<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   -----------
                                   FORM 10-QSB
                                   -----------

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2001

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

                        COMMISSION FILE NUMBER: 000-23163


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

                     TEXAS                                     76-0494995
        (State or other jurisdiction)                        (IRS Employer
       of incorporation or organization                   Identification No.)

                                 101 COURAGEOUS DRIVE
                             LEAGUE CITY TEXAS 77573-3925
          (Address of principal executive offices, including zip code)

                                 (281) 538-6000
              (Registrant's telephone number, including area code)
                                  -------------


Indicate by check mark whether the registrant (i) has 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 (ii) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

As of April 20, 2001, there were 62,333,563 shares of common stock outstanding
<PAGE>

<TABLE>
<CAPTION>

                                EAGLE WIRELESS INTERNATIONAL, INC. AND SUBSIDIARIES
                                                       INDEX


PART 1 - FINANCIAL INFORMATION                                                                   PAGE
<S>                                                                                              <C>

         Item 1.  Financial Statements (Unaudited)

                  Balance Sheets at February 28, 2001 and August 31, 2000                          3

                  Statements of Income for the Six
                  Months Ended February 28, 2001 and 2000                                          4

                  Statements of Changes In Shareholders' Equity for the
                  Six Months Ended February 28, 2001 and 2000                                      5

                  Statements of Cash Flows for the Six Months Ended
                  February 28, 2001 and 2000                                                       6

                  Notes to the Financial Statements                                               7-21

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                            21-23

PART 2 - OTHER INFORMATION

         Item 1.  Legal Proceedings                                                               23

         Item 2.  Recent Sales of Unregistered Securities or Changes
                  in Securities and Use of Proceeds.                                              23

         Item 3.  Defaults Upon Senior Securities                                                 23

         Item 4.  Submission of Matters to a Vote of Security Holders                             23

         Item 5.  Other Information                                                               23

         Item 6.  Exhibits and Reports on Form 8-K                                                23

SIGNATURES                                                                                        24

</TABLE>




                                                 2
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                               EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                                  (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
                                                   ASSETS
                                                                           FEBRUARY 28,       AUGUST 31,
                                                                               2001              2000
                                                                            (UNAUDITED)       (AUDITED)
                                                                         -------------   ---------------
<S>                                                                      <C>             <C>
CURRENT ASSETS
     Cash and Cash Equivalents (Note 1)                                  $      27,311   $        32,346
     Accounts Receivable (Note 2)                                               10,473             9,902
     Inventories (Note 1)                                                        7,913             5,756
     Notes Receivable (Note 9)                                                   9,891               971
     Prepaid Expenses                                                            1,106               716
                                                                         -------------   ---------------
         TOTAL CURRENT ASSETS                                                   56,694            49,691

PROPERTY AND EQUIPMENT (NOTES 1 & 3):
     Operating Equipment                                                        14,759             2,703
     Less:  Accumulated Depreciation                                            (1,268)           (1,023)
                                                                         -------------    --------------
         TOTAL PROPERTY AND EQUIPMENT                                           13,491             1,680

OTHER ASSETS:
     Deferred Syndication (Note 1)                                                 ---               270
     Goodwill (Notes 1 & 4)                                                     76,754             5,966
     Other Intangible Assets (Note 1)                                           38,059               171
     Less:  Accumulated Amortization                                              (689)             (194)
     Other Assets, principally security deposits                                   217                57
                                                                         -------------    --------------
         TOTAL OTHER ASSETS                                                    114,341             6,270
                                                                         -------------    --------------

TOTAL ASSETS                                                             $     184,526    $       57,641
                                                                         =============    ==============

                                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts Payable                                                    $       8,009    $        2,007
     Accrued Expenses                                                            4,979               308
     Notes Payable (Note 5)                                                      2,720                42
     Line of Credit (Note 7)                                                     1,211               266
     Capital Lease Obligations (Note 6)                                             70                59
     Federal Income Taxes Payable (Notes 1 & 10)                                   772               736
     Other Payables                                                                136                57
     Sales Taxes Payable                                                           706                17
     Deferred Taxes (Note 10) Long Term Debt                                       ---                15
                                                                         -------------    --------------
         TOTAL CURRENT LIABILITIES                                              18,603             3,507

LONG-TERM LIABILITIES:
     Capital Lease Obligations
       (net of current maturities) (Note 6)                                         47                41
     Deferred Taxes (Note 10)                                                       --                32
     Long Term Debt                                                                 79                --
                                                                         -------------    --------------
         TOTAL LONG-TERM LIABILITIES                                               126                73

COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 17)

SHAREHOLDERS' EQUITY:
     Preferred Stock  -  $.001 par value
         Authorized  5,000,000 shares
         Issued  -0- shares                                                        ---               ---
     Common Stock  -  $.001 par value
         Authorized  100,000,000 shares
         Issued and Outstanding at February 28,2001,
         and August 31, 2000
         61,353,770 and 25,609,263, respectively                                    61                26
     Paid in Capital                                                           163,889            52,160
     Unrealized Gain on marketable securities                                    1,189               ---
     Retained Earnings                                                             658             1,875
                                                                         -------------    --------------
         TOTAL SHAREHOLDERS' EQUITY                                            165,797            54,061
                                                                         -------------    --------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                               $     184,526    $       57,641
                                                                         =============    ==============
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                                   3
<PAGE>

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
                               EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF EARNINGS
                                                  (IN THOUSANDS)
---------------------------------------------------------------------------------------------------------------------------

                                                         Three months    Three months       Six months        Six months
                                                            ended            ended        ended February    ended February
                                                         February 28,     February 29,       28, 2001          29, 2000
                                                             2001            2000
<S>                                                 <C>                 <C>              <C>               <C>
Net sales:
    Integration services                                       $   132           $  ---           $   132            $  ---
    Structured wiring                                            1,594              ---             1,594               ---
    Broadband services                                              73              ---                73               ---
    Products                                                     2,870            1,247             4,736             1,903
    Other                                                          127              ---               127               ---
                                                    ------------------- ---------------- ----------------- -----------------
Total sales                                                      4,797            1,247             6,663             1,903
                                                    ------------------- ---------------- ----------------- -----------------
Costs of goods sold:
    Materials other than cable and wire                             32              225               535               332
    Direct labor and related costs                                 245              235               772               353
    Integration services and materials                             309              ---               309               ---
    Products                                                     1,947              ---             1,947               ---
    Structured wiring labor and materials                          757              ---               757               ---
    Broadband costs                                                 50              ---                50               ---
    Depreciation and amortization                                  208               17               252                34
    Other manufacturing costs                                      105               42               113                49
                                                    ------------------- ---------------- ----------------- -----------------
Total costs of goods sold                                        3,652              519             4,734               770
                                                    ------------------- ---------------- ----------------- -----------------

Gross profit                                                     1,145              728             1,929             1,133
                                                    ------------------- ---------------- ----------------- -----------------
Operating expenses
    Selling, general and administrative:
        Salaries and related costs                               1,436              210             1,966               342
        Advertising and promotion                                  136               29               263                32
        Depreciation and amortization                              329               39               488                55
        Other support costs                                        717              279               884               532
        Research and Development                                   189              125               687               256
                                                    ------------------- ---------------- ----------------- -----------------
Total operating expenses                                         2,807              682             4,288             1,216
                                                    ------------------- ---------------- ----------------- -----------------

Income (loss) from operations                                   (1,662)              46            (2,359)              (83)

Other income, principally interest income                          382              192             1,142               443
                                                    ------------------- ---------------- ----------------- -----------------

Earnings (loss) Before Income Taxes & Loss From
Minority Interest in Affiliate                                  (1,280)             238            (1,217)              361
                                                    ------------------- ---------------- ----------------- -----------------

Gain/(Loss) From Minority Interest in Affiliate                    ---              ---               ---               (37)

Income (loss) before income taxes                               (1,280)             238            (1,217)              323

Provisions for income taxes                                        ---               83               ---               100
                                                    ------------------- ---------------- ----------------- -----------------
Net earnings (loss)                                             (1,280)             155            (1,217)              223
Other comprehensive income, net of tax
Unrealized holding gain                                          1,182                              1,189
                                                    ------------------- ---------------- ----------------- -----------------
Other comprehensive (loss)                                     $   (98)                           $   (28)
                                                    =================== ================ ================= =================
Net earnings (loss) per common share:
Basic                                                          $ (0.03)          $ 0.01           $ (0.04)           $ 0.02
Diluted                                                        $ (0.03)          $ 0.01           $ (0.04)           $ 0.02
Comprehensive income - (loss)                                  $   nil                            $   nil

</TABLE>

                                                             4
<PAGE>

<TABLE>
<CAPTION>

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

                                                                                  ADDITIONAL                     TOTAL
         AUGUST 31, 2000             COMMON      STOCK          PREFERRED          PAID IN       RETAINED    SHAREHOLDER'S
      TO FEBRUARY 28, 2001           SHARES      VALUE            STOCK            CAPITAL       EARNINGS       EQUITY
---------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>         <C>            <C>              <C>             <C>         <C>

Total Shareholders' Equity
   As of August 31, 1999              13,480     $    13        $     ---        $     7,181     $  1,700     $    8,894

Net Earnings 2000                                                                                     193            193

New Stock Issued to Shareholders
   Issuance of Common Stock
     For Acquisitions                    869           1                               3,661                       3,662
     For Services and Compensation       981           1                               1,642                       1,643
     For Warrant Conversion            9,411           9                              38,559                      38,568
     For Debt Conversion                 828           1                               1,612                       1,613
     For Employee Stock Option Plan       40           1                                 158                         158

Syndication Costs                                                                      (653)                       (653)

Unrealized Holding Loss                                                                               (18)           (18)
                                    --------     -------        ---------          ---------    ---------     ----------

Total Shareholders' Equity
   As of August 31, 2000              25,609          26              ---             52,160        1,875         54,060
                                    --------     -------        ---------          ---------    ---------     ----------

Net Earnings for Six Months
    Ended February 28, 2001                                                                        (1,217)        (1,217)
New Stock Issued to Shareholders
    For Services and Compensation         63                                             546                         546
    For Warrants Conversion              645                                           3,506                       3,506
    For Employee Stock Option Plan        96                                             192                         192
    For acquisition of ClearWorks,
      Inc.                            35,287         35                              109,355                     109,390

Syndication Costs                                                                       (876)                       (876)

Retirement of ESOP shares              (347)                                            (994)                       (994)

Unrealized Holding Gain                                                                             1,189          1,189
                                     -------     -------        ---------        -----------     --------            ---


Total as of February 28, 2001         61,353     $    61        $     ---        $   163,889     $  1,847      $ 165,797
                                    ========     =======        =========        ===========     ========     ==========
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.






                                                           5
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
                               EAGLE WIRELESS INTERNATIONAL, INC., AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------

                                                                              SIX MONTHS ENDED
                                                                                 FEBRUARY 28,
                                                                             2001            2000
                                                                          (UNAUDITED)     (UNAUDITED)
                                                                          ----------      ----------
<S>                                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Earnings                                                         $  (1,217)        $    223

     Adjustments to Reconcile Net Earnings to Net Cash
      Used by Operating Activities:
       Stock for Services Rendered                                              738              ---
       Depreciation and Amortization                                            740              344
       Unrealized Holding Gain on Marketable Securities                       1,189              ---
       (Increase) / Decrease in Accounts Receivable                           5,195           (1,720)
       (Increase) / Decrease in Inventories                                     801           (1,181)
       (Increase) / Decrease in Prepaid Expenses                                (81)              40
       Increase / (Decrease) in Accounts Payable                                578            2,142
       Increase / (Decrease) in Accrued Expenses                             (6,833)              29
       Increase / (Decrease) in Deferred Revenues                               ---             (480)
       Increase / (Decrease) in Deferred Taxes                                  ---                8
       Increase / (Decrease) in Federal Income Taxes Payable                    ---             (368)
       Increase / (Decrease) in Franchise Taxes Payable                         ---                4
                                                                          ----------        --------

       Total Adjustments                                                      2,327           (1,182)
                                                                          ----------        --------

     Net Cash (Used) / Provided by Operating Activities                       1,110             (959)

CASH FLOWS FROM INVESTING ACTIVITIES
       (Purchase) / Disposal of Property and Equipment                          (98)            (664)
       (Increase) / Decrease in Investments                                  (8,126)             ---
       (Increase) / Decrease in Security Deposit                                ---              ---
       (Increase) / Decrease in Deferred Costs                                  655              ---
       (Increase) / Decrease in Deferred Syndication Costs                      ---              ---
       (Increase) / Decrease in Other Intangible Assets                         ---              ---
       (Increase) / Decrease in Other Assets                                    (46)            (232)
                                                                          ----------        --------

     Net Cash Used by Investing Activities                                   (7,615)            (896)

CASH FLOWS FROM FINANCING ACTIVITIES
       Increase / (Decrease) in Notes Payable                                   508              461
       Increase / (Decrease) in Capital Leases                                   17              ---
       Increase / (Decrease) in Line of Credit                                  945              ---
       Increase / (Decrease) in Shareholders' Advances                          ---              ---
       Proceeds from Sale of Common Stock, Net                                  ---            8,891
                                                                          ----------        --------

     Net Cash Used by Financing Activities                                    1,470            9,352

     Net Increase / (Decrease) in Cash                                       (5,035)           7,497

CASH AT BEGINNING OF THE PERIOD                                              32,346              188
                                                                          ----------        --------

CASH AT THE END OF THE PERIOD                                             $  27,311         $  7,685
                                                                          ==========        ========

       Supplemental Disclosures of Cash Flow Information:
       Net cash paid during the year for:
           Interest                                                       $     144
           Income Taxes                                                   $     ---

Supplemental Non-Cash Investing Activities - See Note 4.

</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.




                                                  6
<PAGE>



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 products and
         services, providing 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. The
         Company designs, manufactures, markets and services its products under
         the Eagle and BroadbandMagic.com, Inc. names. These products include
         transmitters, receivers, controllers, software, convergent set-top
         boxes, fiber, cable, and other equipment used in commercial and
         personal communications systems and radio and telephone systems.
         Additionally the Company provides cable television, telephone,
         security, internet connectivity and related services under a bundled
         digital services package, commonly known as "BDS", through single
         source billing.

A)       Consolidation

         At February 28, 2001 the Company has four wholly owned subsidiaries:
         AtlanticPacific Communications, Inc., eToolz, Inc., BroadbandMagic.com,
         Inc., ClearWorks.Net, Inc. and its subsidiaries, (ClearWorks
         Communication, Inc., ClearWorks Structured Wiring Services, Inc.,
         ClearWorks Integration Services, Inc., United Computing Group and
         Link-Two Communications, 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 $27,311 and $33,346, in thousands, invested in interest
         bearing accounts at February 28, 2001 and August 31, 2000,
         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>
                           Head-In Facility                                 20
                           Manufacturing Equipment                         3-7
                           Furniture and Fixtures                          2-7
                           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.

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, in thousands:

<TABLE>
<CAPTION>
                                                                   February 28
                                                           2001                      2000
                                                      -----------------------------------
                           <S>                        <C>                        <C>

                           Raw Materials                 $5,630                    $2,784
                           Work in Process                1,000                       752
                           Finished Goods                 1,283                         0
                                                      ---------                  --------
                                                         $7,913                    $3,536
                                                      =========                  ========
</TABLE>

E)       Revenue Recognition

         The Company reports income from long-term contracts by the
         percentage-of-completion method of accounting. This method recognizes
         income and costs with respect to individual contracts on the basis of
         the proportionate value of work completed during the period. Estimated
         losses are recognized in full as soon as they are identifiable.
         Earnings are charged with a provision for doubtful accounts receivable
         based on collection experience and current review of the collectability
         of accounts. Accounts deemed uncollectable are charged against the
         allowance for doubtful accounts. The majority of cabling contracts are
         completed in less than one month.

         The Company's subsidiary, ClearWorks.Net, Inc., recognizes revenue and
         the related costs at the time the services are rendered. Revenue is
         derived from fees charged for the delivery of Bundled Digital Services,
         integration services and


                                       7
<PAGE>

         cabling and wiring. Long-term contracts are treated the same as the
         parent company.

F)       Research and Development Costs

         For the months ended February 28, 2001, 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 $687,000 were expensed for
         the six months ended February 28, 2001.

         Prior to Fiscal 2000, 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 $256,000 were expensed for the six
         months ended February 29, 2000. Contract revenues earned for the months
         ended February 28, 2001 and 2000 were $0. No research and development
         services were performed for outside parties for the months ended
         February 28, 2001.

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 are 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, in thousands:

<TABLE>
<CAPTION>

                                                                       February 28, 2000   February 29, 2000
                                                                       -----------------   -----------------
                  <S>                                                  <C>                 <C>
                  Weighted Average Number of Common
                      Shares Outstanding Including:

                  Primary Common Stock Equivalents                                32,156              14,255
                  Fully Dilutive Common Stock Equivalents                         32,299              14,349
</TABLE>

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 February 28, 2001 and 2000, 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.

         Other intangible assets consist of patents, licenses and the intrinsic
         value trade-show costs. Patents and trade show costs are being
         amortized using the straight-line method over ten (10) years, (25)
         years and eighteen (18) months, respectively.

K)       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 or expensed in the period incurred. For the six months ended
         February 28, 2001, the Company has expensed $263,000 whereas $374,000
         in costs has been reclassified to prepaid expenses. Prior to fiscal
         2000, the Company had no contractual arrangements, therefore all
         advertising related costs were expensed as incurred.

L)       Deferred Syndication Costs


                                       8
<PAGE>


         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.

M)       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.

N)       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 statements 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.

O)       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, 2000, no other comprehensive income existed.

P)       Reclassification

         The Company has reclassified certain assets costs and expenses for the
         six months ended February 28, 2001 to facilitate comparison to the six
         months ended February 29, 2000 and August 31, 2000.


NOTE 2 - ACCOUNTS RECEIVABLE:

         Accounts receivable consist of the following, in thousands:

<TABLE>
<CAPTION>
                                                                 February 28,
                                                            2001                   2000
                                                      ---------------------------------
         <S>                                          <C>                    <C>
         Accounts Receivable                          $   11,005             $    2,007
         Allowance for Doubtful Account                      532                    ---
                                                      ----------             ----------
         Net Accounts Receivable                      $   10,473             $    2,007
                                                      ==========             ==========
</TABLE>

NOTE 3 - PROPERTY, PLANT & EQUIPMENT:

         Components of property, plant & equipment are as follows, in thousands:

<TABLE>
<CAPTION>
                                                                                       February 28,
                                                                                  2001               2000
                                                                           ------------------------------
                  <S>                                                      <C>                <C>

                  Automobile                                               $       894        $       ---
                  Head In Facilities                                             4,903                ---
                  Furniture & Fixtures                                             581                 55
                  Leasehold Improvements                                            56                 23
                  Hardware & Software                                            1,401                ---
                  Office Equipment                                                 908                164
                  Property, Manufacturing & Equipment                            6,016                535
                                                                           -----------        -----------

                     Total Property, Plant & Equipment                          14,759              1,586
                         Less:  Accumulated Depreciation                        (1,268)              (677)
                                                                           -----------        -----------
                     Net Property, Plant & Equipment                       $    13,491        $       909
                                                                           ===========        ===========
</TABLE>


                                                    9
<PAGE>


NOTE 4 - BUSINESS COMBINATIONS:

         On February 1, 2001, the Company acquired ClearWorks.Net, Inc.
         (ClearWorks) and its subsidiaries, ClearWorks Communication, Inc.,
         ClearWorks Structured Wiring Services, Inc., ClearWorks Integration
         Services, Inc., United Computing Group, Link-Two Communications, Inc.
         and LD Connect, Inc. in a business combination accounted for as a
         purchase. ClearWorks is a communications carrier providing broadband
         data, video and voice communication services to residential and
         commercial customers, currently within Houston, Texas. These services
         are provided over fiber-optic networks ("Fiber-To-The-Home" or "FTTH")
         which the Company designs, constructs, owns and operated inside large
         residential master-planned communities and office complexes. ClearWorks
         also provides information technology staffing personnel, network
         engineering, vendor evaluation of network hardware, implementation of
         network hardware and support of private and enterprise networks, as
         well as, developing residential, commercial and education accounts for
         deployment of structured wiring solutions. The results of operation for
         ClearWorks are included in the accompanying financial statements since
         the date of acquisition. The Company issued 35,287,000 shares of its
         common stock to ClearWorks. The total cost of the acquisition was
         $109,389,526, which exceeded the fair value of the net assets of
         ClearWorks by $67,765,000. The excess is being amortized as goodwill
         using the straight-line method over twenty (20) years.

         On January 1, 2000, the Company acquired AtlanticPacific
         Communications, Inc. (AtlanticPacific) in a business combination
         accounted for as a purchase. AtlanticPacific is primarily engaged in
         the nationwide sales and installation of fiber and cable to commercial
         enterprises. The results of operations for AtlanticPacific are included
         in the accompanying financial statements since the date of acquisition.
         To culminate this transaction, the Company issued 518,919 shares of its
         common stock and paid no cash to AtlanticPacific. However, the Company
         assumed debt of $1,304,080 and immediately paid off $830,000. The total
         cost of the acquisition was $3,131,850, which exceeded the fair value
         of the net assets of AtlanticPacific by $3,662,890. The excess is being
         amortized using the straight-line method over twenty (20) years.

         On January 1, 2000, the Company acquired Comtel Communications, Inc.
         (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 results of
         operations for Comtel are included in the accompanying financial
         statements since the date of acquisition. The Company issued 300,000
         shares of its common stock to Comtel in culminating this transaction.
         The total cost of the acquisition was $2,269,856, which exceeded the
         fair value of the net assets of Comtel by $1,878,528. The excess is
         being amortized as goodwill using the straight-line method over twenty
         (20) years.

         On March 17, 2000, the Company acquired eToolz, Inc. (ETI) in a
         business transaction accounted for as a purchase. ETI specializes in
         the development of leading edge, innovative, commercial, industrial and
         military technologies. The results of operations for ETI are included
         in the accompanying financial statements since the date of acquisition.
         The Company issued 50,000 shares of its common stock to ETI in
         culminating the transaction. The total cost of the transaction was
         $437,500, which exceeded the fair market of the net assets of ETI by
         $424,019. The excess is being amortized as goodwill using the
         straight-line method over twenty (20) years.

A)       Pro Forma Results

         The following summarized pro forma (unaudited) information assumes the
         transactions related to ClearWorks.net, Inc. and subsidiaries had
         occurred September 1, 1999.

<TABLE>
<CAPTION>
                                                      For the year ended August 31, 2000
                                                          Income Statement Pro Forma
                                                                 (IN THOUSANDS)

                                           Eagle Wireless                       Pro forma       Combined
                                            International      Clearworks.net        Adj.        Totals
                                            -----------        --------------   ---------       --------
         <S>                                <C>                <C>              <C>            <C>
         Total Revenues                     $     5,240         $    21,447     $     ---      $  26,687
                  Operating Expenses              2,482              20,293           ---         22,775
                                            -----------         -----------     ---------       --------
                  Gross Profit                    2,758               1,154           ---          3,912
                  Operating Expense               3,985              22,207                       26,192
                                            -----------         -----------     ---------       --------
                  Other Income -net               1,516               6,304                       (4,788)
                                            -----------         -----------     ---------       --------
                  Net Loss                  $      (289)        $   (27,357)    $     ---      $ (27,068)
                                            ===========         -----------     ---------       ---------

                                                                       Earnings Per Share
                           Basic             $0.01                                               $(0.68)
                                              ====                                                ======
                           Diluted           $0.01                                               $(0.63)
                                              ====                                                ======
</TABLE>



                                                   10
<PAGE>

<TABLE>
<CAPTION>
                                                      For the year ended August 31, 2000
                                                          Income Statement Pro Forma
                                                                 (IN THOUSANDS)

                                           Eagle Wireless                       Pro forma(1)    Combined
                                            International      Clearworks.net        Adj.        Totals
                                            -----------        --------------   ---------       --------
         <S>                                <C>                <C>              <C>            <C>
         Total Revenues                     $     3,917         $    21,711     $     ---      $  25,628
                  Operating Expenses              5,375              45,724        15,324         35,775
                                            -----------         -----------     ---------       --------
                  Net Loss                  $    (1,458)        $   (24,013)    $  15,324      $ (10,147)
                                            -----------         -----------     ---------       --------

                                                                       Earnings Per Share
                           Basic             $0.02                                               $(0.17)
                                              ====                                                ======
                           Diluted           $0.02                                               $(0.17)
                                              ====                                                ======
</TABLE>

         (1) Interest expense, incentive compensation and other services paid to
             settle contracts and debts which items are not reoccurring in
             future operations.


B)       Significant Acquisitions

         As stated in the aforementioned, the Company consummated three
         acquisitions and entered into one merger agreement during the Fiscal
         2000. None of the three acquisitions meets the significance test
         individually or cumulative when compared to the Company for the months
         ended February 28, 2001. The merger with ClearWorks is considered to
         represent a significant acquisition when compared to the Company for
         the months ended February 28, 2001 and has accordingly been included in
         the above pro forma information for a six month period ended December
         31, 2000.

NOTE 5 - NOTES PAYABLE:

         The following table lists the Company's note obligations as of February
28, 2001 and 2000, in thousands:

<TABLE>
<CAPTION>
                                                      Annual
                                                     Interest                               Amount
                                                       Rate          Due Date           2001          2000
                                                 --------------- ----------------     --------     ---------
                 <S>                             <C>             <C>                  <C>          <C>
                 Vehicles                             Various        Various          $    106     $     ---
                 6% Convertible Debenture (Note8)     6.0%           Demand              2,000           ---
                 Hou-Tex                              10.0%          Demand                500           ---
                 Other                                Various        Various               193           198
                                                                                      --------     ---------

                 Total notes payable                                                  $  2,799     $     198
                 Less current portion                                                   (2,720)         (184)
                                                                                      --------     ---------

                 Total long-term debt                                                 $     79     $      14
                                                                                      ========     =========
</TABLE>


NOTE 6 - CAPITAL LEASE OBLIGATIONS:

         The Company leases equipment from various companies under capital
         leases with varying expiration dates. The assets and liabilities under
         the capital lease are recorded at the lower of the present value of the
         minimum lease payments or the fair value of the asset. The assets are
         depreciated over the estimated useful life with the value and
         depreciation being included as a component of Property and Equipment
         under operating equipment.

         Minimum future lease payment under capital lease as of February 28,
         2001 for each of the next five years and in the aggregate are, in
         thousands:

<TABLE>
<CAPTION>

                 Period Ended                                             Amount
                                                                       ------------
                 <S>                                                   <C>
                     2002                                              $       70
                     2003                                                      34
                     2004                                                      13
                                                                       ------------


                                       11
<PAGE>

                 Total minimum lease payment                           $      117
                                                                       ------------
                 Less: Amount representing interest                            14
                                                                       ------------
                 Present value of net minimum lease
                 payments                                              $      103
                                                                       ============
</TABLE>

NOTE 7 - LINE OF CREDIT:

         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 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.

         The Company, through its subsidiary United Computing Group (UCG),
         maintains a $3,000,000 line of credit with IBM Credit Corporation (IBM)
         bearing a variable rate of interest. At February 28, 2001, a balance of
         $661,433 existed. Payments are due every ten (10) days. Subsequent to
         February 28, 2001, the credit line has been increased to $6,000,000. As
         part of the agreement, UCG must maintain annual revenues of greater
         than zero and equal to or less than 40.0 : 1.0; a ratio of net profit
         after tax to revenues equal to or greater than 1.25 percent; and a
         ratio of total liabilities to tangible net worth greater than zero and
         equal to or less than 10.0 : 1.0. Additionally, UCG must maintain a
         standard all-risk insurance policy in the amount of at least $300,000
         with IBM being named lender loss payee.

NOTE 8 - CONVERTIBLE DEBENTURES:

         On December 13, 1999, ClearWorks.Net, Inc. (ClearWorks), closed a
         private placement transaction with Candlelight Investors, LLC, and
         ("Candlelight") a Delaware limited liability company. In the private
         placement, ClearWorks received from Candlelight a total of $3,000,000
         in exchange for $3,000,000 total face value 6% convertible debentures
         due December 13, 2001, together with warrants to purchase up to 210,000
         shares of common stock. ClearWorks determined the warrants to have a
         total value of $215,000 on the date of issuance and recorded this
         amount as a discount against the convertible debentures.

         The warrants are exercisable at $3.16 per share. The debentures are
         convertible at the lower of $3.30 per share or ninety-two percent (92%)
         of the average of the three lowest closing bid prices for ClearWorks'
         common stock during the 30 days immediately preceding conversion.
         However, if the average lowest closing price is less than $1.50 per
         share, then the conversion price of the debentures shall be equal to
         the average lowest closing price without modification. Because the
         conversion price of these debentures was less than the fair value of
         ClearWorks' common stock on the date of issuance, ClearWorks has
         recorded as interest expense the intrinsic value of the beneficial
         conversion feature. The intrinsic value of the beneficial conversion
         feature was determined to be $650,000.

         In connection with the private placement, ClearWorks agreed not to sell
         any of its securities until July 4, 2000, unless the securities are (1)
         issued in connection with a public offering of at least $15 million,
         (2) in connection with an acquisition of additional businesses or
         assets or (3) as compensation to employees, consultants, officers or
         directors.

         On April 19, 2000, ClearWorks issued an additional $2,000,000 of 6%
         convertible debentures to Candlelight with conversion features similar
         to those noted above. Because the conversion price of these debentures
         was less than the fair value of ClearWorks' common stock on the date of
         issuance, ClearWorks has recorded as interest expense the value of the
         beneficial conversion feature. The value of the beneficial conversion
         feature exceeded the carrying value of the debentures (net of discount
         allocable to detachable warrants discussed below), therefore, the
         charge to interest expense was limited to $1,716,000.

         The 6% convertible debentures issued on April 19, 2000 were also issued
         with detachable warrants, exercisable at $3.16 per share. The warrants
         can be converted into 140,000 shares of common stock. ClearWorks
         determined the warrants have a total value of $284,000 on the date of
         issuance and recorded this amount as a discount against the convertible
         debentures. This discount will be amortized to interest expense over
         the term on the convertible debenture.

         This debenture contained a stipulation that required ClearWorks to
         register all underlying shares of common stock by May


                                      12
<PAGE>

         19, 2000. This registration did not occur resulting in a situation of
         default. As a result of said default. On December 13, 2000, Candlelight
         served notice that the principal and accrued interest of the 6%
         convertible debenture dated April 19, 2000 to be repaid in accordance
         with the terms of the debenture. As a result of this call and the
         subsequent lawsuit served by Candlelight against ClearWorks, all
         deferred costs and penalties associated with this debenture have been
         expensed.

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
         February 28, 2001 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 months ended February 29,
         2000, no marketable securities were held.

         At February 28, 2001, the securities had an original basis of
         $1,703,000; determined by multiplying the number of shares being
         acquired by the fair market value of those shares. At the February 28,
         2001 balance sheet date, the fair market value of these securities was
         $2,885,000; 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 gain and is included below current earnings in
         "Other Comprehensive Income

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>

         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          13,852
                                                                      -------         -------

                  Valuation Allowance                                       0               0
                                                                            -               -

                       Net Deferred Tax Asset / Liability             $47,480         $13,852
                                                                      =======         =======
</TABLE>

NOTE 11 - ISSUANCE OF COMMON STOCK:

         During the three months ended February 28, 2001, the Company issued
         shares of common stock. The following table summarizes the shares of
         common stock issued, in thousands.

<TABLE>
                  <S>                                                         <C>

                  Shares Outstanding November 30, 2000                                 26,317
                                                                              ----------------

                  Shares issued for Employee Stock Option Plan                             96
                  Shares issued for Acquisition                                        35,287
                  Shares retired from Employee Stock Option Plan                         (347)
                                                                              ----------------
                  Shares Outstanding February 28, 2001                                 61,353
</TABLE>

                                      13
<PAGE>

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 February 28, 2001,
         410,474 options have been granted pursuant to such plan with 72,499
         being exercised and 10,350 being cancelled.

         The Company has issued or has acquired through its acquisitions and
         outstanding the following warrants which have not yet been exercised
         at February 28, 2001:

                  59,998 stock purchase warrants will be issued to Carl A.
                  Chase. Expiration of warrants is 6,666 on the ending date of
                  each month commencing on November 30, 2001 and ending on July
                  31, 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 $0.31 per share. The shares of
                  common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As of
                  February 28, 2001, none of these warrants have been
                  registered, issued or exercised.

                  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
                  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 February 28, 2001, 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 warrants were registered
                  for resale on August 3, 2000, under the Securities Act of
                  1933. As of February 28, 2001, 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 November 30, 2000, under the Securities Act of 1933.
                  As February 28, 2001, 6,234 warrants have been exercised
                  resulting cash proceeds of $10,910.

                  25,000 stock purchase warrants issued to Synchton, Inc.
                  expiring January 1, 2004. 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. The
                  shares of common stock underlying these have not been
                  registered as of February 28, 2001, under the Securities Act
                  of 1933. As of February 28, 2001, none of these warrants have
                  been exercised.

                  41,667 stock purchase warrants issued to Peter Miles expiring
                  July 20, 2004. 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. The shares of
                  common stock underlying these have not been registered as of
                  February 28, 2001, under the Securities Act of 1933. As of
                  February 28, 2001, none of these warrants have been exercised.

                  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 February 28, 2001, none of these warrants have
                  been exercised.


                                      14
<PAGE>


                  40,000 stock purchase warrants will be issued to Rachel
                  McClere 1998 Trust expiring April 24, 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 $3.75
                  per share. The shares of common stock underlying these
                  warrants have not been registered or issued, under the
                  Securities Act of 1933. As of February 28, 2001, none of these
                  warrants have been registered, issued or exercised.

                  160,000 stock purchase warrants will be issued to McClere
                  Family Trust expiring April 24, 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 $3.75
                  per share. The shares of common stock underlying these
                  warrants have not been registered or issued, under the
                  Securities Act of 1933. As of February 28, 2001, none of these
                  warrants have been registered, issued or exercised.

                  232,000 stock purchase warrants will be issued to Shannon D.
                  McLeroy expiring April 24, 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 $3.75 per share.
                  The shares of common stock underlying these warrants have not
                  been registered or issued, under the Securities Act of 1933.
                  As of February 28, 2001, none of these warrants have been
                  registered, issued or exercised.

                  176,000 stock purchase warrants will be issued to Tech
                  Technologies Services, LLC expiring April 24, 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 $3.75 per share. The shares of common stock
                  underlying these warrants have not been registered or issued,
                  under the Securities Act of 1933. As of February 28, 2001,
                  none of these warrants have been registered, issued or
                  exercised.

                  328,000 stock purchase warrants will be issued to Candlelight
                  Investors, LLC. Expiration of warrants is as follows: 104,000
                  on December 31, 2002, 112,000 on February 15, 2003 and the
                  remaining 112,000 on April 19, 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 $3.95
                  per share. The shares of common stock underlying these
                  warrants have not been registered or issued, under the
                  Securities Act of 1933. As of February 28, 2001, none of these
                  warrants have been registered, issued or exercised.

                  25,000 stock purchase warrants issued to Synchton, Inc.
                  expiring October 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 $4.50 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 February 28, 2001, 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 February 28, 2001, 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 February 28, 2001, 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
                  February 28, 2001, none of these warrants have been exercised.

                  192,000 stock purchase warrants will be issued to Tech
                  Technologies Services, LLC. expiring April 24, 2008. The
                  warrants are to purchase fully paid and non-assessable shares
                  of the common stock,


                                      15
<PAGE>


                  par value $.001 per share at a purchase price of $7.50 per
                  share. The shares of common stock underlying these warrants
                  have not been registered or issued, under the Securities Act
                  of 1933. As of February 28, 2001, none of these warrants have
                  been registered, issued or exercised.

                  240,000 stock purchase warrants will be issued to Shannon D.
                  McLeroy expiring April 24, 2008. 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 have not
                  been registered or issued, under the Securities Act of 1933.
                  As of February 28, 2001, none of these warrants have been
                  registered, issued or exercised.

                  168,000 stock purchase warrants will be issued to Michael T.
                  McClere expiring April, 24, 2008. 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 have not
                  been registered or issued, under the Securities Act of 1933.
                  As of February 28, 2001, none of these warrants have been
                  registered, issued or exercised.

                  40,000 stock purchase warrants will be issued to Rachel
                  McClere 1998 Trust expiring April 24, 2008. 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 have not been registered or issued, under the
                  Securities Act of 1933. As of February 28, 2001, none of these
                  warrants have been registered, issued or exercised.

                  160,000 stock purchase warrants will be issued to McClere
                  Family Trust expiring April 24, 2008. 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 have not been registered or issued, under the
                  Securities Act of 1933. As of February 28, 2001, none of these
                  warrants have been registered, issued or 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 February 28, 2001, 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 February 28, 2001, none of these warrants have
                  been exercised.

                  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 February 28,
                  2001, 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 February 28, 2001, 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 February 28,
                  2001, 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 February 28, 2001, none of
                  these warrants have been exercised.


                                      16
<PAGE>


                  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 February 28,
                  2001, 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:

<TABLE>
<CAPTION>
                   Warrants Issued              Warrants Exercisable              Warrants                 Warrants Expired
Class of             February 28,                    February 28,            Non-          Non-              February 28,
Warrants         2001           2000           2001             2000      Exercisable   Registered      2001            2000
--------       ----------------------        -------------------------    -------------------------    -----------------------
<S>            <C>              <C>          <C>                <C>       <C>             <C>          <C>              <C>
  1.50         600,000             0                0                0       350,000      250,000           0               0
  1.54         100,000             0                0                0             0            0           0               0
  1.55          50,000             0           25,000                0             0            0           0               0
  1.75          43,641             0                0                0             0            0           0               0
  1.75          20,000             0           13,766                0             0            0           0               0
  1.92         100,000             0                0                0             0            0           0               0
  2.00          25,000             0           25,000                0             0            0           0               0
  3.00          50,000             0           50,000                0             0            0           0               0
  4.50          50,000             0                0                0             0            0           0               0
  7.00         100,000             0                0                0             0      100,000           0               0
  7.49         250,000             0                0                0             0      250,000           0               0
  7.50          25,000             0           25,000                0             0            0           0               0
  9.68          50,000             0           50,000                0             0            0           0               0
 10.00          25,000             0           25,000                0             0            0           0               0
 10.00          50,000             0                0                0             0      250,000           0               0
 12.00          50,000             0          250,000                0             0            0           0               0
 14.00          50,000             0                0                0             0      350,000           0               0
 18.00          50,000             0          250,000                0             0            0           0               0
 25.00          50,000             0          250,000                0             0      150,000           0               0

  2.00         Expired             0 *              0                0             0            0      50,000               0
 ESOP          281,474 *           0 *        127,525                0       153,949            0           0               0
 ESOP          129,000       192,407           43,500           82,250        85,500            0      10,350          41,875
             -----------------------        --------------------------    ------------------------     -----------------------
             3,149,115       192,407        1,134,791           82,250       589,449    1,350,000      60,350          41,875
             =======================        ==========================    ========================     =======================
</TABLE>

AN ASTERISK (*) DENOTES WARRANTS WHICH WOULD HAVE AN ANTI-DILUTIVE EFFECT IF
CURRENTLY USED TO CALCULATE EARNINGS PER SHARE FOR THE MONTHS ENDED FEBRUARY 28,
2001 AND 2000, RESPECTIVELY.

NOTE 13 - CAPITALIZATION ACTIVITIES:

         On July 10, 2000, AtlanticPacific Communications, Inc. (a wholly-owned
         subsidiary) initiated a stock offering in accordance with Regulation D
         promulgated 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 February 28, 2001, 1325 units have been sold
         totaling 132,500 shares and resulting in proceeds of $331,250.

NOTE 14 - RISK FACTORS:

         For the months ended February 28, 2001 and 2000, substantially all of
         the Company's business activities have remained within the United
         States and have been extended to the wireless infrastructure, fiber,
         cabling and broadband industry. Approximately, eighty-four percent of
         the Company's revenues and receivables have been created solely in the
         state of Texas, two percent have been created in the international
         market, and the approximate fourteen percent remainder have been
         created relatively evenly over the rest of the nation during the year
         ended February 28, 2001. Whereas approximately ninety-one percent of
         the Company's revenues and receivables have been created solely in the
         state of Texas, two percent have been created in the international
         market, and the approximate seven percent remainder has been created
         relatively evenly over the rest of the nation for the year ended August
         31, 2000.

         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, 2000 and has
         since expanded into the fiber, cable and broadband markets for the six
         months ended February 28, 2001, it is management's belief that the
         Company faces little credit or economic risk due to the continuous
         growth the market is experiencing.

NOTE 15 - FOREIGN OPERATIONS:

         Although the Company is based in the United States, its product is sold
         on the international market. Presently, international sales total
         approximately 2% and 2% at February 28, 2001 and 2000, respectively.


                                      17
<PAGE>


NOTE 16 - 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 February 28, 2001 and 2000, rental expenses of
         approximately $64,550 and $64,550, respectively, were incurred.

         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 February 28, 2001 and
         2000, rental expense of $6,390 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
         February 28, 2001 and 2000, rental expense of $4,494 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. For the periods ended February 28, 2001 and 2000,
         rental expense of $6,660 and $0, respectively were incurred.

         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 February 28, 2001 and 2000 of
         $13,500 and $0 were incurred.

         The Company's subsidiary, ClearWorks.Net, Inc., leases office space in
         Houston, Texas with 2000 North Loop. This non-cancelable lease expires
         on April 30, 2003. The monthly payments will increase from $3,659 to
         $3,785 on May 30, 2000 and again on May 1, 2002 to $3,911 for the
         remaining twelve months. For the period ended February 28, 2001, rental
         expense of $3,785 was incurred.

         Also, ClearWorks.Net, Inc., leases office space in Phoenix, Arizona
         with Airpark Holdings. This non-cancelable lease expires on July 31,
         2003. The monthly payments are variable. For the period ended February
         28, 2001, rental expense of $4,706 was incurred.

         Also, ClearWorks.Net, Inc., leases office space in San Antonio, Texas
         with Wade Holdings. This is a month-to-month lease. The monthly
         payments are $2,000. For the period ended February 28, 2001, rental
         expense of $2,000 was incurred.

         The Company's subsidiary, United Computing Group, leases office space
         in Houston, Texas with Techdyne, Inc. This non-cancelable lease expires
         on August 31, 2002. The monthly payments will increase from $6,000 to
         $6,100 on September 1, 2000 and again on September 1, 2001 to $6,300
         for the remaining twelve months. For the period ended February 28,
         2001, rental expense of $6,100 was incurred.

         Also, United Computing Group, leases office space in Dallas, Texas with
         Trammell Crow. This non-cancelable lease expires on June 30, 2002. The
         monthly payments are $2,179 for the life of the contract. For the
         period ended February 28, 2001, rental expense of $2,179 was incurred.

                  Future obligations under the non-cancelable lease terms are:

<TABLE>
<CAPTION>
                                   Period Ending
                                   February 28,           Amount
                                   -------------         --------
                                   <S>                   <C>
                                     2001                $254,125
                                     2002                 274,565
                                     2003                  76,274
                                    Total                $604,964
                                                         =========
</TABLE>

                                      18
<PAGE>


         The Company is subject to legal proceedings and claims that arise in
         the ordinary course of business. The Company's management does not
         expect that the results in any of these legal proceedings will have a
         material adverse effect on the Company's financial condition or results
         of operations. All legal proceedings are incorporated herein by
         reference from Company's Form 8K, which was previously filed on April
         16, 2001.

         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 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.


                                      19

<PAGE>

NOTE 17 - EARNINGS PER SHARE:

         The following table sets forth the computation of basic and diluted
earnings per share, in thousands except per-share amount:

<TABLE>
<CAPTION>
                                                      For the Six Months Ended February 28, 2001
                                                    ----------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)       (Denominator)        Amount
                                                    -----------       -------------      ---------
         <S>                                        <C>               <C>                <C>
         Net Income                                  $ (1,217)

         Basic EPS:
          Income available to common stockholders      (1,217)           32,156             $ 0.04
                                                                                            ======

         Effect of Dilutive Securities
           Warrants                                       ---               154
                                                     --------          --------

         Diluted EPS:
           Income available to common stockholders
             and assumed conversions.                $ (1,217)           32,299             $ 0.04
                                                     ========          ========             ======


                                                           For the Months Ended August 2001
                                                    ----------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)       (Denominator)        Amount
                                                    -----------       -------------      ---------
         <S>                                        <C>               <C>                <C>
         Net Income                                    $  193

         Basic EPS:
          Income available to common stockholders         193            19,073             $ 0.01
                                                                                            ======

         Effect of Dilutive Securities
           Warrants                                         0             3,306
                                                     --------          --------

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


         For the Months ended November 30, 2000 and August 31, 1999,
         anti-dilutive securities existed. (see Note 12)

NOTE 18 - 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 February
         28, 2001 and 2000, 410,474 and 192,407 warrants have been issued to
         various employees. Of these outstanding warrants, - 0 - and 32,875 were
         exercised for the three months ended February 28, 2001 and 2000,
         respectively. Additionally, 10,350 warrants have expired as of February
         28, 2001.

         On September 22, 2000, the Company's board of directors authorized a
         stock repurchase program whereby the Company may repurchase up to
         1,000,000 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. As of February 28, 2001, 438,800 shares
         of the Company's common stock have been repurchased for a total price
         of $1,165,357.

NOTE 19 - 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 months ended February 28,
         2001 and 2000, employee contributions were approximately $42,920 and
         $44,802, respectively. The Company matched approximately $14,277 and
         $28,634, respectively for those same periods.

NOTE 20 - MAJOR CUSTOMER:

         The Company had gross revenues of $4,797,000 and $1,247,000 for the
         three months ended February 28, 2001 and 2000, respectively. The
         following parties individually represent a greater than ten percent of
         these revenues.

<TABLE>
<CAPTION>
                                           February 28, 2001          February 29, 2000
              Customer                   Amount     Percentage       Amount    Percentage
              --------                 ---------    ----------       ------    ----------
              <S>                      <C>          <C>              <C>       <C>
              Enron                    $ 866,000      18.1%          $  -0-       0.0%

              Sprint PC                $ 638,000      13.3%          $  -0-       0.0%
                                       =========      ====           ======      ====
</TABLE>


                                      20
<PAGE>


NOTE 21 - INDUSTRY SEGMENTS:

         The Company has adopted the provisions of SFAS No. 131, "Disclosures
         about Segments of an Enterprise and Related Information". At February
         28, 2001, the Company's seven 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. (Including Eagle Wireless, BroadbandMagic & etools
         for this summary)

         AtlanticPacific Communications, Inc. (APC / SW) 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.

         ClearWorks Communications, Inc. (COMM) provides solutions to consumers
         by implementing technology both within the residential community and
         home. This is accomplished through the installation of fiber optic
         backbones to deliver voice, video and data solutions directly to
         consumers.

         ClearWorks Home Systems, Inc. (HSI) specializes in providing fiber
         optic and copper based structured wiring solutions and audio and visual
         equipment to single family and multi-family dwelling units.

         United Computing Group, Inc. (UCG/INT) is an accelerator company and
         computer hardware and software reseller.  UCG/INT maintains a national
         market presence.

         Link Two Communications, Inc. (Link II) is in the development and
         delivery of one and two way messaging systems over a national
         high-speed wireless broadband network. Link II continues to add to the
         paging customer base.

<TABLE>
<CAPTION>
(in thousands)             Eagle/Elim.    APC/SW    COMM      HSI     UCG/INT    Link II    .Net    Consolidated
                           -----------    ------   ------    -----    -------    -------    ----    ------------
<S>                        <C>            <C>      <C>       <C>      <C>        <C>        <C>     <C>
Revenue                          485       1,565       71*     246*    2,426*         4*     ---        4,797
Segment Profit / (Loss)         (667)        221     (133)    (134)      (29)      (180)    (358)      (1,280)
Total Assets                 164,093       2,788    4,923      981     5,541      5,312      888      184,526
Capital Expenditures              26          10      229      ---        10          2      ---          277
Dep. And Amort.                  658          17       20        2         8         20       15          740
</TABLE>


         The accounting policies of the reportable segments are the same as
         those described in Note 1. The Company evaluates the performance of its
         operating segments based on income before net interest expense, income
         taxes, depreciation and amortization expense, accounting changes and
         non-recurring items. *Note that these revenues were only reported for
         a period of 28 days for the purpose of this consolidation.

ITEM 2.  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 three months ended February 28, 2001, the Company's primary
         operations were concentrated in the completion of the merger with
         ClearWorks.Net, Inc., finalization of long-term set-top box sales
         agreements, marketing of wireless infrastructure, cabling, multi-media
         devices, high definition television products and sale of bundle digital
         services (BDS). The new combined company commenced a marketing program
         to significantly sales of commercial and residential bundled digital
         services, cabling to various educational institutions, financing of the
         expansion of Clearworks.Net broadband infrastructure in Texas and
         Arizona.

         REVENUE RECOGNITION

         Eagle reports income from long-term contracts by the
         percentage-of-completion method of accounting. This method recognizes
         income and costs with respect to individual contracts on the basis of
         the proportionate value of work completed during the period. Estimated
         losses are recognized in full as soon as they are identifiable.
         Earnings are charged with a provision for doubtful accounts receivable
         based on collection experience and current review of the collectability
         of accounts. The majority of cabling contracts are completed in less
         than one month.


                                      21
<PAGE>


         RECEIVABLES

         For the six months ended February 28, 2001, Eagle accounts receivables
         increased to $10,473,000 from $9,902,000 at August 31, 2000. The
         majority of this increase is due to additional revenues and related
         receivables from the merged .Net companies.

         RECENT ACQUISITIONS; GOODWILL

         In September 2000, Eagle entered into a merger agreement with
         ClearWorks.net, whereby it agreed to acquire 100% of the outstanding
         common stock of ClearWorks.net in exchange for 0.8 shares of Eagle
         common stock for each share of ClearWorks.net common stock at the
         closing. In addition to the share issuance, Eagle will assume all
         outstanding ClearWorks.net stock options and warrants based upon the
         same 0.8 exchange ratio. On January 31, 2001, Eagle and Celarworks.Net
         voted unanimously to conduct the merger of the two companies.

         MARKETABLE SECURITIES

         Eagle has adopted the provisions of SFA No. 115, as amended by SFAS No.
         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.

         During the three months ended February 28, 2001, the Company acquired
         1,500,000 common stock shares of Burst.com and 750,000 common stock
         shares of Urbana, Inc. with a cost of $500,000 and $100,000,
         respectively.

         INVENTORY

         Inventories are valued at the lower of cost or market. The cost is
         determined by using the first-in first-out method. At February 28,
         2001, Eagle's inventory total of $7,913,000 as compared to $3,537,000
         at February 29, 2000. The additional inventory is primarily
         attributable to the set-top boxes and cabling.

         RESULTS OF OPERATIONS

         THREE MONTHS ENDED FEBRUARY 28, 2001 COMPARED TO THREE MONTHS ENDED
         FEBRUARY 29, 2000

         NET SALES. For the three months ended February 28, 2001, net sales
         increased to $4,797,000 from $1,247,000 during the three months ended
         February 29, 2000. The increase was primarily attributable to added
         sales from Atlanticpacific, Comtel and ClearWorks.Net companies. Only
         28 days of sales from Clearworks, UCG, and Link Two were reported due
         to timing considerations.

         COST OF GOODS SOLD. For the three months ended February 28, 2001, cost
         of goods sold increased to $3,652,000 from $519,000 during the three
         months ended February 29, 2000. This is primarily associated with the
         cable and fiber products. Although the cost of sales increased, the
         Company's gross profit percentage for products sold decreased to 24%
         from 58% during the three months ended February 29, 2000.

         OPERATING EXPENSES. For the three months ended February 28, 2001,
         operating expenses increased to $2,807,000 from $682,000 during the
         three months ended February 29, 2000. The primary portions of the
         increase are discussed below:

         A $1,226,000 increase in salaries, as a result of its acquisitions and
         expanded business.

         A $107,000 increase in advertising and promotion, due primarily to
         increased attendance at conventions and trade shows on a worldwide
         basis.

         A $290,000 increase in depreciation and amortization, due to an
         increase in amortization of goodwill and purchase of additional assets.

         A $438,000 increase in other support costs, due to an increase in
         rents, travel, utilities and communication costs.

         NET EARNINGS. For the three months ended February 28, 2001, Eagle's net
         loss was $1,280,000, compared to net earnings of $155,000 during the
         three months ended February 29,2000.

         CHANGES IN CASH FLOW. Eagle's operating activities provided net cash of
         $1,110,000 in the three months ended February 28, 2001, compared to
         $(959,000) in the three months ended February 29, 2000. The increase in
         net cash provided by operating activities was primarily attributable to
         decrease in receivables. Eagle's investing activities used net cash of
         $7,615,000 in the three months ended February 28, 2001, compared to
         $896,000 in the three months ended February 29, 2000. The increase was
         due primarily to investment activities and purchase of equipment.
         Eagle's financing activities provided cash of $1,470,000, in the three
         months ended February 28, 2001, compared to $9,352,000 in the three
         months ended February 29, 2000. The decrease was primarily the result
         of no sale of common stock or exercise of warrants.


                                      22
<PAGE>


         LIQUIDITY AND CAPITAL RESOURCES.

         Current assets for the three months ended February 28, 2001 totaled
         $56,694,000 as compared to $13,430,000 reported for the three months
         ended February 29, 2000. Of this amount, $27,311,000 consisted of cash.
         Eagle believes that its working capital of $38,091,020 as of February
         28, 2001 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 February 28,
         2001, Eagle had no material capital commitments other than its federal
         income and state franchise tax liabilities.

PART 2. - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

         The Company is subject to legal proceedings and claims that arise in
         the ordinary course of business. The Company's management does not
         expect that the results in any of these legal proceedings will have a
         material adverse effect on the Company's financial condition or results
         of operations. All legal proceedings are incorporated herein by
         reference from Company's Form 8K, which was previously filed on April
         16, 2001.

ITEM 2 - RECENT SALES OF UNREGISTERED SECURITIES OR CHANGES IN SECURITIES AND
         USE OF PROCEEDS


         In January 2001, Eagle issued 35,287,000 common shares, which were
         registered in an S-4 filing with Securities and Exchange Commission.
         This issuance was in conjunction with the merger.

         In October 2000, holders of options issued under Eagle's employee stock
         option, exercised options to purchase an aggregate of 500 shares of
         common. The exercise of these options resulted in cash proceeds of
         $750. 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.

         In October 2000, in exchange for consulting services, Eagle issued an
         aggregate of 62,500 shares on common stock. 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 3 - DEFAULTS UPON SENIOR SECURITIES
         None

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

         Approval of the issuance of Clearworks shares.

ITEM 5 - OTHER INFORMATION
         None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

                (a) Exhibit
                    None
                (b) Reports on Form 8-K
                    Form 8-K filed on April 16, 2001 in conjunction with the
                    merger of ClearWorks.Net, Inc.


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<PAGE>


SIGNATURES

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



                                    EAGLE WIRELESS INTERNATIONAL, INC.


         Date: April 20, 2001                     By:    /s/ H. Dean Cubley
                                                         Dr. H. Dean Cubley
                                                         President

                                                         /s/ Richard R. Royall
                                                         Richard R. Royall
                                                         Chief Financial Officer








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