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, 1998

[ ]   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.)

                                910 GEMINI AVENUE
                            HOUSTON, TEXAS 77058-2704
          (Address of principal executive offices, including zip code)

                                 (281) 280-0488
              (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 FEBRUARY 28, 1998, THERE WERE 11,605,334 SHARES
                          OF COMMON STOCK OUTSTANDING
<PAGE>
                       EAGLE WIRELESS INTERNATIONAL, INC.

                                      INDEX

PART 1 - FINANCIAL INFORMATION
                                                                          PAGE
                                                                          ----
Item 1. Financial Statements (Unaudited)

        Balance sheets at February 28, 1998 and August 31, 1997 .........  3

        Statements of  Income and Retained Earnings for the
        three and six months ended February 28, 1998 and 1997 ..........   4

        Statements of Cash Flows for the six months ended
        February 28, 1998 and 1997 .....................................   5

        Statements of Changes In Shareholders' Equity for the
        six months ended February 28, 1998 and 1997 ....................   6

        Notes to the financial statements ..............................  7-13

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations ............................   14

SIGNATURES .............................................................   15

                                      -2-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
BALANCE SHEETS
(dollars in thousands)

                                                          February    August 31,
                                                          28, 1998        1997
ASSETS                                                   (unaudited)   (audited)

Current Assets:
   Cash and cash equivalents .........................     $ 1,886      $ 2,895
   Accounts receivable ...............................       3,501        2,895
   Inventories .......................................       1,095        1,012
   Prepaid expenses ..................................          68           57
                                                           -------      -------
      Total current assets ...........................       6,550        6,859
                                                           -------      -------
Property and equipment:
   Operating equipment ...............................         910          591
   Less accumulated depreciation .....................        (158)        (112)
                                                           -------      -------
        Total property and equipment .................         752          479
                                                           -------      -------
Other assets .........................................          69           42
                                                           -------      -------
                                                           $ 7,371      $ 7,380
                                                           =======      =======
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable
    Accrued expenses .................................     $   166      $   180
    Shareholder's advances ...........................         136          138
    Current maturities of capital lease ..............          77          129
obligations ..........................................          16           32
    Federal income and other taxes payable ...........         156          281
    Deferred taxes ...................................           9            9
                                                           -------      -------
        Total current liabilities ....................         560          769
                                                           -------      -------
Long-term liabilities:
   Long-term capital lease obligations, net of
     current maturities ..............................           1            3
   Deferred taxes ....................................          22           16
                                                           -------      -------
        Total long-term liabilities ..................          23           19
                                                           -------      -------
Shareholders' equity .................................       6,788        6,592
                                                           =======      =======
Total liabilities and shareholders' equity ...........     $ 7,371      $ 7,380
                                                           =======      =======

                                      -3-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF INCOME - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
                                                          Three                Three                 Six                    Six
                                                       months ended         months ended         months ended           months ended
                                                       February 28,          February 28,         February 28,          February 28,
                                                          1998                   1997                1998                   1997
<S>                                                   <C>                    <C>                  <C>                    <C>        
Net sales ..................................          $      1,064           $     1,238          $      1,622           $     2,377

Costs of goods sold:
    Materials and supplies .................                   203                   330                   237                   611
    Direct labor and related                
      costs ................................                    82                   135                   167                   261
    Depreciation and amortization ..........                    18                    12                    35                    21
    Other manufacturing costs ..............                   118                   110                   209                   286
                                                      ------------           -----------          ------------           -----------
Total costs of goods sold ..................                   421                   587                   648                 1,179
                                                      ------------           -----------          ------------           -----------
Gross profit ...............................                   643                   651                   974                 1,198
                                                      ------------           -----------          ------------           -----------
Operating expenses
    Selling, general and
      administrative:
        Salaries and related
          costs ............................                   220                   170                   375                   307
        Advertising and promotion ..........                    64                    33                   182                    90
        Depreciation and                    
          amortization .....................                     7                     8                    12                    15
        Other support costs ................                   140                   134                   229                   241
        Research and Development ...........                   125                  --                     159                  --  
                                                      ------------           -----------          ------------           -----------
                                                               556                   345                   957                   653
        Total operating expenses ...........          ------------           -----------          ------------           -----------
                                                                87                   306                    17                   545
Income from operations .....................

Other income
    Interest income (net) ..................                    93                   139                   193                   162
    Gain/Loss on affiliate investments .....                    (5)                 --                     (10)                 --
                                                      ------------           -----------          ------------           -----------
        Total other income .................                    88                   139                   183                   162
                                                      ------------           -----------          ------------           -----------
Income before income taxes .................                   175                   445                   200                   707

Provisions for income taxes ................                    79                   151                    79                   240
                                                      ------------           -----------          ------------           -----------
Net income .................................          $         96           $       294          $        121           $       467
                                                      ============           ===========          ============           ===========
Net earnings per common share:
Basic ......................................          $      0.008           $     0.029          $      0.010           $     0.052
Diluted ....................................          $      0.004           $     0.013          $      0.005           $     0.023
                                                      ============           ===========          ============           ===========
Weighted average basic common
shares outstanding .........................            11,605,334            10,027,500            11,557,834             8,958,000

Weighted average diluted common
shares outstanding .........................            25,972,002            22,782,501            25,924,502            20,422,550
</TABLE>
                                      -4-
<PAGE>


EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
                                                                             Six months ended   Six months ended
                                                                             February 28, 1998  February 28, 1997
<S>                                                                             <C>                 <C>    
Cash flows from operating activities
    Net income ........................................................         $   121             $   467
    Adjustment to reconcile net earnings to net cash Used by operating                            
       activities:                                                                                
         Depreciation and amortization ................................              47                  36
         (Increase) / Decrease in accounts receivable .................            (606)             (1,376)
         (Increase) / Decrease in inventories .........................             (83)                (43)
         (Increase) / Decrease in prepaid expenses ....................             (11)                 16
         Increase / (Decrease) in accounts payable and accrued expenses             (16)               (259)
         Increase / (Decrease) in payroll taxes payable ...............            --                    13
         Increase / (Decrease) in customer deposits ...................            --                  (129)
         Increase / (Decrease) in federal income taxes payable ........            (125)                  5
         Increase / (Decrease) in deferred taxes ......................               6                 235
                                                                                -------             -------
         Total Adjustments ............................................            (788)             (1,502)
                                                                                -------             -------
    Net cash used by operating activities .............................            (667)             (1,035)
Cash flows used in investing activities                                                           
         Purchase of property and equipment ...........................            (319)               (107)
         (Increase) in other assets ...................................             (28)                (64)
                                                                                -------             -------
Net cash used  by investing activities ................................            (347)               (171)
Cash flows from financing activities                                                              
         Issuance of  common stock ....................................              75               3,542
         (Increase) / Decrease in notes payable and capital leases ....             (18)               (375)
         (Increase) / Decrease in syndication costs ...................            --                     3
         (Increase) / Decrease in shareholder's advances ..............             (52)               (105)
         (Increase) / Decrease in subscriptions payable ...............            --                   (97)
                                                                                -------             -------
    Net cash provided by financing activities .........................               5               2,968
    Net increase(decrease) in cash ....................................          (1,009)              1,762
Cash at the beginning of the period ...................................           2,895               2,104
                                                                                =======             =======
Cash at the end of the period .........................................         $ 1,886             $ 3,866
                                                                                =======             =======
</TABLE>
                                      -5-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
                                                                                  Preferred
                                                                                  stock $.001
                                                              Common stock         par value
                                                             $.001 par value       5,000,000      Additional
                                                            100,000,000 shares       shares          paid       Retained
                                                                authorized         authorized     in capital    earnings     Total
<S>                                                            <C>                  <C>             <C>           <C>        <C>   
Balance September 1, 1996 .............................        $          7         $  --           $2,038        $ 32       $2,077
    Net income for the six months ended
    February 28, 1997 .................................                                                            467          467
    Private placement .................................                   1                          3,690                    3,691
    Syndication cost conversions ......................                   2                            118                      120
    Notes payable conversions .........................                   0                            369                      369
    Exercise of $0.01 warrants ........................                   1                              6                        7
    Issuance of warrants for funding activities .......                                                192                      192
    Syndication costs .................................                                               (837)                    (837)
                                                               ------------         -------         ------        ----       ------
Balance February 28, 1997 .............................        $         11         $  --           $5,576        $499       $6,086
                                                               ============         =======         ======        ====       ======
Shares issued and outstanding .........................          11,225,334            None           --           --          --
                                                               ============         =======
Balance, Sept. 1, 1997 ................................        $         11         $  --           $5,820        $761       $6,592
    Net income for the three months ended
    February 28, 1998 .................................                                                            121          121
    Stock issued to retire debt and acquire a
    company ...........................................                --                               74                       75
                                                               ------------         -------         ------        ----       ------
Balance February 28, 1998 .............................        $         12         $  --           $5,894        $882       $6,788
                                                               ============         =======         ======        ====       ======
Shares issued and outstanding .........................          11,605,334            None           --           --          --
                                                               ============         =======
</TABLE>

                                      -6-
<PAGE>
EAGLE WIRELESS INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

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 telecommunications equipment and
      related software 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 name.
      These products include transmitters, receivers, controllers, software and
      other equipment used in personal communications systems (including paging,
      voice messaging, cellular and message management and mobile data systems)
      and radio and telephone systems.

A)    Cash and Cash Equivalents

      The Company had $1,886,073 and $3,865,865 invested in interest bearing
      accounts at February 28, 1997 and 1996, respectively.

B)    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:

                                                  YEARS
                                                  -----
            Machinery and equipment                 7
            Furniture and Fixtures                  7

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

C)    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:

                                      February 28
                                      1998   1997
                                      ----   ----
                                    (in thousands)

            Raw Materials          $  793    $ 325
            Work in Process           297      243
            Finished Goods              5       --
                                   ------    -----
                                   $1,095    $ 568
                                   ======    =====

D)    Organizational Costs

      Organizational costs are amortized using the straight-line method over a
      period of sixty (60) months. Accumulated amortization is $1,328 for the
      period ended February 28, 1998.

                                      -7-
<PAGE>
NOTE 1 -BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES: (continued)

E)    Research and Development Costs

      The Company's research and development costs occur as a result from
      obligations to perform contractual services for outside parties. These
      costs are expensed as contract revenues are earned.

F)    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.

G)    Net Earnings Per Common Share

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

H)    Warrants for Funding Activities

      To date, the Company has issued the following warrants: 5,033,334 Class A;
      5,033,334 Class B; 1,050,000 Class C; 1,050,000 $.05; 1,375,000 $.50; and
      425,000 $5.00. Certain of these warrants were issued to individuals and
      trusts for their assistance in the fundraising activities.

I)    Deferred Financing Fees

      The deferred financing fees originated as a financing charge on a
      non-interest bearing notes payable in the amount of $375,000. During
      November 1996, the financing fees were expensed.

J)    Advertising and Promotion

      All advertising related costs are expensed as incurred. The Company does
      not incur any cost for direct-response advertising. For the six months
      ended February 28, 1998 and 1997, the Company had expensed $181,650 and
      $89,837 respectively.

NOTE 2 - NOTES Payable:

      At February 28, 1998 the Company borrowed from a corporation $22,378. This
      unsecured note to an insurance company bears interest at 8% and is due
      $2,042 monthly until January 1999.

                                      -8-

<PAGE>
NOTE 3 - CAPITAL LEASE OBLIGATIONS:

                                                          FEBRUARY 28
                                                          -----------
                                                        1998       1997
                                                        ----       ----
       Equipment lease with Compix
       bearing interest at 15%, payable in
       monthly installments of $624; due
       July 1998  ...............................     $ 2,424     $ 9,572

       Equipment lease with IFR bearing
       interest at 15%, payable in monthly
       installments of $1,427; due June 1998  ...       4,185      20,736

       Equipment lease with Associates
       Capital bearing interest at 7%,
       payable in monthly installments
       of $1,177; due September 1998.7,915 ......      21,161

       Equipment lease with IKON Office
       Solutions bearing interest at 18%
       payable in monthly installments of
       $105; due March, 2000  ...................       2,170        --
                                                      -------     -------

          Total Obligations .....................      16,694      51,469
          Less Current Portion of
             Lease Obligations ..................      15,549      34,851
                                                      -------     -------
          Total Long - Term Capital
             Lease Obligations ..................     $ 1,145     $16,618
                                                      =======     =======

      The capitalized lease obligations are collateralized by the related
      equipment acquired with a net book value of approximately $ 46,902. The
      future minimum lease payments under the capital leases at February 28,
      1998 are $19,587 of which $2,893 represents interest.

      Future obligations under these non-cancelable leases are:
 
                  Period Ending
                   February 28,                        Amount
                   ------------                        ------
                     1999                          $   18,012
                     2000                               1,575
                                                   -----------
                         Total                     $   19,587
                                                   ==========

                                      -9-
<PAGE>
NOTE 4 - 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:
                                           February 28,
                                          1998     1997
                                          ----     ----
                                            %        %
      U.S. Federal Statutory Tax Rate      34       34
                                           --       --
      Effective Tax Rate                   34       34
                                           ==       ==

B)    Deferred income taxes are provided for differences between financial
      statement and income tax reporting. Principal difference is the manner in
      which depreciation is computed for financial and income tax reporting
      purposes.

NOTE 5 -  PREFERRED STOCK, STOCK OPTIONS AND WARRANTS:

      In July, 1996, the Board of Directors and majority shareholders authorized
      5,000,000 shares of Preferred Stock with a par value of $.001. As of
      February 28, 1998, no Preferred Stock has been issued.

      In July, 1996, the Board of Directors and majority shareholders adopted a
      stock option plan under which 400,000 shares of Common Stock have been
      reserved for issuance. As of February 28, 1998, 20,875 options have been
      granted pursuant to such plan. None of these options have been exercised.

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

      Due to the lack of a public market, shareholders and warrant-holders are
      inherently restricted from exercising their warrants. A minimal value has
      therefore been assigned as compensation for these warrants and recorded as
      syndication costs.

      The Company has issued and outstanding the following warrants which have
      not yet been exercised at February 28, 1998:

            1,050,000 stock purchase warrants which expire July, 1999. These
            warrants are subject to restrictions regarding the timing of
            exercise, the ability of the Company to become a public company and
            future marketability of the common stock. The warrants are to
            purchase fully paid and non-assessable shares of the common stock,
            par value $.001 per share at a purchase price of $.05 per share.
            These warrants, however, are not exercisable until and unless the
            shares of Common Stock trade at a minimum of $5.50 per share for
            twenty consecutive trading days, yet still expire July, 1999 if not
            exercised.

                                      -10-
<PAGE>
NOTE 5 -  PREFERRED STOCK, STOCK OPTIONS, AND WARRANTS: (continued)

            1,375,000 stock purchase warrants which expire July, 1999. These
            warrants are subject to restrictions regarding the timing of
            exercise, the ability of the Company to become a public company and
            future marketability of the common stock. The warrants are to
            purchase fully paid and non-assessable shares of the common stock,
            par value $.001 per share at a purchase price of $.50 per share.
            These warrants, however, are not exercisable until and unless the
            shares of Common Stock trade at a minimum of $5.50 per share for
            twenty consecutive trading days, yet still expire July, 1999 if not
            exercised.

            425,000 stock purchases warrants which expire July, 1999. The
            warrants are to purchase fully paid and non-assessable shares of the
            common stock, par value $.001 per share at a purchase price of $5.00
            per share. These warrants are subject to restrictions regarding the
            timing of exercise. The underlying shares of common stock were
            registered for resale on September 4, 1997 under the Securities Act
            of 1933.

            5,033,334 Class A stock purchase warrants which expire August 31,
            2000. These warrants are subject to restrictions regarding the
            timing of exercise, the ability of the Company to become a public
            company and future marketability of the common stock. The warrants
            are to purchase fully paid and non-assessable shares of the common
            stock, par value $.001 per share at a purchase price of $4.00 per
            share. If, however, the closing bid price of the Common Stock shall
            have equaled or exceeded $5.50 per share for a period of twenty
            consecutive trading days at any time, the Company may redeem the
            Class A Warrants by paying holders $.05 per Class A Warrant. The
            underlying shares of common stock were registered for resale on
            September 4, 1997 under the Securities Act of 1933.

            5,033,334 Class B stock purchase warrants which expire August 31,
            2000. These warrants are subject to restrictions regarding the
            timing of exercise, the ability of the Company to become a public
            company, and future marketability of the common stock. The warrants
            are to purchase fully paid and non-assessable shares of the common
            stock, par value $.001 per share, at a purchase price if $6.00 per
            share. If, however, the closing bid price of the Common Stock shall
            have equaled or exceeded $7.50 per share for a period of twenty
            consecutive trading days at any time, the Company may redeem the
            Class B Warrants by paying holders $.05 per Class B Warrant. The
            underlying shares of common stock and Class B Warrants were
            registered for resale on September 4, 1997 under the Securities Act
            of 1933.

            1,050,000 Class C stock purchase warrants which expire August 31,
            2000. These warrants are subject to restrictions regarding the
            timing of exercise, the ability of the Company to become a public
            company, and future marketability of the common stock. The warrants
            are to purchase fully paid and non-assessable shares of the common
            stock, par value $.001 per share, at a purchase price if $2.00 per
            share. If, however, the closing bid price of the Common Stock shall
            have equaled or exceeded $5.50 per share for a period of twenty
            consecutive trading days at any time, the Company may redeem the
            Class C Warrants by paying holders $.05 per Class C Warrant. The
            underlying shares of common stock were registered for resale on
            September 4, 1997 under the Securities Act of 1933.

                                      -11-

<PAGE>
NOTE 5 -  PREFERRED STOCK, STOCK OPTIONS, AND WARRANTS: (continued)

      The warrants outstanding are segregated into two categories (exercisable
      and non-exercisable). They are summarized as follows:
<TABLE>
<CAPTION>
           CLASS  OF              EXERCISABLE
           WARRANTS     FEB 28, 1998       FEB 28, 1997       NON-EXERCISABLE         EXERCISE PRICE
           --------     -------------------------------       ---------------         --------------
<S>           <C>          <C>             <C>                  <C>                      <C>
              .05              --              --               1,050,000                 .05
              .50              --              --               1,375,000                 .50
             5.00            425,000         425,000                --                   5.00
               A           5,033,334       4,748,334                --                   4.00
               B           5,033,334       4,748,334                --                   6.00
               C           1,050,000         483,334                --                   2.00
                         -----------      ----------          -----------
             Total        11,541,668      10,405,002            2,425,000
                         ===========      ==========          ===========
</TABLE>
NOTE 6 - SEGMENT INFORMATION:

           The Company had gross revenues of $1,063,905 for the three months
           ended February 28, 1998. The following customers individually
           represent a greater than ten percent of these revenues.

                                                          FEBRUARY 28, 1998
           CUSTOMER                                     AMOUNT     PERCENTAGE
           --------                                     ------     ----------
           A                                          $  267,700       25%
           B                                          $  208,079       20%
           C                                          $  170,806       16%

NOTE 7  - INVESTMENT IN LINK - TWO COMMUNICATIONS, INC.:

      The Company and Link - Two Communications, Inc. (Link II) have executed an
      agreement, whereby the Company would receive up to an eight percent equity
      interest in Link II in lieu of accruing finance charges on the outstanding
      balance owed by Link II to the Company. Under the agreement, equity in
      Link II was earned at a rate of 0.2% per month per $100,000 payable and
      outstanding for more than thirty days. At February 28, 1998 the Company
      had earned a 7% minority equity interest in Link II. This is evidenced by
      the issuance of 240,000 shares of Link II common stock to the Company. As
      of February 28, 1998, the Company has recorded it share of losses in this
      unconsolidated affiliate. The loss for the six months ended February 28,
      1998 totaled $10,000. Certain principal stockholders (or affiliates
      thereof) of the Company, including James Futer, executive vice president,
      director, and chief operating officer, and A.L. Clifford, a director of
      the Company, are also principal stockholders of Link II. Mr. Clifford is
      also the chairman, president, and chief executive officer of Link II and
      Dr. Cubley is a director of Link II.

NOTE 8 - RISK FACTORS:

      At February 28, 1998, substantially all of the Company's business activity
      has remained within the United States and has been extended to the
      wireless infrastructure industry. Through the normal course of business,
      the Company generally does not require its customers to post any
      collateral. However, because Link-Two Communications, Inc. constitutes a
      significant customer with respect to its current accounts receivable
      balance, the two companies have reached an agreement whereby the Company
      has received a minority interest in Link -Two Communications, Inc. as well
      as interest computed at twelve percent on the monthly indebtedness to the
      Company. Although the Company has concentrated its efforts in the wireless
      infrastructure industry at February 28, 1998, it is management's belief
      that the Company faces little credit or economic risk due to the
      continuous growth the market is experiencing.

                                      -12-
<PAGE>
NOTE 9 - SHAREHOLDERS' ADVANCES:

      Certain officers and an employee advanced the Company $290,000. At
      February 28, 1998 and 1997, the Company owes $77,046 and $185,000,
      respectively. The shareholder advances are non-interest bearing and
      payable upon demand.

NOTE 10 - FOREIGN OPERATIONS:

      Although the Company is based in the United States, its product is sold on
      the international market. Presently, international sales total 2.2% and
      2.9% for the three months ended February 28, 1998 and 1997, respectively.

NOTE 11 - COMMITMENTS AND CONTINGENT LIABILITIES:

      The Company now leases its primary office space for $7,931 per month under
      a non-cancelable lease expiring on March 31, 1999. For the six months
      ended February 28, 1998, rental expense of $47,586 was incurred under this
      lease.

            Future obligations under the non-cancelable lease terms are:

                  PERIOD ENDING
                   FEBRUARY 28,                    AMOUNT
                   ------------                   -------
                       1999                       $95,172
                       2000                         7,931
                                                  -------
                       Total                      $95,172
                                                  =======

      The Company has been named as a defendant in a lawsuit involving a vendor
      of the Company. Liability relating to this lawsuit has been accrued as of
      the fiscal year ended August 31, 1997.

      The Company has been named with another defendant in two lawsuits. These
      suits orginate from former employees and a vendor of an affiliate. The
      claims of these individuals are being investigated as no asserted monetary
      damages have been stipulated. Management has not provided for any
      settlement as it believes these allegations and claims against the Company
      are without merit.

      The Company has entered into an agreement with a financial consultant
      whereby the financial consultant can receive options to purchase up to
      400,000 shares of the company's common stock at various prices ranging
      from $1.75 to $5.00 per share. The delivery of these options is contingent
      upon the attainment of certain objective criteria outlined in a January
      15, 1998 agreement between the Company and the financial consultant.

      The Company has entered into an agreement with a financial consultant
      whereby the financial consultant will receive options to purchase 500,000
      shares and may receive options to purchase 800,000 shares of the Company's
      common stock at prices ranging from $4.00 to $16.00 per share. The
      delivery of the options to purchase 800,000 shares of the Company's common
      stock is contingent upon the attainment of certain objective criteria
      outlined in a January 27, 1998 agreement between the Company and the
      financial consultant.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

During the six months ended February 28, 1997, the Company completed its plan to
take the Company public and shifted its primary focus to the completion of
certain research and development projects and the augmentation of its sales and
marketing efforts through the implementation of a representative sales
organization. Since the launch of the Company's operations in early 1996, the
Company has worked primarily with customers on a project basis. The Company is
now focusing on augmenting these activities through the formation of longer-term
customer relationships and the sale of products in mass to the wireless
communications marketplace.

The Company's sales for this quarter were $1.1 million as compared to the sales
for the quarter ended February 28, 1997 of $1.2 million. For the quarter ended
February 28, 1998, net income was $121,421 as compared to $466,470 for the
quarter ended February 28, 1997. The reduction in sales and net income in the
quarter ended February 28, 1998 is attributable to timing constraints on major
project shipments and is deemed normal and is expected to be ongoing.

Current assets for the quarter ended February 28, 1998 totaled $6,549,712 as
compared to $6,168,838 reported in the quarter ended February 28, 1997. The
Company's shareholders' equity for the quarter ended February 28, 1998 totaled
$6,787,589 as compared to $6,085,748 reported in the quarter ended February 28,
1997. Cash flows invested in operations totaled $667,000 and financing
activities provided cash flows of $5,000 during the quarter ended February 28,
1998. For the comparable period ended February 28, 1997, cash flows invested in
operations totaled $1,034,729 and financing activities provided cash flows of
$2,967,427.

                                      -14-
<PAGE>
                       EAGLE WIRELESS INTERNATIONAL, INC.

                                   SIGNATURES

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


                      EAGLE WIRELESS INTERNATIONAL, INC.
                                 (Registrant)

Date: 04-14-98          By:   /s/ H. DEAN CUBLEY
                              Dr. H. Dean Cubley
                              President

                        By:   /s/ RICHARD R. ROYALL
                              Richard R. Royall
                              Chief Financial Officer