<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ----------------------
                                    FORM 10-Q/A
                             ----------------------

       /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES AND EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       OR

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

                        FOR THE TRANSITION PERIOD FROM TO

                         COMMISSION FILE NUMBER 0-24408

                       UNIVERSAL BROADBAND NETWORKS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                   DELAWARE                                33-0611753
        (STATE OR OTHER JURISDICTION OF                 (I.R.S.  EMPLOYER
        INCORPORATION OR ORGANIZATION)               IDENTIFICATION NUMBER)

          2030 MAIN STREET, 5TH FLOOR
              IRVINE, CALIFORNIA                              92614
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 260-8100

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

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

As of June 19, 2001 there were 25,346,849 shares of Common Stock outstanding.


================================================================================

<PAGE>


                       UNIVERSAL BROADBAND NETWORKS, INC.
                                      INDEX



                                                                        PAGE NO.
                                                                        --------


PART I--FINANCIAL INFORMATION

         As disclosed in Item 5 of Part II of the Company's September 30, 2000
         Form 10-Q filed on November 14, 2000, the September 30, 2000
         consolidated condensed financial statements included therein were not
         reviewed by the Company's independent certified public accountants as
         required by Rule 10-01(d) of Regulation S-X. The Company's September
         30, 2000 consolidated condensed financial statements included herein
         have been reviewed in accordance with professional standards as
         described in the preceding sentence, and, accordingly, the Company is
         filing this Form 10-Q/A.

Item 1. Financial Statements

     Report on Review by Independent Certified Public Accountants

     Consolidated Condensed Balance Sheets as of September 30, 2000
          (unaudited) and March 31, 2000.....................................  3

     Unaudited Consolidated Condensed Statements of Operations for the
          three and six-month periods ended September 30, 2000 and 1999......  4

     Unaudited Consolidated Condensed Statements of Cash Flows for the
          six-month periods ended September 30, 2000 and 1999................  5

     Notes to Consolidated Condensed Financial Statements....................  6

Item 2. Management's Discussion and Analysis of Consolidated Financial
     Condition and Results of Operations..................................... 17

Item 3. Quantitative and Qualitative Disclosure About Market Risk............  *


PART II--OTHER INFORMATION

     Item 1.  Legal Proceedings.............................................. 25

     Item 2.  Changes In Securities and Use of Proceeds...................... 25

     Item 3.  Defaults Upon Senior Securities................................ 25

     Item 4.  Submission of Matters to a Vote of Security Holders............ 25

     Item 5.  Other Information.............................................. 25

     Item 6.  Exhibits and Reports on Form 8-K............................... 26


* No information provided due to inapplicability of item.

                                        2

<PAGE>

                          PART I--FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


INDEPENDENT ACCOUNTANTS' REPORT


To the Board of Directors and Shareholders
Universal Broadband Networks, Inc. and Subsidiaries

We have reviewed the interim consolidated balance sheet of Universal Broadband
Networks, Inc. and Subsidiaries (collectively referred to as the "Company") as
of September 30, 2000, the related consolidated interim statement of operations
for the quarter then ended, and the related consolidated interim statement of
cash flows for the six-month period ended September 30, 2000. These financial
statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the aforementioned financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States.

The consolidated balance sheet of the Company as of March 31, 2000, the
statements of operations for the three and six-month periods ended September 30,
1999, and the statement of cash flows for the six-month period ended September
30, 1999 included in the Company's Form 10-Q/A for the quarter ended September
30, 2000 were not audited or reviewed by us and, accordingly, we do not express
an opinion or any other form of assurance on them.

As discussed in Notes 1 and 2, the Company filed a voluntary petition for
protection under Chapter 11 of the United States Bankruptcy Code on October 31,
2000.


/s/ Squar, Milner, Reehl & Williamson, LLP

May 3, 2001 (except Note 10, as to which the date is June 5, 2001)
Newport Beach, California


<PAGE>

<TABLE>

UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>

ASSETS

                                                                                     SEPTEMBER 30,        MARCH 31,
                                                                                         2000                2000
                                                                                     -------------      -------------
                                                                                      (Unaudited)
<S>                                                                                  <C>                <C>
Current assets:
     Cash....................................................................        $      1,576       $      1,176
     Accounts receivable, net of allowance for doubtful accounts
       of $545 and $330, respectively........................................                 100                 64
     Prepaid expenses and other current assets...............................                 537                645
                                                                                     -------------      -------------
Total current assets.........................................................               2,213              1,885

Property and equipment, net of accumulated depreciation of $5,025
   and $2,796, respectively..................................................              15,160             15,235
Other assets, net............................................................               1,137              3,216
                                                                                     -------------      -------------
          Total assets.......................................................        $     18,510       $     20,336
                                                                                     =============      =============

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
     Accounts payable and accrued liabilities (Note 2).......................        $          -       $      9,522
     Accrued payroll, benefits and related costs (Note 2)....................                   -                647
     Secured vendor financing (Note 6).......................................              13,042                  -
     Equipment financing and line of credit arrangement (Note 6).............               4,044             14,222
     Obligations under capital leases........................................               2,675                402
     Liabilities subject to compromise (Note 2)..............................              29,526                  -
                                                                                     -------------      -------------
Total current liabilities....................................................              49,287             24,793

Obligations under capital leases, less current portion.......................                   -                788
                                                                                     -------------      -------------

Total liabilities............................................................              49,287             25,581
                                                                                     -------------      -------------

Shareholders' deficit:
     Series A Convertible Preferred Stock, $.01 par value; authorized
       1,000,000 shares; 0 and 2,000 issued and outstanding,
       liquidation preference of $2,000......................................                   -                  -
     Series B Convertible Preferred Stock, $.01 par value; authorized
       150,000 shares; 100,000 and 0 issued and outstanding, liquidation
       preference of $1,000 .................................................                   1                  -
     Common Stock, $.001 par value; authorized 50,000,000 shares;
       21,347,833 and 20,283,508 issued and outstanding, respectively........                  21                 20
     Additional paid-in capital..............................................              48,238             39,347
     Accumulated deficit.....................................................             (79,037)           (44,612)
                                                                                     -------------      -------------
Total shareholders' deficit..................................................             (30,777)            (5,245)
                                                                                     -------------      -------------
Total liabilities and shareholders' deficit..................................        $     18,510       $     20,336
                                                                                     =============      =============



          See accompanying notes to consolidated condensed financial statements.

</TABLE>

                                       3

<PAGE>

<TABLE>

UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>

                                              FOR THE THREE MONTHS ENDED             FOR THE SIX MONTHS ENDED
                                              --------------------------             ------------------------
                                           SEPTEMBER 30,      SEPTEMBER 30,      SEPTEMBER 30,      SEPTEMBER 30,
                                           -------------      -------------      -------------      -------------
                                               2000               1999               2000               1999
                                               ----               ----               ----               ----
                                                              (as restated)                         (as restated)

<S>                                        <C>                <C>                <C>                <C>
Revenues...............................    $        634       $        740       $      1,317       $      1,665
                                           -------------      -------------      -------------      -------------
Operating expenses:
Network expenses.......................           2,890                626              5,228              1,009
Payroll and related expenses...........           1,733              1,156              3,785              2,052
Selling, general and
   administrative expenses.............           4,390              1,574              9,461              3,144
Depreciation and amortization..........           1,240                230              2,770                397
                                           -------------      -------------      -------------      -------------
        Total operating expenses.......          10,253              3,586             21,244              6,602
                                           -------------      -------------      -------------      -------------
Operating loss.........................          (9,619)            (2,846)           (19,927)            (4,937)

Interest income........................              16                 13                 48                 13
Interest expense, including
   amortization of deferred
   financing costs.....................          (1,254)              (350)            (3,305)              (350)
                                           -------------      -------------      -------------      -------------
Loss before reorganization items.......         (10,857)            (3,183)           (23,184)            (5,274)

Reorganization items...................         (10,968)                 -            (10,968)                 -
                                           -------------      -------------      -------------      -------------
Net loss...............................         (21,825)            (3,183)           (34,152)            (5,274)

Preferred stock dividends..............               -                (54)               (23)              (147)
Preferred stock beneficial
   conversion feature..................            (249)                 -                  -               (448)
                                           -------------      -------------      -------------      -------------
Net loss applicable to common
   shareholders........................    $    (22,074)      $     (3,237)      $    (34,175)      $     (5,869)
                                           =============      =============      =============      =============

Loss per common share, basic and
   diluted.............................    $      (1.05)      $      (0.18)      $      (1.64)      $      (0.34)
                                           =============      =============      =============      =============
Weighted-average number of
   common shares outstanding,
basic and diluted......................      20,960,323         17,621,965         20,794,140         17,292,108
                                           =============      =============      =============      =============




          See accompanying notes to consolidated condensed financial statements.

</TABLE>

                                       4
<PAGE>
<TABLE>

UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>

                                                                                                 SIX MONTHS ENDED
                                                                                                 ----------------
                                                                                         SEPTEMBER 30,     SEPTEMBER 30,
                                                                                         -------------     -------------
                                                                                            2000               1999
                                                                                            ----               ----
                                                                                                           (as restated)
<S>                                                                                   <C>                  <C>

Cash flows used in operating activities:
   Net loss........................................................................   $     (34,152)       $    (5,274)
   Adjustments to reconcile net loss to net cash used in operating activities:
       Reorganization items........................................................           9,525                  -
       Depreciation and amortization...............................................           2,770                397
       Amortization and direct write-off of deferred financing costs...............           5,660                350
       Stock options and warrants issued as professional expense...................           1,101                  -
       Stock issued for services...................................................             554                748
       Accrued interest............................................................             821                  -
       Provision for doubtful accounts.............................................             260                  -
       Changes in current assets and liabilities:
           Accounts receivable.....................................................            (297)              (402)
           Prepaid expenses and other current assets...............................             108                335
           Other assets............................................................            (314)                 -
           Accounts payable and accrued liabilities................................            (995)             3,387
           Accrued payroll, benefits and related costs.............................              40                 17
                                                                                      --------------       ------------
   Net cash used in operating activities...........................................         (14,919)              (442)
                                                                                      --------------       ------------

Cash flows used in investing activities:
   Purchases of fixed assets.......................................................          (1,360)            (4,073)
   Receipt of loan due from shareholder............................................               -                (80)
   Purchase of licenses and other assets ..........................................               -                (70)
                                                                                      --------------       ------------
   Net cash used in investing activities...........................................          (1,360)            (4,223)
                                                                                      --------------       ------------

Cash flows provided by financing activities:
   Borrowings of short-term debt...................................................          19,545              7,000
   Repayment of short-term debt....................................................          (4,000)                 -
   Repayment of long-term debt.....................................................               -               (222)
   Repayment of loan to shareholders...............................................               -               (157)
   Repayment of capital lease obligations..........................................            (375)                 -
   Proceeds from exercise of warrants..............................................             225                  -
   Proceeds from sale of preferred stock, net......................................             834              1,790
   Proceeds from sale of common stock, net.........................................             450                800
                                                                                      --------------       ------------
   Net cash provided by financing activities.......................................          16,679              9,211
                                                                                      --------------       ------------

 Net increase in cash..............................................................             400              4,546
 Cash at beginning of period.......................................................           1,176                903
                                                                                      --------------       ------------
 Cash at end of period.............................................................   $       1,576        $     5,449
                                                                                      ==============       ============

Supplemental schedule of non-cash investing and financing activities:
   Increase of liabilities relating to asset purchases.............................   $       8,131        $         -
                                                                                      ==============       ============
   Issuance of warrants in conjunction with financing arrangements.................   $       2,985        $     1,944
                                                                                      ==============       ============
   Issuance of warrants in conjunction with preferred stock .......................   $       2,978        $         -
                                                                                      ==============       ============
   Beneficial conversion feature of preferred stock................................   $         249        $         -
                                                                                      ==============       ============
   Preferred stock dividends paid in common stock..................................   $         162        $         -
                                                                                      ==============       ============
Other disclosures:
   Cash paid during the period for interest........................................   $         176        $        10
                                                                                      ==============       ============
          See accompanying notes to consolidated condensed financial statements.


                                       5

</TABLE>
<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1.       BASIS OF PRESENTATION AND GOING CONCERN

On October 31, 2000 (the "Petition Date"), Universal Broadband Networks, Inc.
and four of its wholly-owned subsidiaries (collectively the "Company") filed a
voluntary petition for protection and reorganization (the "Chapter 11 Matter")
under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the Central District of California (the
"Bankruptcy Court"). Since the Petition Date, the Company has conducted limited
activities as a debtor-in-possession under the Bankruptcy Code. See Note 2 for
additional information.

The Company operates through several wholly-owned subsidiaries: IJNT, Inc.
("IJNT"), Ubee Network Enterprises, Inc. ("UBEE"), Access Communications, Inc.
("Access"), Webit of Utah, Inc. ("Webit"), UrJet Backbone Network, Inc. ("UBN"),
Man Rabbit House Multimedia, Inc. ("MRHM"), GIjargon.com ("GI"), and Global
Broadband Services, Inc. ("Global"). Some subsidiaries were inactive, including
Access, Webit, GI and Global. The accompanying consolidated condensed financial
statements include the accounts of Universal Broadband Networks, Inc. and the
aforementioned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

On July 25, 2000, the shareholders of the Company ratified the proposal to
change the name of the Company from IJNT.net, Inc. to Universal Broadband
Networks, Inc. and the stock ticker symbol was correspondingly changed to UBNT.

In early January 2001, after considering current industry conditions and other
factors (and in consultation with the creditors committee formed during
bankruptcy proceedings), management concluded that reorganization was not
feasible. A decision to liquidate the Company was reached at that time, and
liquidation commenced soon thereafter. Thus, the Company is no longer engaged in
the conduct of business to any significant extent, and now operates for the sole
purpose of holding and liquidating its assets. The Company expects that its
assets will either be sold or assigned to secured creditors, with any remaining
proceeds distributed to other creditors.

The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States ("GAAP")
applicable to a going concern, which assume that assets will be realized and
liabilities will be discharged in the normal course of business. As a result of
the Chapter 11 Matter (see Note 2), such realization of assets and liquidation
of liabilities is subject to uncertainty. A substantial portion of the Company's
liabilities as of the Petition Date are subject to compromise or other treatment
in the Chapter 11 Matter. For financial reporting purposes, those unsecured
liabilities and obligations whose disposition is dependent on the outcome of the
Chapter 11 Matter have been segregated and classified as liabilities subject to
compromise in the September 30, 2000 balance sheet. Generally, actions to
enforce or otherwise effect repayment of all pre-Chapter 11 liabilities and
pending litigation against the Company are stayed while the Company continues as
a debtor-in-possession during bankruptcy proceedings. Schedules have been filed
by the Company with the Bankruptcy Court setting forth the assets and
liabilities of the Company as of the Petition Date as reflected in the Company's
accounting records. Differences between amounts reflected in such schedules and
claims filed by creditors are currently being investigated and will be either
amicably resolved or adjudicated by the Bankruptcy Court. The ultimate amount of
and settlement terms for such liabilities are not presently determinable.

Financial accounting and reporting during a Chapter 11 Matter for an entity with
the expectation of reorganizing is prescribed in Statement of Position No. 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"). When the Company's September 30, 2000 financial statements (as
originally reported) were filed with the Securities and Exchange Commission on
November 14, 2000, the Company had an expectation of reorganizing under the
Bankruptcy Code. Accordingly, unsecured pre-petition liabilities, which may be
subject to settlement, have been classified as liabilities subject to compromise
in the accompanying balance sheet at September 30, 2000. In addition, the
Company has reported all transactions (other than interest expense) directly
related to the Chapter 11 Matter as reorganization items in the accompanying
statement of operations for the six month period ended September 30, 2000. SOP
90-7's definition of reorganization items excludes (1) interest expense and (2)
transactions required to be reported as discontinued operations or extraordinary
items in conformity with GAAP. The accompanying consolidated condensed balance
sheet at September 30, 2000, and the consolidated condensed statements of
operations and cash flows for the periods ended September 30, 2000 and 1999 are
unaudited. Such financial statements have been prepared on the same basis as the
Company's audited consolidated financial statements and, in the opinion of
management, reflect all adjustments, which (except as described in Notes 7 and
8) are only of a normal recurring nature, necessary for a fair presentation of
the consolidated financial position and results of operations for such periods.
However, the accompanying financial statements do not include any adjustments
that may be required in connection with restructuring the Company under Chapter
11 of the Bankruptcy Code. These unaudited consolidated condensed financial
statements should be read in conjunction with the March 31, 2000 audited
consolidated financial statements included in the Company's Form 10-K as filed
with the Securities and Exchange Commission on July 10, 2000.

                                        6

<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


2.       BANKRUPTCY FILING AND OTHER SUBSEQUENT EVENTS

Bankruptcy Filing

As discussed in Note 1, the Company is currently a debtor-in-possession pursuant
to the Bankruptcy Code. As such, management of the Company continues to conduct
limited activities under the supervision of the Bankruptcy Court. In accordance
with the provisions of the Bankruptcy Code, an automatic stay provides that
creditors of the Company and other parties in interest are prevented from
seeking repayment of pre-petition debts. Additionally, the Company must, unless
otherwise approved by the Bankruptcy Court, refrain from payment of pre-petition
indebtedness.

The Company's bankruptcy filing resulted in non-payment of $4.1 million payable
on November 1, 2000 to a secured creditor (see Note 6). Because of the
combination of this event and cross-default provisions included in the Company's
other debt agreements (see Note 6) and in certain lease agreements,
substantially all of the Company's indebtedness is in default and is due and
payable. The repayment of such indebtedness, if any, will be determined in the
Company's Chapter 11 Matter.

Subsequent to the Petition Date, the Company rejected substantially all of its
lease obligations. This rejection will result in lease rejection claims pursuant
to the Bankruptcy Code; such claims have not yet been adjudicated by the
Bankruptcy Court. Although legal fees and other administrative expenses to
complete the Company's bankruptcy proceedings may be significant, they are not
susceptible of reasonable estimation at this time. Accordingly, the accompanying
financial statements do not include any provision for such costs not incurred as
of September 30, 2000 by the Company.



Independent Certified Public Accountants

Effective October 31, 2000, the Company accepted the resignation of BDO Seidman,
LLP, as the Company's independent certified public accountant, which was
tendered on that same date. No disagreements existed between the Company and BDO
Seidman, LLP, with respect to any financial statement of the Company or the
presentation of any financial statement for which BDO Seidman, LLP, issued a
report.

On December 28, 2000, the Company engaged Squar, Milner, Reehl & Williamson,
LLP, as its independent certified public accountant.

Trading Market

The Company's common stock ceased trading on the Nasdaq National Market on
October 17, 2000 at the Company's request. Since the Company no longer satisfies
the requirements for continued listing on the Nasdaq National Market, by letter
dated November 3, 2000, the Company requested that its securities be delisted
from the Nasdaq National Market. On November 9, 2000, the Company's common stock
began being quoted on the "Pink Sheets""; such market is not sponsored or
supported by the Company. No assurance can be given as to the continuing
existence or liquidity of any trading market for the Company's common stock.
Notwithstanding this market activity, the Company believes that its outstanding
shares of common stock currently have nominal value.

Liabilities Subject to Compromise and Reorganization Items

The September 30, 2000 balances of liabilities that became subject to compromise
on October 31, 2000 are as follows:


        Accounts payable                                $          8,918
        Accrued payroll, benefits and related costs                  687
        Unsecured short-term debt (Note 7)                        19,921
                                                        ----------------

        Total liabilities subject to compromise         $         29,526
                                                        ================


                                        7

<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


Reorganization items reported in the statement of operations include the
following for the six-month period ended September 30, 2000:


        Fixed asset impairment                        $         6,995
        Other asset impairment                                    990
        Professional fees                                         150
        Accelerated amortization of deferred
           financing costs (Note 7)                             3,689
        Other liabilities                                        (856)
                                                      ----------------

        Total reorganization items                    $        10,968
                                                      ================

3.       SHAREHOLDERS' EQUITY

STOCK GRANTS

During the three and six-month periods ended September 30, 2000, the Company
issued 18,556 and 37,235, respectively, shares of common stock in exchange for
various professional services. The estimated fair value of the stock issued of
$145 and $252, respectively, has been charged to operations. In addition, 821
shares of common stock were issued to an employee under the terms of an
employment agreement for the three months ended September 30, 2000. The
estimated fair value of the stock issued of $2 has been charged to operations as
compensation expense.

Effective for the fiscal year beginning April 1, 2000, non-employee directors
receive an annual fee in the form of Company common stock with an estimated fair
market value of $60 as of May 31st of each year. Accordingly, on May 31, 2000,
the Company's non-employee directors, Messrs. Torney, Charles, Cubley, Kramer
and Pazian, each received $60 of the Company's common stock valued at the quoted
market price of $2.88 a share (20,833 shares each), or a total of 104,165 shares
issued. The total fair market value of the stock issued of $300 was charged to
operations in June 2000. Effective October 18, 2000, the Company rescinded the
grant of the aforementioned stock to the non-employee Directors. In lieu of
receiving stock, the Directors will be compensated commencing November 1, 2000
in the amount of $3 cash per quarter and $1 per meeting plus reimbursement of
out-of-pocket expenses.

                                        8
<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3.       SHAREHOLDERS' EQUITY (CONTINUED)

PRIVATE PLACEMENT

In September 2000, the Company sold shares of its common stock through a private
placement. The Company issued 333,333 shares for cash consideration of $450 (net
of commissions of $50).

SERIES A CONVERTIBLE PREFERRED STOCK

In December 1998, the Company entered into an agreement with private investors
(the "Investors") whereby the Investors purchased 2,000 shares of the Company's
convertible Preferred Series A Stock (the "Series A Preferred Stock") for a
gross price of $2,000, net of commissions of $200. In May 1999, the Agreement
was amended to include an additional 2,000 shares of Series A Preferred Stock,
which netted $1,790 (net of $210 expenses) to the Company. The Series A
Preferred Stock is convertible at a discount of 20% below the average closing
market price of the Company's common stock for the five business days preceding
the conversion request. A dividend of 8% per year accrues on unconverted Series
A Preferred Stock held by the Investors. The dividend is paid in the form of
shares of the Company's common stock at the time of the Preferred Stock
conversion.

During the three months ended June 30, 2000, the remaining 2,000 shares of
Series A Preferred Stock were converted into 364,299 shares of common stock and
$162 in related dividends ($139 of which was earned and accrued during the year
ended March 31, 2000) was converted into 29,432 shares of common stock, for a
total of 393,731 shares of common stock issued in connection with the Series A
Preferred Stock conversions.

As of September 30, 2000, all the Series A Preferred Stock and related dividends
had been converted to common stock.

SERIES B CONVERTIBLE PREFERRED STOCK

On July 21, 2000, the Company entered into an agreement with a private investor
whereby the investor purchased 100,000 shares of the Company's convertible
Preferred Series B Stock (the "Series B Preferred Stock") at a price of $10.00
per share for gross proceeds of $1,000, net of commissions of $166. The shares
have a liquidation preference of $10 per share.

The convertible feature of the Series B Preferred Stock provides for a rate of
conversion that is below market value. Under the terms of the Agreement, the
investors have the right to convert the Series B Preferred Stock into common
stock at a 25% discount from the average closing market price of the Company's
common stock for the five business days immediately preceding a request for
conversion. Such feature represents a beneficial conversion feature which the
Company has valued at $249. In the calculation of basic and diluted loss per
common share, the value of the beneficial conversion feature has increased the
net loss applicable to common shareholders.

In conjunction with the sale of the Series B Preferred Stock, the Company
granted the investors warrants to purchase 1,000,000 shares of common stock at a
price of $2.00 per share and granted the placement agent warrants to purchase
150,000 shares of common stock at a price of $1.50 per share (see discussion
below).

During the six months ended September 30, 2000, no shares of the Series B
Preferred Stock were converted to common stock of the Company. Subsequent to
September 30, 2000, 41,690 shares of Series B Preferred Stock were converted
into 797,300 shares of common stock, and carry a liquidation preference of $583.


                                        9

<PAGE>


 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3.       SHAREHOLDERS' EQUITY (CONTINUED)

WARRANTS GRANTED TO PURCHASE COMMON STOCK

During the six months ended September 30, 2000, in conjunction with
the issuance of various debt obligations, the Company issued warrants to
purchase 944,541 shares of common stock; see Notes 6 and 7 on debt arrangements.

Subsequent to September 30, 2000, the Company issued a warrant to purchase
100,000 shares of common stock at $1.50 per share to a consultant under the
terms of a consulting contract dated September 18, 2000. The Company estimated
the value of the warrant at $140 using the Black-Scholes Option Pricing Model,
and accrued the expense as of September 30, 2000.

In connection with the issuance of Series B Preferred Stock on July 21, 2000,
the Company granted 1,000,000 warrants to the investors at $2.00 per share and
150,000 warrants to the placement agent at $1.50 per share to purchase shares of
the Company's common stock. The Company estimated the value of the warrants at
$2,079 and $397, respectively, using the Black-Scholes Option Pricing Model. The
proceeds of the Series B Preferred Stock were allocated between the Preferred
Stock and the warrants using the relative fair value method, as stipulated by
Accounting Principles Board Opinion 14. The estimated value of the warrants
issued to the placement agent was included in additional paid-in capital. In
September 2000, the placement agent exercised the aforementioned warrant for
150,000 shares of the Company's common stock.

In connection with the execution of a financial advisory services agreement on
May 22, 2000 with an investment banking firm, the Company granted warrants to
purchase 250,000 share of its common stock at a price of $6.06 per share. The
warrants expire five years from the date of grant. The Company estimated the
fair value of the warrants at $801 using the Black-Scholes Option Pricing Model.
The warrant agreement required the Company to obtain effective registration of
the shares underlying the warrants by November 22, 2000. The Company expensed
the entire estimated value of the warrant during the quarter ended June 30,
2000.

The Company was involved in a dispute with a third-party consultant concerning
consideration the Company allegedly owed for various financial advisory
services. The Company reached a settlement with the consultant whereby it agreed
to issue warrants to purchase 75,000 shares of the Company's common stock with
an exercise price of $5.00 per share. The Company estimated the fair value of
the warrants at $146 using the Black-Scholes Option Pricing Model. Such warrants
were issued in August 2000, although the expense was recognized during the
quarter ended June 30, 2000.

At September 30, 2000, there were warrants to purchase shares of the Company's
common stock as shown in the following table. The weighted average exercise
price of all warrants is $4.69 per share. All the warrants are immediately
exercisable.


                                       10

<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3.       SHAREHOLDERS' EQUITY (CONTINUED)

The following represents all warrants outstanding as of September 30, 2000:

        GRANT DATE             EXERCISE PRICE        NUMBER OF
        ----------             --------------        ----------
                                                       SHARES
                                                       ------
        May 27, 1999            $      3.24             25,000
        May 27, 1999            $      3.24             25,000
        July 16, 1999           $      2.50             75,000
        July 30, 1999           $      4.97            492,094
        January 4, 2000         $      9.88            560,938
        April 6, 2000           $      1.95            100,000
        April 17, 2000          $      6.06            412,541
        May 22, 2000            $      6.06            250,000
        May 23, 2000            $      3.91             32,000
        June 5, 2000            $      2.88            200,000
        July 3, 2000            $      4.06            100,000
        August 4, 2000          $      5.00             75,000
        August 4, 2000          $      2.00          1,000,000
        August 4, 2000          $      3.00            200,000
                                                     ----------

                                                     3,547,573
                                                     ==========
OPTIONS GRANTED TO PURCHASE COMMON STOCK

The Company's Board of Directors adopted the 2000 Management Equity Incentive
Plan (the "Management Plan") and the 2000 Equity Incentive Plan (the "Equity
Plan") during the year ended March 31, 2000. Both of the Plans require
shareholder approval, which was obtained on July 25, 2000 at the Annual
Meeting of Stockholders.

Under terms of the Management Plan and the Equity Plan, from May 17, 2000 to
August 1, 2000, the Company granted options to purchase 1,223,750 shares of its
common stock to certain management and employees at exercise prices ranging from
$2.88 to $4.63 per share, the closing market prices of the Company's common
stock on each grant date. In addition, pursuant to terms of an employment
contract with the Company's then Chief Executive Officer ("CEO"), on June 19,
2000 the Company granted options to purchase one million shares of common stock
to its CEO at $5.28 per share, the closing market price of the Company's common
stock on such grant date. These plans are "non-compensatory" under APB No. 25,
and, accordingly, no compensation expense was recorded in connection with these
grants.

On April 13, 2000, the Company granted various service providers options to
purchase 20,500 shares of common stock at an exercise price of $8.03 per share.
The exercise price equaled the closing market price of the Company's common
stock at the date of grant. The Company estimated the fair value of the options
at $153 using the Black-Scholes Option Pricing Model and charged the expense to
operations during the quarter ended September 30, 2000.

Due to termination of most of the Company's staff on October 17, 2000 in
connection with the Chapter 11 Matter, substantially all of the options expired
on January 17, 2001. No options were exercised during the six months ended
September 30, 2000 or during the period from October 1, 2000 to January 17,
2001.


                                       11
<PAGE>


 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

4.       LOSS PER COMMON SHARE

Basic loss per common share is computed by dividing net loss applicable to
common shareholders by the weighted average number of shares of the Company's
common stock, after giving consideration to shares subject to repurchase, that
are outstanding during the period. Net loss applicable to common shareholders
has been increased for the effect of the preferred stock dividends and
beneficial conversion features (see Note 3).

Diluted loss per common share is determined in the same manner as basic loss per
share except that the number of shares is increased assuming exercise of
dilutive stock options and warrants using the treasury stock method. Common
shares issuable upon conversion of preferred stock and convertible debt and the
exercise of outstanding warrants and stock options have been excluded from the
computation since their effect would be antidilutive.

5.       RELATED PARTY TRANSACTION

At June 30 and March 31, 2000, the Company was owed $98 from JustWebit, a
company whose CEO and principal shareholder is J.R. Marple. Mr. Marple is the
son of Jon Marple, the former Chairman of the Board of Directors of the Company.
Of this amount, $50 represents the amount J.R. Marple has agreed to pay to
purchase the JustWebit domain name from the Company. Such domain name was
acquired in the Webit of Utah purchase during a prior year. Such amount was to
be paid to the Company through the issuance of 84,700 shares of stock of
JustWebit, which are traded over-the-counter, having a fair value approximating
$50. The remainder represents $31 due to the Company in connection with an
acquisition during the year ended March 31, 1999 and $17 cash funds advanced
during the year ended March 31, 2000. Such amounts were to be repaid to the
Company through the issuance of 68,600 shares of stock of JustWebit, having a
fair value approximating $60. Such shares were issued during the quarter ended
September 30, 2000 and are restricted pursuant to Rule 144. The Company has
determined the shares to be without value and has written-off such balance in
the accompanying statement of operations for the quarter ended September 30,
2000.

6.       EQUIPMENT FINANCING AND LINE OF CREDIT ARRANGEMENT

In July 1999, UBN, a subsidiary of UBEE, entered into a credit agreement (the
"Agreement") with Nortel Networks, Inc. ("Nortel") which provides for a
line-of-credit of up to $7,000 ("Tranche A") as well as a term loan of up to
$37,000 ("Tranche B"). However, the maximum combined borrowing under the
Agreement cannot exceed $37,000. Furthermore, under terms of the original
Agreement, the Company was not able to borrow under Tranche B until a $30,000
equity infusion to UBN had been completed. If such infusion was not completed by
October 30, 2000, the Tranche B commitment would terminate. On September 20,
2000 Nortel amended the Agreement, waiving the equity infusion requirement and
converting the outstanding balance of an open account (under which Nortel
advanced approximately $13,000 in equipment and services) to a draw-down under
Tranche B. However, in connection with the amendment, no further borrowings
under Tranche B were allowed. The Agreement is collateralized by all of the
assets and the common stock of UBN. A substantial portion of the Company's
assets are located in its UBN subsidiary. The Agreement further restricts UBN
from dividending or loaning funds to Universal Broadband Networks, Inc. or its
subsidiaries.


                                       12
<PAGE>


 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

6.       EQUIPMENT FINANCING AND LINE OF CREDIT ARRANGEMENT (CONTINUED)

Borrowings under Tranche A could be used for working capital and general
corporate purposes, bear interest at 13% and matured on July 31, 2000. As of
September 30, 2000, $4,044 (including interest) was outstanding under Tranche A
and no additional borrowings were available. The Company has obtained an
amendment to the Agreement from Nortel to extend the maturity date of Tranche A
to November 1, 2000. As a result of the Chapter 11 Matter, the Company did not
make the payment to Nortel for the outstanding balance due on Tranche A. See
further discussion in Note 2.

Borrowings under Tranche B could only be used to finance purchases of Nortel
goods and services, and bear interest at the prime rate (9.5% at September 30,
2000) plus 3.75%. Tranche B was payable in twelve equal quarterly payments
beginning November 15, 2000. As of June 30, 2000, no borrowings were outstanding
under Tranche B, and the Company owed Nortel $12,780 on an open account for
purchases of equipment and services. Effective September 20, 2000, Nortel
required the Company to convert the unfinanced purchases into borrowings under
Tranche B as a condition of amending the Agreement to waive certain covenants in
order that the Company could pursue third-party equity financing opportunities
and continue its discussions with Nortel regarding a restructuring and expansion
of the Agreement. As of September 30, 2000, $13,042 (including interest) was
outstanding under Tranche B. As a result of the Chapter 11 Matter, the Company
did not make any of the payments due to Nortel beginning November 15, 2000 as
required under the terms of the payment schedule. See further discussion in Note
2.

The September 30, 2000 liability amounts set forth below have been classified as
liabilities subject to compromise in the accompanying consolidated balance
sheet.


A summary of the borrowings under the Agreement follows:

                                        September 30,     March 31,
                                        -------------     ---------
                                           2000             2000
                                           ----             ----

        Tranche A                       $     4,044      $     7,646
        Tranche B                            13,042               --
        Unfinanced purchases                     --            6,576
                                        -----------      -----------

        Total                           $    17,086      $    14,222
                                        ===========      ===========


In connection with the Agreement, the Company issued a warrant to purchase
492,094 shares of the Company's common stock (see Note 3). The estimated fair
value of the warrants of approximately $1,943, as well as certain other costs
related to the Agreement, were capitalized as deferred financing costs during
the year ended March 31, 2000 and were amortized over the life of the Tranche A
loan, completed in July 2000.

The Agreement has certain restrictive covenants that include minimum tangible
net worth requirements, maximum asset to net worth ratios, minimum net income
requirements and restrictions with respect to certain other financial ratios.
Furthermore, the Agreement has restrictions related to specific activities
including, but not limited to, limitations on leases, timely payment of accounts
payable and timely submission of certain reports to Nortel. Although the Company
entered into an amendment to the Agreement that revised all such covenants
effective March 31, 2000, the Company is presently not in compliance with any of
such covenants or restrictions; such non-compliance will be processed by the
Bankruptcy Court through the Chapter 11 proceedings.


                                       13
<PAGE>


 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

7.       OTHER DEBT

On April 17, 2000, the Company entered into an unsecured Note and Warrant
Purchase Agreement to borrow $5,000. The agreement provided for interest at 6%
per annum, with any unconverted principal and accrued interest due October 17,
2001. Interest was payable in cash or common stock, at the election of the
Company, upon conversion of principal or October 17, 2001, whichever was
earlier. The agreement also provided for the conversion of the note's principal
balance into shares of common stock, at the election of the holder, at a price
of $6.06 per share. Such conversion price equaled the closing market price of
the Company's common stock on April 17, 2000. The agreement further provided for
an adjustment of the conversion price to the closing price of the Company's
common stock on April 17, 2001, if such price was lower than $6.06 on that date.
However, the conversion price cannot be adjusted to less than $3.94 per share.
The agreement required the Company to obtain effective registration of the
shares underlying the convertible note and the warrant (see discussion below) by
October 17, 2000. The agreement also provided for a 2% per month cash penalty if
such registration is not effective on said date.

In conjunction with the above agreement, the Company issued warrants to the
holder of the convertible note to purchase 412,541 shares of its common stock at
a price of $6.06 per share. The warrants expire three years from the date of
grant. The Company estimated the fair value of the warrants at $1,689 using the
Black-Scholes Option Pricing Model, and was amortizing such amount over the
18-month life of the debt.

On May 23, 2000, the Company entered into an unsecured Note and Warrant Purchase
Agreement to borrow $250. The agreement provided for interest at 6% per annum,
with any unconverted principal and accrued interest due November 23, 2001.
Interest was payable in cash or common stock, at the election of the Company,
upon conversion of principal or November 23, 2001, whichever was earlier. The
agreement also provided for the conversion of the note's principal balance into
shares of common stock, at the election of the holder, at a price of $3.91 per
share. Such conversion price equaled the closing market price of the Company's
common stock on May 23, 2000. The agreement further provided for an adjustment
of the conversion price to the closing price of the Company's common stock on
May 23, 2001, if such price is lower than $3.91 on that date. However, the
conversion price cannot be adjusted to less than $2.54 per share. The agreement
required the Company to obtain effective registration of the shares underlying
the convertible note and the warrant (see discussion below) by November 23,
2000. The agreement also provided for a 2% per month cash penalty if such
registration is not effective on said date.

In conjunction with the May 2000 agreement, the Company issued warrants to the
holder of the convertible note to purchase 32,000 shares of its common stock at
a price of $3.91 per share. The warrants expire three years from the date of
grant. The Company estimated the fair value of the warrants at $84 using the
Black-Scholes Option Pricing Model and, was amortizing such amount over the
18-month life of the debt.


                                       14
<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

7.       OTHER DEBT (CONTINUED)

On June 5, 2000, the Company entered into a Note and Warrant Purchase Agreement
to borrow $1,000. On July 7, 2000, this agreement was amended to include an
additional $500. The agreement provided for interest at 6% per annum, with
principal and accrued interest originally due in August 2000. The agreement also
provided for default interest at a rate of 24% per annum. The agreement required
the Company to obtain effective registration of the shares underlying the
warrants issued in connection with the note (see discussion below) by August 21,
2000, and provided for a 2% per month cash penalty if such registration was not
effective on said date. The agreement is personally guaranteed by the former
Chairman of the Board of Directors of the Company, and collateralized by trust
deeds on two of his residences. The lender agreed to extend the maturity date to
January 2, 2001. According to its terms, the note was to have continued accruing
interest at the default rate until repaid. As a result of the Chapter 11 Matter,
the Company did not make the payment for the outstanding balance due on this
Note Agreement. See further discussion in Note 2.

In conjunction with the June 2000 agreement, the Company issued warrants to the
holder of the note to purchase 200,000 shares of its common stock at a price of
$2.88 per share and 100,000 shares at a price of $4.06 per share. The warrants
expire three years from the date of grant. The Company estimated the fair value
of the warrants at $933 and $279, respectively, using the Black-Scholes Option
Pricing Model and was amortizing such amounts over the life of the debt.

On August 15, 2000, the Company entered into an unsecured Note Agreement to
borrow $4,000. The agreement provided for interest at 13.7% per annum, with
principal and accrued interest due December 15, 2000. As a result of the Chapter
11 Matter, the Company did not make the payment for the outstanding balance due
on this Note Agreement. See further discussion in Note 2.

On August 2, 2000, the Company entered into a Secured Convertible Promissory
Note Agreement to borrow $8,795. Of this amount, $1,295 was received on July 7,
2000 and previously disclosed in the Company's Form 10-K with the SEC on July
10, 2000; the remaining $7,500 was received during the quarter ended September
30, 2000. The note was secured by shares of the Company's common stock.

The entire note became convertible 91 days after its original issuance and is
convertible into shares of the Company's common stock at a price equal to 75% of
the average closing market price for the five business days immediately
preceding the conversion date. The reduced conversion price represents a
beneficial conversion feature which the Company has valued at $1,470. This
amount was expensed in the quarter ended September 30, 2000 as part of the
write-off and accelerated amortization of deferred financing costs (see Note 2).
The note bears interest at the rate of 8% per annum and is due and payable, if
not converted, on August 2, 2003.

No amount of the debt was converted during the quarter ended September 30, 2000.
Subsequent to the quarter end, principal of $552 was converted into 3,236,653
shares and interest of $9 was converted into 74,229 shares for a total of
3,310,882 shares of the Company's common stock issued in connection with
conversion of the debt.

In connection with the above agreement, the Company issued warrants to a broker
for services rendered to purchase 200,000 shares of its common stock at a price
of $3.00 per share. The Company estimated the fair value of the warrants at $502
using the Black-Scholes Option Pricing Model. Such services were initially
recorded as deferred financing costs; subsequently, the amortization was
accelerated due to the impending bankruptcy at September 30, 2000 as further
discussed in Note 2.


                                       15
<PAGE>

 UNIVERSAL BROADBAND NETWORKS, INC. AND SUBSIDIARIES (FORMERLY IJNT.NET, INC.)
                             (DEBTOR-IN-POSSESSION)
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

8.       COMMITMENTS AND CONTINGENCIES

DISPOSITION OF MRHM

During the quarter ended June 30, 2000, the Company's Board of Directors
directed management to effect the disposition of MRHM. MRHM had total assets and
net assets approximating $538 and $29, respectively, as of June 30, 2000, and a
net loss from operations approximating $745 for the quarter then ended, before
any accruals related to office closing costs. MRHM provided a variety of web
design and web hosting services. Management expected to continue, although to a
lesser extent, to provide such services after the successful disposition of
MRHM. The Company did not identify MRHM as a separate business line that
required discontinued operations accounting.

On July 31, 2000 negotiations for the sale of MRHM were discontinued and its
operations were largely terminated on August 1, 2000. A reduced staff provided
for the orderly transition of hosting operations to alternative providers and
the wind-up of development projects. In connection with such termination, the
Company recognized the impairment of $290 of fixed assets, various current
assets and deposits. MRHM had two office leases, which required minimum lease
payments aggregating $1,618 over the next five years. The leases were rejected
as part of the bankruptcy proceedings; see further discussion at Note 2.

DISPOSITION OF SATELLITE OFFICES

The Company had wireless and dial-up internet service operations in five
satellite offices located in Concord and Petaluma, California, Beaumont and
Houston, Texas and Salt Lake City, Utah. The satellite offices have incurred
substantial losses from operations. In a prior quarter, the Board of Directors
instructed management to evaluate such offices to determine whether they should
be retained and restructured, or sold. The satellite offices have various office
leases, which require minimum lease payments aggregating $1,536 over the next
five years. Substantially all of the leases were rejected as part of the
bankruptcy proceedings; see further discussion in Note 2.

Management had concluded to sell the satellite offices and/or their customer
bases; since a sale was not effected in a timely manner, such offices were
closed in September and October 2000. A sharply reduced staff was providing for
the continuing operation of the network in order to bill and serve the remaining
customers, however, no new customers are being added to the network. There is an
uncertainty as to the actual amount the Company will ultimately receive from the
assets of the satellite offices, if they are sold. As a result, such assets may
ultimately be determined to be impaired. During the quarter ended September 30,
2000, the Company recognized the impairment of $1,216 of fixed assets in order
to approximate their estimated fair value on a going-concern accounting basis.

REGISTRATION RIGHTS AGREEMENTS

The Company is obligated under various agreements to register its common stock,
including the common stock underlying certain warrants and convertible preferred
stock. The Company is subject to penalties for failure to register such
securities, the amount of which could be material to the Company's consolidated
financial condition, results of operations and cash flows. The Company filed a
registration statement on Form S-3 in August 2000 to register the necessary
securities, and such registration was deemed effective by the Securities and
Exchange Commission on September 13, 2000. Thereafter, the Company defaulted on
certain registration obligations. These defaults will be processed through the
Chapter 11 Matter.


9.       RESTATEMENT OF SEPTEMBER 30, 1999 FINANCIAL STATEMENTS

The consolidated financial statements for the six months ended September 30,
1999 have been restated to correct the following errors:

During the six months ended September 30, 1999, 211,733 shares of common stock
were issued for services. The Company has recorded the value of the shares
tendered using the free-trading market price on the date of transfer as the
basis for all such issuances. Such adjustments resulted in additional expense of
$748 for the six months ended September 30, 1999.

The loan origination fee of $660 and the value of the warrants of $1,944, both
related to the financing agreement with Nortel, were not previously reflected in
the consolidated financial statements. Such items have now been recorded,
resulting in an increase to liabilities and shareholders' equity, respectively.
The Company has also recorded the amortization of the loan origination fee and
the warrants, totaling $110 and $324, respectively, resulting in a charge to
interest expense.

In connection with Series A Preferred Stock, the Company has recognized a
beneficial conversion feature in the amount of $147. In addition, the Company
has recognized a total of $198 in dividends related to such stock.

The adjustments described above increased the basic/diluted loss per common
share by $0.07 for the six months ended September 30, 1999.

The Company has restated revenue to comply with SEC guidelines for accounting
issues related to Internet operations to the net method for revenues related to
the Fair Auction subsidiary. This change resulted in a $459 decrease to revenue
but had no impact on the previously reported net loss.


10.       PROPOSED MERGER

The Company is presently negotiating a merger with Norstar Telecommunications,
Inc. ("Norstar"). Based on a signed letter of intent ("LOI"), subject to Court
approval, the principal terms of the proposed transaction as of June 5, 2001 are
as follows: (a) Norstar would be merged into the Company, which would be the
surviving entity, (b) the Company would receive a total of $450 in cash by the
closing date, and its current stockholders would own approximately 5% of the
post-merger entity, (c) such cash consideration and most of the Company's other
assets would be transferred to a third party for the benefit of the Company's
creditors, (d) none of the Company's presently outstanding common or preferred
stock would be cancelled or otherwise effected by the proposed merger, and (e)
Norstar stockholders would own the remaining 95% of the surviving entity.

Under the terms of the LOI, the surviving entity would seek to register with the
Securities and Exchange Commission the stock of the Company owned by the
Company's original shareholders within six months of the effective date of the
proposed merger. Absent such registration, the surviving entity would either (1)
issue additional shares to such stockholders or (2) purchase such stock at an
agreed-upon (but presently unknown) price.

The proposed transaction described above is subject to approval by the
Bankruptcy Court and negotiation/execution of a definitive merger agreement.


                                       16
<PAGE>


                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

IN ADDITION TO HISTORICAL INFORMATION, MANAGEMENT'S DISCUSSION AND ANALYSIS
INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS INCLUDING, BUT NOT LIMITED TO,
THOSE RELATED TO THE GROWTH AND STRATEGIES, FUTURE OPERATING RESULTS AND
FINANCIAL POSITION AS WELL AS ECONOMIC AND MARKET EVENTS AND TRENDS OF THE
COMPANY. ALL FORWARD-LOOKING STATEMENTS MADE BY THE COMPANY, INCLUDING SUCH
STATEMENTS HEREIN, INCLUDE MATERIAL RISKS AND UNCERTAINTIES AND ARE SUBJECT TO
CHANGE BASED ON FACTORS BEYOND THE CONTROL OF THE COMPANY. ACCORDINGLY, THE
COMPANY'S ACTUAL RESULTS AND FINANCIAL POSITION COULD DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED IN ANY FORWARD-LOOKING STATEMENT AS A RESULT OF
VARIOUS FACTORS, INCLUDING WITHOUT LIMITATION FACTORS DESCRIBED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION REGARDING RISKS AFFECTING
THE COMPANY'S FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

BANKRUPTCY AND LIQUIDATION

Due to overall market and industry conditions, the Company was unsuccessful in
its efforts to secure new vendor financing. As a result, on October 31, 2000
(the "Petition Date"), Universal Broadband Networks, Inc. and four of its
wholly-owned subsidiaries (collectively the "Company") filed a voluntary
petition for protection and reorganization under Chapter 11 of the Federal
Bankruptcy Code in the United States Bankruptcy Court for the Central District
of California, Santa Ana Division. Since the Petition Date, the Company has
conducted limited activities as a debtor-in-possession under the Bankruptcy
Code. See further discussion in Notes 1 and 2 of the Consolidated Condensed
Financial Statements.

In its Chapter 11 Matter, the Company may sell assets and settle liabilities for
amounts other than those reflected in the financial statements. The
administrative and other bankruptcy-related expenses resulting from the Chapter
11 filing will unfavorably affect results. Moreover, future results may be
adversely affected by other claims and factors resulting from the Chapter 11
filing.

In early January 2001, after considering current industry conditions and other
factors (and in consultation with the creditors committee formed during
bankruptcy proceedings), management concluded that reorganization was not
feasible. A decision to liquidate the Company was reached at that time, and
liquidation commenced soon thereafter. Thus, the Company is no longer engaged in
the conduct of business to any significant extent, and now operates for the sole
purpose of holding and liquidating its assets. The Company expects that its
assets will either be sold or assigned to secured creditors, with any remaining
proceeds distributed to other creditors.

In addition, the Company has defaulted on certain indebtedness. See "Part II -
Item 3 - Defaults Upon Senior Securities."

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999

Total revenues decreased 14% or $0.1 million to $0.6 million for the three
months ending September 30, 2000 compared to revenues of $0.7 million for the
three months ending September 30, 1999. The decrease was caused in part by the
closure of the web development subsidiary in August 2000, as discussed below.

The Company incurred network expenses totaling $2.9 million for the three months
ended September 30, 2000 compared to $0.6 million for the three months ended
September 30, 1999, an increase of 362% or $2.3 million. The Company's main
subsidiary, UBN, generated $1.6 million of this increase, comprised of
significant network development costs incurred to install circuit lines and
establish co-location sites to deploy the Los Angeles market-area network in
preparation for offering high speed data and voice communication services.


                                       17
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS (CONTINUED)

The Company incurred payroll and related expenses of $1.7 million for the three
months ended September 30, 2000 compared to $1.2 million for the three months
ended September 30, 1999, an increase of 50% or $0.5 million. The increase is
due to growth in headcount in all areas of the Company to support its growth
objectives. The increase in headcount has occurred primarily in the UBN
subsidiary as the Company added staff to support its network deployment and
business expansion objectives.

The Company incurred total selling, general and administrative expenses ("SG&A")
of $4.4 million for the three months ended September 30, 2000, compared with
$1.6 million for the three months ended September 30, 1999, an increase of $2.8
million or 179%. The increase is due to continued expansion of the sales and
marketing efforts, professional fees and the increases in operating costs of the
Company's offices throughout the United States. Also, during the three months
ended September 30, 2000, the Company issued 18,556 shares of its common stock
in exchange for professional services. The fair value of the shares issued of
$0.1 million has been charged to operations.

The Company incurred depreciation and amortization costs of $1.2 million for the
three months ended September 30, 2000 compared to $0.2 million for the
corresponding period of the previous year, an increase of $1.0 million or 439%.
The increase is due to the large amounts of fixed assets placed into service
during fiscal 2000, particularly for computer equipment and network equipment.

The Company incurred interest expense of $1.3 million in the three months ended
September 30, 2000. Of this amount, $1.2 represented the amortization of
deferred financing costs on various notes payable, including Nortel Networks.
See further discussion in Notes 6 and 7 in the Consolidated Condensed Financial
Statements.

The Company reflected reorganization items of $11 million for the three months
ended September 30, 2000 due to asset impairment and other charges in connection
with the Chapter 11 Matter. The Company recognized $8.0 million in asset
impairment, $0.1 in professional fees, $3.7 million in
accelerated amortization of deferred financing costs and adjustments of other
liabilities of $(0.9) million. See further discussion in Notes 2, 6 and 7 in the
Consolidated Condensed Financial Statements.

SIX MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 1999

Total revenues decreased 21% or $0.3 million to $1.3 million for the six months
ending September 30, 2000 compared to revenues of $1.6 million for the six
months ending September 30, 1999. The decrease was caused in part by the closure
of the web development subsidiary in August 2000, as discussed below.

During the quarter ended June 30, 2000, the Company's Board of Directors
directed management to effect the disposition of MRHM. MRHM had total assets and
net assets approximating $0.5 million and $29,000, respectively, as of June 30,
2000, and a net loss from operations approximating $0.7 million for the quarter
ended June 30, 2000, before accruals for office closing costs. MRHM provides a
variety of web design and web hosting services. Management of the Company had
expected to continue, although to a lesser extent, to provide such services
after the successful disposition of MRHM. Management of the Company had not
identified MRHM as a separate business line which requires discontinued
operations accounting.

                                       18
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS (CONTINUED)

On July 31, 2000 negotiations for the sale of MRHM were discontinued, and its
operations were largely terminated on August 1, 2000. In connection with
such termination, the Company has recognized the impairment of $0.3 million of
fixed assets and various other current assets and deposits. MRHM had two office
leases, which required minimum lease payments aggregating $1.6 million over the
next five years. The leases were rejected as part of the bankruptcy proceedings,
see further discussion at Note 2 of the Condensed Consolidated Financial
Statements.

The Company had wireless and dial-up internet service operations in five
satellite offices located in Concord and Petaluma, California, Beaumont and
Houston, Texas and Salt Lake City, Utah. The satellite offices have incurred
substantial losses from operations. The Board of Directors instructed management
to evaluate such offices to determine whether they should be retained and
restructured, or sold. The satellite offices have various office leases, which
require minimum lease payments aggregating $1.5 million over the next five
years. Substantially all of the leases were rejected as part of the bankruptcy
proceedings, see further discussion at Note 2 of the Condensed Consolidated
Financial Statements. Management had concluded to sell the satellite offices
and/or their customer bases. Since a sale was not effected in a timely manner,
such offices were closed in September and October 2000. A reduced staff was
providing for the continuing operation of the network in order to provide
service to the customers, however no new customers are being added to the
network. There is an uncertainty as to the actual amount the Company will
ultimately receive from the assets of the satellite offices, if they are sold.
As a result, such assets may ultimately be determined to be impaired. The
Company has recognized the impairment of $1.2 million of fixed assets in order
to approximate their estimated fair value on a going-concern accounting basis.

The Company incurred network expenses totaling $5.2 million for the six months
ended September 30, 2000 compared to $1.0 million for the six months ended
September 30, 1999, an increase of 418% or $4.2 million. The Company's main
subsidiary, UBN, generated $3.0 million of this increase, comprised of
significant network development costs incurred to install circuit lines and
establish co-location sites to deploy the Los Angeles market-area network in
preparation for offering high speed data and voice communication services.

The Company incurred payroll and related expenses of $3.8 million for the six
months ended September 30, 2000 compared to $2.1 million for the six months
ended September 30, 1999, an increase of 84% or $1.7 million. The increase is
due to growth in headcount in all areas of the Company to support its growth
objectives. The increase in headcount has occurred primarily in the UBN
subsidiary as the Company added staff to support its network deployment and
business expansion objectives. Pursuant to the Company's Chapter 11 Matter,
substantially all of the Company's workforce was terminated on October 18,
except for a few key employees who are essential to the bankruptcy
process. Certain employees have claims against the Company for unpaid salary;
such claims are included in reorganization items in the Consolidated Condensed
Financial Statements.

                                       19
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)

The Company incurred total selling, general and administrative expenses ("SG&A")
of $9.5 million for the six months ended September 30, 2000, compared with $3.1
million for the six months ended September 30, 1999, an increase of $6.4 million
or 201%. The increase is due to continued expansion of the sales and marketing
efforts, professional fees and the increases in operating costs of the Company's
offices throughout the United States. Also, during the six months ended
September 30, 2000, the Company issued 37,235 shares of its common stock in
exchange for professional services and 104,165 shares to its non-employee
Directors. The total estimated fair value of the shares issued of $0.6 million
has been charged to operations.

The Company incurred depreciation and amortization costs of $2.8 million for the
six months ended September 30, 2000 compared to $0.4 million for the
corresponding period of the previous year, an increase of $2.4 million or 597%.
The increase is due to the large amounts of fixed assets placed into service
during fiscal 2000, particularly for computer equipment and network equipment.

The Company incurred interest expense of $3.3 million in the six months ended
September 30, 2000. Of this amount, $0.1 million was cash paid on various notes
and leases payable, $0.8 million was accrued on various notes, including the
obligations to Nortel Networks and $2.4 represented the amortization of deferred
financing costs on various notes payable, including Nortel Networks. See further
discussion in Notes 6 and 7 in the Consolidated Condensed Financial Statements.

The Company reflected reorganization items of $11 million for the six months
ended September 30, 2000 due to asset impairment and other charges in connection
with the Chapter 11 Matter. The Company recognized $8.0 million in asset
impairment, $0.1 in professional fees, $3.7 million in accelerated amortization
of deferred financing costs and adjustments of other liabilities of $(0.9)
million. See further discussion in Notes 2, 6 and 7 in the Consolidated
Condensed Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

As previously mentioned, subsequent to the Petition Date, the Company is
operating as a debtor-in-possession under provisions of Chapter 11 of the
Bankruptcy Code. The Company has sufficient cash reserves to continue to operate
on a liquidation basis.

CASH FLOWS

Cash used in operating activities was $14.9 million for the six months ended
September 30, 2000 compared to $0.5 million for the six months ended September
30, 1999. Cash was impacted primarily by the Company's operating loss for the
six months ended September 30, 2000, partially offset through the payment of
certain expenses with stock ($0.5 million) and warrants and options ($1.1
million), depreciation and amortization ($2.8 million), amortization/direct
write-off of deferred financing costs ($5.7 million) and delaying the payment of
certain accounts payable.

The Company's operations have required substantial capital investment for the
procurement, design and construction of the voice and data network
infrastructure, the purchase of telecommunications equipment, and the design and
development of the operational support system. Capital expenditures were
approximately $9.5 million (including amounts financed through capital leases
and other liabilities) for the six months ended September 30, 2000 and $4.1
million for the six months ended September 30, 1999.

Cash was provided primarily by equity and short-term borrowing. See further
discussion below of stock transactions and financing proceeds for the six months
ended September 30, 2000.


                                       20
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS (CONTINUED)

EQUIPMENT FINANCING AND LINE OF CREDIT ARRANGEMENT

In July 1999, UBN, a subsidiary of UBEE, entered into a credit agreement (the
"Agreement") with Nortel Networks, Inc. ("Nortel") which provides for a
line-of-credit of up to $7.0 million ("Tranche A") as well as a term loan of up
to $37 million ("Tranche B"). However, the maximum combined borrowing under the
Agreement cannot exceed $37 million. Furthermore, under terms of the original
Agreement, the Company was not able to borrow under Tranche B until a $30
million equity infusion to UBN had been completed. If such infusion was not
completed by October 30, 2000, the Tranche B commitment would terminate. On
September 20, 2000 Nortel amended the Agreement, waiving the equity infusion
requirement and converting the outstanding balance of an open account (under
which Nortel advanced approximately $13 million in equipment and services) to a
draw-down under Tranche B. However, in connection with the amendment, no further
borrowings under Tranche B were allowed. The Agreement is collateralized by all
of the assets and the common stock of UBN. A substantial portion of the
Company's assets are located in its UBN subsidiary. The Agreement further
restricts UBN from dividending or loaning funds to Universal Broadband Networks,
Inc. or its subsidiaries.

Borrowings under Tranche A could be used for working capital and general
corporate purposes, bear interest at 13% and matured on July 31, 2000. As of
September 30, 2000, $4 million (including interest) was outstanding under
Tranche A and no additional borrowings were available. The Company has obtained
an amendment to the Agreement from Nortel to extend the maturity date of Tranche
A to November 1, 2000. As previously disclosed, the Company did not make the
payment to Nortel for the outstanding balance due on Tranche A. See further
discussion in Note 2 of the Condensed Consolidated Financial Statements.

Borrowings under Tranche B could only be used to finance purchases of Nortel
goods and services and bear interest at the prime rate (9.5% at September 30,
2000) plus 3.75%. Tranche B was payable in twelve equal quarterly payments
beginning November 15, 2000. As of June 30, 2000, no borrowings were outstanding
under Tranche B, and the Company owed Nortel $12.8 million on an open account
for purchases of equipment and services. Effective September 20, 2000, Nortel
required the Company to convert the unfinanced purchases into borrowings under
Tranche B. As of September 30, 2000, $13.0 million (including interest) was
outstanding under Tranche B. As a result of the Chapter 11 Matter, the Company
did not make the November 15, 2000 payment to Nortel as required under the terms
of the payment schedule.

In connection with the Agreement, the Company issued a warrant to purchase
492,094 shares of the Company's common stock (see Note 3 to the consolidated
condensed financial statements). The estimated fair value of the warrants of
approximately $1.9 as well as certain other costs related to the Agreement, were
capitalized as deferred financing costs during the year ended March 31, 2000 and
were being amortized over the life of the Tranche A loan, completed in July
2000.

The Agreement has certain restrictive covenants that include minimum tangible
net worth requirements, maximum asset to net worth ratios, minimum net income
requirements and restrictions with respect to certain other financial ratios.
Furthermore, the Agreement has restrictions related to specific activities,
including, but not limited to, limitations on leases, timely payment of accounts
payable and timely submission of certain reports to Nortel. Although the Company
entered into an amendment to the Agreement which revised all such covenants
effective March 31, 2000 and for all future periods, the Company is not in
compliance with any of the covenants or restrictions; such non-compliance will
be processed by the Bankruptcy Court through the Chapter 11 proceedings.

                                       21
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS (CONTINUED)

OTHER DEBT

On April 17, 2000, the Company entered into an unsecured Note and Warrant
Purchase Agreement to borrow $5.0 million. The agreement provided for interest
at 6% per annum, with any unconverted principal and accrued interest due October
17, 2001. Interest was payable in cash or common stock, at the election of the
Company, upon conversion of principal or October 17, 2001, whichever was
earlier. The agreement provided for the conversion of the note's principal
balance into shares of common stock, at the election of the holder, at a price
of $6.06 per share. The conversion price equaled the closing price of the
Company's common stock on April 17, 2000. The agreement provided for an
adjustment of the conversion price to the closing price of the Company's common
stock on April 17, 2001, if the Company's common stock is lower than $6.06 on
such date. However, the conversion price cannot be adjusted to less than $3.94
per share. The agreement required the Company to obtain effective registration
of the shares underlying the convertible note and the warrant (see discussion
below) by October 17, 2000. The agreement provided for a 2% per month cash
penalty if such registration is not effective on said date.

In conjunction with the above agreement, the Company issued warrants to the
holder of the convertible note to purchase 412,541 shares of common stock at a
price of $6.06 per share. The warrants expire three years from the date of
grant. The Company estimated the fair value of the warrants at $1.7 million
using the Black-Scholes Option Pricing Model and was amortizing such amount over
the 18 month life of the debt.

On May 23, 2000, the Company entered into an unsecured Note and Warrant Purchase
Agreement to borrow $0.3 million. The agreement provided for interest at 6% per
annum, with any unconverted principal and accrued interest due November 23,
2001. Interest was payable in cash or common stock, at the election of the
Company, upon conversion of principal or November 23, 2001, whichever was
earlier. The agreement provided for the conversion of the note's principal
balance into shares of common stock, at the election of the holder, at a price
of $3.91 per share. The conversion price equaled the closing price of the
Company's common stock on May 23, 2000. The agreement provided for an adjustment
of the conversion price to the closing price of the Company's common stock on
May 23, 2001, if the Company's common stock is lower than $3.91 on such date.
However, the conversion price cannot be adjusted to less than $2.54 per share.
The agreement required the Company to obtain effective registration of the
shares underlying the convertible note and the warrant (see discussion below) by
November 23, 2000. The agreement provided for a 2% per month cash penalty if
such registration is not effective on said date.

In conjunction with the May 2000 agreement, the Company issued warrants to the
holder of the convertible note to purchase 32,000 shares of common stock at a
price of $3.91 per share. The warrants expire three years from the date of
grant. The Company estimated the fair value of the warrants at $0.1 million
using the Black-Scholes Option Pricing Model, and was amortizing such amount
over the 18 month life of the debt.

On June 5, 2000, the Company entered into a Note and Warrant Purchase Agreements
to borrow $1.0 million. On July 7, 2000, this agreement was amended to include
an additional $0.5 million. The agreement provided for interest at 6% per annum,
with principal and accrued interest originally due August 15, 2000. The
agreement provided for default interest at a rate of 24% per annum. The
agreement required the Company to obtain effective registration of the shares
underlying the warrants issued in connection with the note (see discussion
below) by August 21, 2000, and provided for a 2% per month cash penalty if such
registration is not effective on said date. The agreement is personally
guaranteed by the former Chairman of the Board of Directors of the Company and
collateralized by trust deeds on two of his residences. The lender agreed to
extend the maturity date to January 2, 2001. However, the note was to have
continued to accrue interest at the default rate until repaid. As a result of
the Chapter 11 Matter, the Company did not make the payment for the outstanding
balance due on this Note Agreement.

                                       22
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS (CONTINUED)

In conjunction with the June 2000 agreement, the Company issued warrants to the
holder of the note to purchase 200,000 shares of common stock at a price of
$2.88 per share and 100,000 shares at a price of $4.06 per share. The warrants
expire three years from the date of grant. The Company estimated the fair value
of the warrants at $1.2 million using the Black-Scholes Option Pricing Model and
was amortizing such amount over the life of the debt.

On August 15, 2000, the Company entered into an unsecured Note Agreement to
borrow $4.0 million. The agreement provided for interest at 13.7% per annum,
with principal and accrued interest due December 15, 2000. As a result of the
Chapter 11 Matter, the Company did not make the payment for the outstanding
balance due on this Note Agreement.

On August 2, 2000, the Company entered into a Secured Convertible Promissory
Note Agreement to borrow $8.8 million. Of this amount, $1.3 million was received
on July 7, 2000 and previously disclosed in the Company's Form 10-K which was
filed with the SEC on July 10, 2000. The remaining $7.5 million was received
during the quarter ended September 30, 2000. The note is secured by shares of
the Company's common stock. The entire note became convertible 91 days after the
date of original issuance. The note is convertible into shares of the Company's
common stock at a price equal to 75% of the average of the five per share market
values immediately preceding the conversion date. The reduced conversion price
represents a beneficial conversion feature which the Company has valued at $1.5
million. This amount has been charged to operations (see Note 2) as part of the
write-off and accelerated amortization of deferred financing costs. The note
bears interest at the rate of 8% per annum, and is due and payable, if not
converted, on August 2, 2003.

In connection with the above agreement, the Company issued warrants to a broker
for services rendered to purchase 200,000 shares of common stock at a price of
$3.00 per share. The Company estimated the fair value of the warrants at $0.5
million using the Black-Scholes Option Pricing Model.

PRIVATE PLACEMENT

In September 2000, the Company sold shares of its common stock through a private
placement. The Company issued 333,333 shares for net consideration of $0.4
million (net of $0.1 million commissions).

SERIES B CONVERTIBLE PREFERRED STOCK

On July 21, 2000, the Company entered into an agreement with a private investor
whereby the investor purchased 100,000 shares of the Company's convertible
Preferred Series B Stock (the "Series B Preferred Stock") at a price of $10.00
per share for a gross price of $1.0 million, net of commissions of $0.2 million.

The convertible feature of the Series B Preferred Stock provides for a rate of
conversion that is below market value. Under terms of the Agreement, the
investors have the right to convert the Preferred Stock into common stock at a
25% discount from the average closing price of the Company's common stock for
the five business days immediately preceding a request for conversion. Such
feature represents a beneficial conversion feature which the Company has valued
at $0.2 million.

In conjunction with the sale of the Series B Preferred Stock, the Company
granted the investors warrants to purchase 1.0 million shares of common stock at
a price of $2.00 per share and granted the placement agent warrants to purchase
150,000 shares of common stock at a price of $1.50 per share. In the calculation
of basic and diluted net loss per common share, the value of the beneficial
conversion feature and the value of the placement agent warrants have increased
the net loss applicable to common shareholders.


                                       23
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS (CONTINUED)

During the six months ended September 30, 2000, no shares of the Series B
Preferred Stock were converted to common stock of the Company. Subsequent to
September 30, 2000, 41,690 shares of Series B Preferred Stock were converted
into 737,300 shares of common stock.

OPTIONS GRANTED TO PURCHASE COMMON STOCK

The Company's Board of Directors adopted the 2000 Management Equity Incentive
Plan (the "Management Plan") and the 2000 Equity Incentive Plan (the "Equity
Plan") during the year ended March 31, 2000. Both of the Plans require
shareholder approval, which was obtained on July 25, 2000 at the Annual
Meeting of Stockholders.

Under terms of the Management Plan and the Equity Plan, from May 17, 2000 to
August 1, 2000, the Company granted options to purchase 1,223,750 shares of its
common stock to certain management and employees at exercise prices ranging from
$2.88 to $4.63 per share, the closing market prices of the Company's common
stock on each grant date. In addition, pursuant to terms of an employment
contract with the Company's then Chief Executive Officer ("CEO"), on June 19,
2000 the Company granted options to purchase one million shares of common stock
to its CEO at $5.28 per share, the closing market price of the Company's common
stock on such grant date. These plans are "non-compensatory" under APB No. 25,
and, accordingly, no compensation expense was recorded in connection with these
grants.

On April 13, 2000, the Company granted various service providers options to
purchase 20,500 common shares of stock at a price of $8.03 per share. The
exercise price equaled the closing price of the Company's common stock at the
date of grant. The Company estimated the fair value of the options at $0.2
million using the Black-Scholes Option Pricing Model and charged the expense to
operations during the quarter ended September 30, 2000.

COMMITMENTS AND CONTINGENCIES

REGISTRATION RIGHTS

As disclosed elsewhere herein, the Company is subject to various requirements to
register common stock and the common stock underlying convertible preferred
stock and various warrants. The Company is subject to various penalties for
failure to register such securities, the amount of which could be material to
the Company's consolidated financial condition, results of operations and cash
flows. The Company filed a registration statement on Form S-3 in August, 2000 to
register the necessary securities, and such registration was deemed effective by
the Securities and Exchange Commission on September 13, 2000. Subsequent to
September 30, 2000, the Company defaulted on certain registration obligations.
These defaults will be processed through the Chapter 11 Matter.


                                       24
<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.
                          PART II -- OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

On the Petition Date, the Company filed a voluntary petition for protection and
reorganization under the Bankruptcy Code in the United States Bankruptcy Court
for the Central District of California. For more information, see Note 2 -
"Bankruptcy Filing and Other Subsequent Events."

The Company has been named the defendant in certain legal proceedings,
principally with regard to enforcement of contractual obligations for payment
for services or products. Moreover, there are other threatened claims of a
substantial nature which have been asserted against the Company. All lawsuits
have been stayed with respect to the Company as a result of the Company's filing
a voluntary petition under Chapter 11 of the Bankruptcy Code.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

Under terms of the credit agreement with Nortel, approximately $4 million in
principal and interest under Tranche A became due and payable on November 1,
2000. As previously disclosed, the Company did not make the payment on the
Nortel credit agreement. In addition, the Company did not make the installment
payment on its Tranche B debt (total liability of approximately $13 million,
including interest, as of September 30, 2000), which was due on November
15,2000.

As a result of the Chapter 11 Matter, the Company also failed to make the
following debt repayments to other creditors:

A.       $1.5 million due January 2, 2001 under an agreement dated June 5, 2000
         (as amended July 7, 2000); and
B.       $4 million due December 15, 2000 under an agreement dated August 15,
         2000.


ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

None

ITEM 5.     OTHER INFORMATION

RESIGNATION OF COMPANY'S INDEPENDENT ACCOUNTANTS

Effective as of October 31, 2000, the Company accepted the resignation of BDO
Seidman, LLP as the Company's independent certified public accountant, which was
tendered on that same date. No disagreements existed between the Company and BDO
Seidman, LLP with respect to any financial statement of the Company or the
presentation of any financial statement for which BDO Seidman, LLP, issued a
report.

TRADING MARKET

The Company's common stock ceased trading on the Nasdaq National Market on
October 17, 2000 at the Company's request. Since the Company no longer satisfies
the requirements for continued listing on the Nasdaq National Market, by letter
dated November 3, 2000, the Company requested that its securities be delisted
from the Nasdaq National Market. On November 9, 2000, the Company's common stock
began being quoted on the "Pink Sheets" market; such market is not sponsored or
supported by the Company. No assurance can be given as to the continuing
existence or liquidity of any trading market for the Company's common stock.


                                       25
<PAGE>


                       UNIVERSAL BROADBAND NETWORKS, INC.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

  (1)      Exhibits:

           None

  (2)      Reports on Form 8-K:

           The Company filed a report on Form 8-K on August 2, 2000 to report
           the filing of an Amended and Restated Certificate of Incorporation in
           the State of Delaware, the Company's domestic state of incorporation.

           The Company filed a report on Form 8-K on August 9, 2000 to report
           the closure of the Man Rabbit House subsidiary.

           The Company filed a report on Form 8-K on October 17, 2000 to report
           that the Company's efforts to secure new vendor financing were
           unsuccessful.

           The Company filed a report on Form 8-K on November 6, 2000 to report
           the filing of the Company's bankruptcy Matter under Chapter 11, the
           resignation of the Company's accountants, BDO Seidman, LLP, ("BDO"),
           and the request by the Company that its securities be delisted from
           the Nasdaq National Market since the Company no longer satisfies the
           listing requirements.

           The Company filed a report on Form 8-K/A on November 13, 2000 to
           submit BDO's resignation letter in satisfaction of the Form 8-K
           rules.

           The Company filed a report on Form 8-K on March 6, 2001 to disclose
           (1) the January 2001 resignation of four of its directors and (2) the
           fact that the Company then did not have any independent directors.


<PAGE>

                       UNIVERSAL BROADBAND NETWORKS, INC.

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.

Dated:   June 25, 2001

                                        UNIVERSAL BROADBAND NETWORKS, INC.



                                        /S/ Brandon Powell
                                        --------------------------
                                        Brandon Powell, Executive Vice President