equal monthly installments of 4,166.

         On November 10, 1999, the Company entered into a one-year agreement
         with The Compass Point Group, Inc. (Compass) whereby Compass will
         assist the Company with various aspects of investor relations. As
         compensation for these services, the Company will pay $5,000 per month
         commencing December 15, 1999. Additionally, the Company will pay $7,000
         and issue 40,000 shares of restricted common stock to Compass due in
         each of the third, sixth and ninth months of the contract. Although due
         to expire on November 9, 2000, this agreement is terminable by either
         party at any time after the seventy-fifth day following the mutual
         execution of the agreement by the parties provided written notice is
         given to the other party at least fifteen days prior to the expiration
         of the current quarter of the agreement.

         On September 1, 1999, the Company entered into an agreement with
         Paladin Associates (Paladin) whereby Paladin will assist the Company
         with general financial related services. These services shall include,
         but not be limited to, assistance in writing news releases, stockholder
         communications, communications with retail brokers and brokerage firms,
         consulting to large shareholders and general image and public relations
         issues. As compensation for the services to be rendered under this
         twelve-month contract, the Company will pay $3,500 and issue 2,000 free
         trading shares of the Company's common stock per month. This agreement
         also contains incentive based bonuses tied to the consecutive
         twenty-one day average closing bid price of the Company's common stock.
         This incentive will consist of 500,000 two-year options for the
         purchase of the Company's common stock at $1.50. These options will be
         vested in three equal portions based upon the Company's performance in
         the stock market. One-third will vest when the closing bid price
         reaches $4.00 and remains above this level for a minimum of twenty-one
         consecutive trading days. The second one-third will vest when the
         closing bid price reaches $6.00 and remains above this level for a
         minimum of twenty-one consecutive trading days. The remaining one-third
         shall vest when the closing bid price reaches $8.00 and remains above
         this level for a minimum of twenty-one consecutive trading days. This
         agreement is cancelable by either party without cause given ten days
         written notice.

         The Company has entered into an employment contract with Mr. Anthony
         Cordaro, the president of AtlanticPacific, terminating on December 31,
         2002. The agreement provides that Mr. Cordaro will be compensated with
         a gross annual salary of $98,800. Additionally, Mr. Cordaro maintains
         the right to participate in all employee benefit plans as established
         by the Board of Directors of the Company.

                                     F-30

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         In connection with the anticipated merger between the Company and
         ClearWorks.net, Inc., the Company has been added as defendant to the
         lawsuit invoked by Sherman, Gerald Mason d/b/a Castle Developments,
         Ltd. (Castle) against ClearWorks.net, Inc. The suit alleges that
         ClearWorks.net, Inc. breached a contract whereby it failed to pay
         certain consulting fees. Castle is seeking from the Company a temporary
         injunction preventing the merger between the Company and
         ClearWorks.net, Inc. The Company intends to vigorously defend this
         matter.

         The Company engages independent contractors and agents for sales
         principally in foreign countries and certain geographic regions in the
         United States. Under the terms of these one-year agreements, the
         distributors or sales agents provide Eagle with manufacturing business
         sales leads. The transactions from these distributors and agents are
         subject to Eagle's approval prior to sale. The distributorship or sales
         agent receives commissions based on the amount of the sales invoice
         from Eagle to the customer. The sale is recognized at the time of
         shipment to the customer. These sales from agents and distributors are
         not a significant portion of total sales in any of the audit years.


                                     F-31

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


NOTE 18 - EARNINGS PER SHARE:

         The following table sets forth the computation of basic and diluted
earnings per share:

<Table>
<Caption>
                                                                  For the Year Ended August, 2000
                                                                 ---------------------------------
                                                                Income             Shares      Per-Share
                                                              (Numerator)       (Denominator)    Amount
                                                              ------------      -------------  ----------
<S>                                                           <C>               <C>            <C>
         Net Income                                           $   193,041

         Basic EPS:
           Income available to common stockholders                193,041          19,073,071     $ 0.01
                                                                                                  ======
         Effect of Dilutive Securities:
           Warrants                                                 - 0 -           3,306,183
                                                                   -------        -----------

         Diluted EPS:
           Income available to common stockholders
             and assumed conversions.                         $   193,041          22,379,354     $ 0.01
                                                                ==========        ===========     ======
</Table>

<Table>
<Caption>
                                                                  For the Year Ended August, 2000
                                                                 ---------------------------------
                                                                Income             Shares      Per-Share
                                                              (Numerator)       (Denominator)    Amount
                                                              ------------      -------------  ----------
<S>                                                           <C>               <C>            <C>

         Net Income                                           $  168,272

         Basic EPS:
           Income available to common stockholders               168,272           11,980,911      $ 0.01
                                                                                                   ======
         Effect of Dilutive Securities:
           Warrants                                                - 0 -               69,000
                                                                  -------         -----------

         Diluted EPS:
           Income available to common stockholders
             and assumed conversions.                         $  168,272           12,049,911      $ 0.01
                                                                =========         ===========      ======
</Table>

         For the years ended August 31, 2000 and 1999, anti-dilutive securities
         existed. (see Note 12)

         For the period September 1, 2000 to November 28, 2000, there were no
         transactions that would have materially changed the number of common
         shares or potential common shares outstanding.


NOTE 19 - EMPLOYEE STOCK OPTION PLAN:

         In July 1996, the Board of Directors and majority stockholders adopted
         a stock option plan under which 400,000 shares of the Company's common
         stock have been reserved for issuance. Under this plan, as of August
         31, 2000 and 1999, 242,607 and 146,375 warrants have been issued to
         various employees. Of these outstanding warrants, 42,999 and 29,000
         were exercised for the years ended August 31, 2000 and 1999,
         respectively. Additionally, 10,250 warrants have expired as of August
         31, 2000.


                                     F-32

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         The Company has elected to follow APB 25, "Accounting for Stock Issued
         to Employees." Accordingly, since employee stock options are granted at
         market price on the date of grant, no compensation expense is
         recognized. However, SFAS 123 requires presentation of pro forma net

         income and earnings per share as if the Company had accounted for its
         employee stock options granted under the fair value method of that
         statement. The weighted average fair value of the individual options
         granted during 1999 is estimated as $0.32 on the date of grant. A
         meaningful weighted average fair value of the individual options
         granted during 2000 using the method prescribed by SFAS 123 could not
         be determined due to the volatility of the share price during the
         measurement period. Management estimates the average fair value for
         options granted during 2000 to be comparable to those granted in 1999.
         The impact on net income is minimal; therefore, the pro forma
         disclosure requirements prescribed by SFAS 123 are not significant to
         the Company. The fair values were determined using a Black-Scholes
         option-pricing model with the following assumptions:

<Table>
<Caption>
                                                           2000        1999
                                                          ------      ------
<S>                                                       <C>         <C>
                   Dividend yield                           0.00%      0.00%
                   Volatility                              15.14       0.17
                   Risk-free interest rate                  7.00%      7.00%
                   Expected life                               5          5
</Table>

         Subsequent to August 31, 2000, the Board of Directors approved a stock
         repurchase program for up to 500,000 shares of the Company's common
         stock whereby these shares may be used for issuance under this plan.
         (see Note 23)


NOTE 20 - RETIREMENT PLANS:

         During October 1997, the Company initiated a 401(k) plan for its
         employees which is funded through the contributions of its
         participants. This plan maintains that the Company will match up to 3%
         of each participant's contribution. For the years ended August 31, 2000
         and 1999 and 1998, employee contributions were approximately $293,000
         and $103,000, respectively. The Company matched approximately $75,300
         and $33,500, respectively for those same periods.

         Subsequent to August 31, 2000, the Board of Directors approved a stock
         repurchase program for up to 500,000 shares of the Company's common
         stock whereby these shares may be used for issuance under this plan.
         (see Note 23)


NOTE 21 - MAJOR CUSTOMER:

         As of August 31, 2000, the Company had a receivable due from Link - Two
         Communications (Link II) in the amount of $8,655,126. Subsequent to
         August 31, 2000, this receivable has been repaid through the issuance
         of 2,856,000 shares of ClearWorks.net, Inc. common stock. (see Note 23)
         Subsequent to August 31, 2000, Link II has had approximately sixty
         percent of its stock purchased by ClearWorks.net, Inc. to become a
         majority owned subsidiary of that company.

                                     F-33

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         The Company had gross revenues of $5,239,670 and $2,359,184 for the
         years ended August 31, 2000 and 1999, respectively. The following
         parties individually represent a greater than ten percent of these
         revenues.

<Table>
<Caption>
                                                               August 31, 2000         August 31, 1999
              Customer                                       Amount    Percentage    Amount    Percentage
              --------                                     ----------  ----------    --------  ----------
<S>                                                        <C>         <C>           <C>       <C>
              Sprint PCS                                   $  758,660     14.48%     $   -        0.00%
              Link - Two Communications, Inc.              $  638,011     12.18%     $991,692    42.83%
              RFTL                                         $   - 0 -       0.00%     $755,771    32.64%
</Table>

NOTE 22 - INDUSTRY SEGMENTS:

         The Company has adopted the provisions of SFAS No. 131, "Disclosures
         about Segments of an Enterprise and Related Information". At August 31,
         2000, the Company's two business units have separate management teams
         and infrastructures that offer different products and services. The
         business units have been aggregated into two reportable segments (as
         described below) since the long-term financial performance of these
         reportable segments is affected by similar economic conditions.

         Eagle Wireless International, Inc. (Eagle) is a worldwide supplier of
         broadband and telecommunications equipment with related software and
         broadband products.

         AtlanticPacific Communications, Inc. specializes in providing
         professional data and voice cable and fiber optic installations through
         project management services on a nationwide basis for multiple
         site-cabling installations for end users and re-sellers.

<Table>
<Caption>
                                                                      Atlantic
                                                         Eagle        Pacific     Eliminations   Consolidated
                                                      -------------------------   ---------------------------
<S>                                                   <C>             <C>         <C>             <C>
         Revenues from Unaffiliated Customers          1,826,463      3,413,207       - 0 -        5,239,670
         Segment Profit / (Loss)                        (412,632)       605,673       - 0 -          193,041
         Total Assets                                 53,470,895      1,820,155      696,745      55,987,795
         Capital Expenditures                            770,978      1,009,766       - 0 -        1,780,744
         Depreciation and Amortization                   406,824        169,859       - 0 -          576,683
</Table>

NOTE 23 - SUBSEQUENT EVENTS:

         Subsequent to August 31, 2000, the Company's board of directors has
         authorized a stock repurchase program whereby the Company may
         repurchase up to 500,000 shares of its outstanding common stock. These
         shares will be repurchased periodically in the open market or in
         negotiated transactions and be held for issuance in connection with the
         Company's ESOP and other employee plans. To date, 193,200 shares of the
         Company's common stock have been repurchased for a total price of
         $712,968.

         On September 29, 2000, AtlanticPacific Communications, Inc. (a wholly
         owned subsidiary of the Company) signed a loan agreement with Southwest
         Bank of Texas (SWBT) whereby it will borrow $900,000. This 364-day note
         bears interest at SWBT's prime rate plus .25% which is

                                     F-34

<Page>

              EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2000


         payable monthly with principal due September 28, 2001. In addition to
         AtlanticPacific's accounts receivable being put forth as collateral,
         Eagle Wireless has signed the document as guarantor. These monies are
         to be used as working capital whereby it has been partially used to
         repay the outstanding line of credits to both Wells Fargo and Compass
         Banks.

         In October 2000, the Company loaned $1,000,000 to ClearWorks.net, Inc.
         This one-year note accrues interest at ten percent (10%) which is to be
         paid monthly with the principal due September 2001. In addition to
         secondary liens on all assets, Clearworks.net, Inc. has issued 750,000
         shares of its common stock as collateral.

         On November 10, 2000, the Company loaned an additional $1,000,000 to
         ClearWorks.net, Inc. This one-year note accrues interest at ten percent
         (10%) which is to be paid monthly with the principal due September
         2001. In addition to the secondary liens on all assets, Clearworks.net,
         Inc. has again issued 750,000 shares of its common stock as collateral.

         Subsequent to August 31, 2000, the receivable due from Link-Two
         Communications, Inc. has been satisfied through the issuance of
         2,856,000 shares of ClearWorks.net, Inc. common stock. (see Note 21)

                                     F-35