U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   ___________



                               Amendment No. 2 to
                                   FORM 10-Q/A


                                   ___________


[X]       QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2003

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

                        Commission File Number: 000-23163


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

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

                              101 Courageous Drive
                          League City Texas 77573-3925
          (Address of principal executive offices, including zip code)

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


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


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



As  of  April  28,,  2004,  there  were  191,517,856   shares  of  common  stock
outstanding.


<PAGE>




                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                                    Form 10-Q
                     For the Quarter Ended November 30, 2003

                                Table of Contents

<TABLE>
<CAPTION>
Part 1 - Financial Information
                                                                                                 Page

         Item 1.  Consolidated Financial Statements (Unaudited)

                  <S>                                                                             <C>
                  Consolidated Balance Sheets at November 30, 2003, and August 31, 2003            3

                  Consolidated Statements of Operations for the Three
                  Months Ended November 30, 2003 and 2002                                          4

                  Consolidated Statements of Changes In Shareholders, Equity for the
                  Three Months Ended November 30, 2003, and Twelve Months Ended
                  August 31, 2003                                                                  5

                  Consolidated Statements of Cash Flows for the Three Months Ended
                  November 30, 2003 and 2002                                                       6

                  Notes to the Consolidated Financial Statements                                   7

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                             27

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                      35

         Item 4.  Controls and Procedures                                                         35

Part 2 - Other Information

         Item 1.  Legal Proceedings                                                               36

         Item 2.  Recent Sales of Unregistered Securities or Changes
                  in Securities and Use of Proceeds.                                              36

         Item 3.  Defaults Upon Senior Securities                                                 36

         Item 4.  Submission of Matters to a Vote of Security Holders                             36

         Item 5.  Other Information                                                               36

         Item 6.  Exhibits and Reports on Form 8-K                                                36


Signatures                                                                                        37
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                     EAGLE BROADBAND, INC., AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                            ASSETS

                                                                             November 30,       August 31,
                                                                                2003               2003
                                                                                ----               ----

                                                                            (Unaudited)         (Audited)
 <S>                                                                              <C>               <C>
Current Assets:
     Cash and Cash Equivalents                                          $        5,673   $           824
     Securities Available for Sale                                               1,877             1,714
     Accounts Receivable, net                                                    2,402             1,704
     Inventories                                                                 3,855             3,199
     Prepaid Expenses                                                              651               668
                                                                        --------------    --------------

         Total Current Assets                                                   14,458             8,109

Property and Equipment:
     Operating Equipment                                                        36,575            36,422
     Less:  Accumulated Depreciation                                           (6,302)           (5,689)
                                                                        --------------    --------------
         Total Property and Equipment                                           30,273            30,733

Other Assets:
     Deferred Costs                                                                334               334
     Goodwill                                                                   76,273            76,273
     Other Intangible Assets                                                     5,330             5,330
     Other Assets                                                                  239               227
                                                                        --------------    --------------

         Total Other Assets                                                     82,176            82,164
                                                                        --------------    --------------

Total Assets                                                             $     126,907    $      121,006
                                                                        ==============    ==============


                            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
     Accounts Payable                                                    $       5,740    $        5,461
     Accrued Expenses                                                            4,432             7,790
     Notes Payable                                                               7,187             5,779
     Deferred Revenue                                                              441               ---
                                                                        --------------    --------------

         Total Current Liabilities                                              17,800            19,030


                  Commitments and Contingent Liabilities

Shareholders' Equity:
     Preferred Stock  -  $.001 par value
         Authorized  5,000,000 shares
         Issued  -0- shares                                                        ---               ---
     Common Stock  -  $.001 par value
         Authorized  200,000,000 shares
         Issued and Outstanding at November 30, 2003, and
         August 31, 2003, 185,058,000 and 147,447,000, respectively                185               147
     Paid in Capital                                                           192,262           177,017
     Retained Earnings                                                        (83,340)          (75,188)
                                                                        --------------    --------------

         Total Shareholders/ Equity                                            109,107           101,976
                                                                        --------------    --------------

Total Liabilities and Shareholders' Equity                               $     126,907    $      121,006
                                                                        ==============    ==============
</TABLE>

See accompanying notes to consolidated financial statements.









                                       3
<PAGE>

                     EAGLE BROADBAND, INC., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands)



                                                    For the Three Months
                                                     ended November 30,
                                                        (Unaudited)

                                                      ----------------
                                                        2003    2002
                                                      -------- -------

Net Sales:
 Structured wiring                                       $392  $1,560
 Broadband services                                     1,564     674
 Products                                                 361   2,044
 Other                                                     80     340
                                                      -------- -------
Total Sales                                             2,397   4,618
                                                      -------- -------

Costs of Goods Sold:
 Direct Labor and Related Costs                           462     346
 Products and Integration Service                         137   1,537
 Structured Wiring Labor and Materials                    205     229
 Broadband Services Costs                                 190     276
 Depreciation and Amortization                            285     114
 Other Manufacturing Costs                                 16     124
                                                      -------- -------
Total Costs of Goods Sold                               1,295   2,626
                                                      -------- -------
Gross Profit                                            1,102   1,992
                                                      -------- -------

Operating Expenses:
 Selling, General and Administrative:
  Salaries and Related Costs                              959   1,508
  Advertising and Promotion                                18      37
  Depreciation and Amortization                           319     153
  Other Support Costs                                   1,424     934
  Research and Development                                119      32
                                                      -------- -------
Total Operating Expenses                                2,839   2,664
                                                      -------- -------

Loss from Operations                                   (1,737)   (672)

Other Income/(Expenses)
 Interest income,                                           4       4
 Interest (expense)                                    (7,080)   (163)
 Gain on Sale of Marketable Securities                    352     ---
                                                      ----------------
Total Other Income (Expense)                           (6,724)   (159)
                                                      ----------------

Net Loss                                               (8,461)   (831)
                                                      ----------------

Other Comprehensive Loss:

Unrealized Holding Gain                                   309      13
                                                      -------- -------

Other Comprehensive Loss                              $(8,152)  $(818)
                                                      -------- -------
                                                      -------- -------

Net Loss per Common Share:
 Basic                                                 $(0.05) $(0.01)
 Diluted                                               $(0.05) $(0.01)
 Comprehensive Loss                                    $(0.05) $(0.01)

See accompanying notes to consolidated financial statements.



                                       4
<PAGE>



<TABLE>
<CAPTION>

                    EAGLE BROADBAND, INC., AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (in thousands)
                                  (Unaudited)


                                                                       Additional             Total
                                           Common Stock      Preferred  Paid In  Retained   Shareholders'
                                          Shares    Value      Stock    Capital  Earnings     Equity
                                          ---------------------------------------------------------------
<S>                                        <C>         <C>       <C>        <C>    <C>           <C>
Total Shareholders' Equity
   As of August 31, 2002                  73,051       $73       ---   $158,731  $(41,424)  $117,380
                                        ========= =========           ========== ========= ==========

Net Loss                                     ---       ---       ---        ---   (33,693)   (33,693)

New Stock Issued to Shareholders
 Services and Compensation                 7,437         7       ---      1,813       ---      1,820
 Property and Other Assets                14,938        15       ---      3,032       ---      3,047
 Retirement of Debt and Liabilities       50,816        51       ---     13,827       ---     13,878
 Employee Stock Option Plan                1,647         2       ---        180       ---        182

Syndication Costs                            ---       ---       ---       (368)      ---       (368)

Treasury Stock                              (442)       (1)      ---       (198)      ---       (199)

Unrealized Holding Loss                      ---       ---       ---        ---       (71)       (71)

Total Shareholders' Equity
   As of August 31, 2003                 147,447       147       ---    177,017   (75,188)   101,976
                                        ========= =========           ========== ========= ==========

Net Loss for the Three Months Ended
 November 30, 2003                           ---       ---       ---        ---    (8,461)    (8,461)

New Stock Issued to Shareholders
  Services and Compensation                3,354         4       ---      2,300       ---      2,304
 Property and Other Assets                                       ---                  ---
 Retirement of Debt and Liabilities       34,257        34       ---      6,033       ---      6,067
 Interest for Beneficial Conversion
  Value                                                          ---      6,912       ---      6,912

Syndication Costs                                                ---                  ---

Treasury Stock                                                   ---                  ---

Unrealized Holding Loss                                          ---                  309        309

                                        -------------------------------------------------------------
Total Shareholders' Equity
   As of November 30, 2003              $185,058      $185       ---   $192,262  $(83,340)  $109,107
                                        ========= =========           ========== ========= ==========

</TABLE>

See accompanying notes to consolidated financial statements.



                                       5
<PAGE>

<TABLE>
<CAPTION>

                     EAGLE BROADBAND, INC., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)



                                                                           For the Three Months
                                                                             ended November 30,
                                                                              2003        2002
                                                                              ----        ----
                                                                                (Unaudited)

  <S>                                                                         <C>          <C>
Cash Flows From Operating Activities
Net Loss                                                                    $(8,461)    $(831)
                                                                            ---------   ---------
Adjustments To Reconcile Net Loss to Net Cash
Used By Operating Activities:
   Interest for Beneficial Conversion Value                                   6,912        91
   Depreciation and Amortization                                                614       266
   Stock Issued for Services Rendered                                         2,304        54
    (Increase)/Decrease in Accounts Receivable                                 (390)      632
   (Increase)/Decrease in Inventories                                          (656)     (428)
   (Increase)/Decrease in Prepaid Expenses                                       17       (13)
   Increase/(Decrease) in Accounts Payable                                      279      (345)
   Increase/(Decrease) in Accrued Expenses                                   (1,109)     (146)
                                                                            ---------   ---------
     Total Adjustment                                                         7,971       111
                                                                            ---------   ---------

Net Cash Used by Operating Activities                                          (490)     (720)

Cash Flows From Investing Activities:
   (Purchase)/Disposal of Property and Equipment                                (94)   (1,471)
   (Increase) / Decrease in Investments                                        (163)      878
    (Increase)/Decrease in Deferred Costs                                       ---       (12)
    (Increase)/Decrease in Other Assets                                         (12)      ---
                                                                            ---------   ---------
Net Cash Used by Investing Activities                                          (268)     (605)
                                                                            ---------   ---------

Cash Flows From Financing Activities:
   Increase/(Decrease) in Notes Payable & Long-Term Debt                      5,608     1,579

Net Cash Provided By Financing Activities                                     5,608     1,579
                                                                            ---------   ---------

Net Increase/(Decrease) in Cash                                               5,012       254
                                                                            ---------   ---------

Cash At The Beginning of Period                                                 824     1,273
                                                                            ---------   ---------
Cash At the End Of Period                                                    $5,673    $1,527
                                                                            =========   =========

Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for
    Interest                                                            $       168  $     72
    Income Taxes                                                                ---       ---
</TABLE>



Supplemental  non-cash  investing  activities  (See  Note  21)  and  changes  in
shareholder's equity:

See accompanying notes to consolidated financial statements.


                                       6
<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003



NOTE 1 -  Basis of Presentation and Significant Accounting Policies:

          EagleBroadband,  Inc., (the Company or Eagle)  incorporated as a Texas
          corporation on May 24, 1993, and commenced  business in April of 1996.
          The  Company  is  a  supplier  of  broadband  products  and  services,
          providing   telecommunications   equipment   with  related   software,
          broadband  products,  and fiber and cable as used by service providers
          in the paging and other personal  communications  markets. The Company
          designs,  manufactures,  markets and services  its products  under the
          Eagle  Broadband,  Inc.,  and  BroadbandMagic  names.  These  products
          include transmitters,  receivers,  controllers,  software,  convergent
          set-top boxes,  fiber,  cable,  and other equipment used in commercial
          and personal  communications  systems and radio and telephone systems.
          Additionally,  the  Company  provides  cable  television,   telephone,
          security, Internet connectivity,  and related services under a bundled
          digital  services  package,  commonly  known as "BDS,"  through single
          source   billing.   Also   provided  is  last  mile  cable  and  fiber
          installation  services  as  well  as  comprehensive  IT  products  and
          services.

A)        Consolidation

          At November  30,  2003,  the  Company/s  subsidiaries  were:  Atlantic
          Pacific  Communications,  Inc. (APC) - operated as Eagle Communication
          Services;  Etoolz,  Inc.  (ETI);  Eagle Wireless  International,  Inc.
          (EWI);  ClearWorks.net,  Inc. (.NET); ClearWorks Communications,  Inc.
          (COMM) - operated as Eagle BDS Services; ClearWorks Home Systems, Inc.
          (HSI) -  operated  as Eagle  Residential  Structured  Wiring;  Contact
          Wireless,  Inc.  (CWI) -  operating  as  Eagle  Paging  Services;  DSS
          Security,  Inc., (DSS) - operated as Eagle Security  Services;  United
          Computing Group,  Inc. (UCG) - operated as Eagle Technology  Services;
          and  Link Two  Communications,  Inc.  (LINK  II) -  operated  as Eagle
          Messaging Services.  The consolidated financial statements include the
          accounts  of  the  Company  and  its  subsidiaries.   All  significant
          inter-company  transactions  and  balances  have  been  eliminated  in
          consolidation.

B)        Cash and Cash Equivalents


          The Company has $5,673,000  and $824,000 of cash and cash  equivalents
          invested in interest bearing accounts at November 30, 2003, and August
          31, 2003, respectively.


          The  Company  also has  securities  available  for sale  that  include
          1,095,000 shares of common stock of Burst.com,  146,085,264  shares of
          Celerity  Systems  common stock and $350,000  Celerity  Systems bonds.
          These common stock and bond  investments  have an aggregate cost basis
          of $1,075,000 and an aggregate fair market value of $1,876,850 and are
          included in the cash and cash  equivalents  category and are available
          for sale as of November 30, 2003.


C)        Property and Equipment


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

                                                                  Years
                                                                  -----
                  Head-End Facility and Fiber Infrastructure       20
                  Manufacturing Equipment                         3-7
                  Furniture and Fixtures                          2-7
                  Office Equipment                                 5
                  Leasehold Improvements                     Life of Lease
                  Property and Equipment                           5
                  Vehicles                                         5

          Expenditures for maintenance and repairs are charged against income as
          incurred  whereas  major  improvements  are  capitalized.  . Eagle has
          acquired all of its property and  equipment  with either cash or stock
          and has not capitalized any interest expenses in its capital assets.

D)        Inventories


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


                                       7
<PAGE>




                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003



                                          November 30,              August 31,
                                              2003                    2003
                                          -----------              ----------

               Raw Materials              $   2,910                  $  1,826
               Work in Process                  810                     1,237
               Finished Goods                   135                      136
                                          -----------              ----------
                                          $   3,855                  $ 3,199
                                          -----------              ----------

E)        Revenue Recognition

          The Company designs,  manufactures,  markets and services its products
          and  services  under  the  Eagle  Broadband,   Inc.;   BroadbandMagic;
          ClearWorks Communications,  Inc.; ClearWorks Home Systems, Inc.; Eagle
          Wireless International,  Inc., Atlantic Pacific Communications,  Inc.;
          Link Two  Communications,  Inc.; United Computing Group, Inc.; Contact
          Wireless, Inc.; and DSS Security, Inc., names.



          Eagle  adopted  EITF  00-21,   "Revenue   Arrangements  with  Multiple
          Deliverables,"  in the fourth  quarter of fiscal  2003.  The impact of
          adopting EITF 00-21 did not have a material  effect to Eagle's results
          of operations.  Eagle's contracts that contain multiple elements as of
          February 29, 2004,  or prior were  immaterial.  When  elements such as
          hardware,  software and consulting  services are contained in a single
          arrangement,  or in related arrangements with the same customer, Eagle
          allocates  revenue to each element  based on its relative  fair value,
          provided  that such  element  meets the  criteria  for  treatment as a
          separate  unit of  accounting.  The price  charged when the element is
          sold  separately  generally  determines  fair value. In the absence of
          fair value for a delivered  element,  Eagle allocates revenue first to
          the fair value of the undelivered  elements and allocates the residual
          revenue to the delivered elements. In the absence of fair value for an
          undelivered element, the arrangement is accounted for as a single unit
          of  accounting,  resulting in a delay of revenue  recognition  for the
          delivered elements until the undelivered elements are fulfilled. Eagle
          limits the amount of revenue recognition for delivered elements to the
          amount that is not  contingent  on the future  delivery of products or
          services or subject to customer-specified return or refund privileges.


          Deferred Revenues

          Revenues  that are billed in advance of services  being  completed are
          deferred  until the  conclusion of the period of the service for which
          the advance  billing  relates.  Deferred  revenues are included on the
          balance  sheet  as a  current  liability  under  the  heading  Accrued
          Expenses  until the service is performed  and then  recognized  in the
          period in which the service is completed.  Eagle's  deferred  revenues
          primarily consist of billings in advance for cable, internet, security
          and  telephone  services,  which  generally  are between one and three
          months of  services.  Eagle had  deferred  revenues  of  $442,000  and
          $156,000 as of November 30, 2003 and 2002, respectively.

          Eagle Wireless International, Inc.
          Eagle  designs,  manufactures  and  markets  transmitters,  receivers,
          controllers   and  software,   along  with  other  equipment  used  in
          commercial  and personal  communication  systems,  radio and telephone
          systems.  Revenues from these products are recognized when the product
          is  shipped.  Eagle's  Wireless  International  Product  revenues  are
          reported  under the  category  of  Products  on  Eagle's  Consolidated
          Statements of Operations  included as page F-4 of this report and also
          under the category Eagle within Note 22 - Industry Segments.

          BroadbandMagic
          BroadbandMagic  designs,   manufactures  and  markets  the  convergent
          set-top boxes.  Products are sent principally to commercial  customers
          for a  pre-sale  test  period  of  ninety  days.  Upon  the end of the
          pre-sale  test  period,  the  customer  either  returns the product or
          accepts  the  product,  at which time Eagle  recognizes  the  revenue.
          Eagle's  Broadband  Multimedia  and  Internet  Products  revenues  are
          reported  under the  category  of  Products  on  Eagle's  Consolidated
          Statements of Operations  included as page F-4 of this report and also
          under the category Eagle within Note 22 - Industry  Segments.  Revenue
          from   software   consists   of  software   licensing.   There  is  no
          post-contract  customer support.  Software revenue is allocated to the
          license  using  vendor  specific  objective  evidence  of  fair  value
          ("VSOE") or, in the absence of VSOE,  the residual  method.  The price
          charged when the element is sold separately generally determines VSOE.
          In the absence of VSOE of a delivered element, Eagle allocates revenue
          to the fair value of the undelivered elements and the residual revenue
          to the  delivered  elements.  Eagle  recognizes  revenue  allocated to
          software licenses at the inception of the license.

          Eagle Broadband, Inc.
          Eagle  Broadband,   Inc.,   engages   independent   agents  for  sales
          principally in foreign countries and certain geographic regions in the
          United  States.  Under  the  terms of these  one-year  agreements  the
          distributor or sales agents  provide the companies with  manufacturing
          business sales leads.  The  transactions  from these  distributors and
          agents  are   subject  to  Eagle's   approval   prior  to  sale.  The
          distributorship  or  sales  agent  receives  commissions  based on the
          amount of the sales invoice from the  companies to the  customer.  The
          sale is  recognized  at the time of  shipment to the  customer.  These
          sales agents and distributors  are not a significant  portion of total
          sales  in  any of  the  periods  presented.  Eagle's  Broadband,  Inc.
          revenues  are  reported  under the  category  of  Products  on Eagle's
          Consolidated  Statements  of  Operations  included as page F-4 of this
          report and also under the  category  Eagle  within  Note 22 -'
          Industry Segments.


                                       8
<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


         Eagle BDS Services - dba ClearWorks Communications, Inc.
         ClearWorks Communications,  Inc., provides Bundled Digital Services to
         business and  residential  customers,  primarily in the Texas  market.
         Revenue is  derived  from fees  charged  for the  delivery  of Bundled
         Digital Services, which includes telephone,  long distance,  internet,
         security  monitoring and cable services.  This  subsidiary  recognizes
         revenue and the related  costs at the time the  services  are rendered
         Installation  fees are recognized  upon the completion and acceptance.
         Eagle's BDS  Services  revenues  are  reported  under the  category of
         Broadband  Services on Eagle's  Consolidated  Statements of Operations
         included  as page F-4 of this  report  and  also  under  the  category
         EBS/DSS within Note 22 - Industry Segments.

         Eagle Residential Structured Wiring - dba ClearWorks Home Systems, Inc.
         ClearWorks Home Systems,  Inc., sells and installs  structured wiring,
         audio and  visual  components  to homes.  This  subsidiary  recognizes
         revenue and the related costs at the time the services are  performed.
         Revenue is derived from the billing of structured  wiring to homes and
         the sale of audio and visual  components  to the  homebuyers.  Eagle's
         Residential Structured Wiring revenues are reported under the category
         of Structured Wiring on Eagle's Consolidated  Statements of Operations
         included  as page F-4 of this  report  and  also  under  the  category
         APC/HSI within Note 22 - Industry Segments.

         Eagle Communication Services - dba Atlantic Pacific Communications,
         Inc.
         Atlantic Pacific  Communications,  Inc.,  provides  project  planning,
         installation,  project management,  testing and documentation of fiber
         and cable to commercial and industrial  clients  throughout the United
         States. The revenue from the fiber and cable installation and services
         is recognized  upon  percentage  of  completion  of the project.  Most
         projects  are  completed in less than one month,  therefore,  matching
         revenue  and expense in the period  incurred.  Service,  training  and
         extended  warranty  contract  revenues are  recognized as services are
         completed. Eagle's Communications Services revenues are reported under
         the category of Structured Wiring on Eagle's  Consolidated  Statements
         of  Operations  included as page F-4 of this report and also under the
         category APC/HSI within Note 22 - Industry Segments.

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

         Eagle Messaging Services - dba Link Two Communications, Inc.
         Link  Two  Communications,  Inc.,  provides  customers  with  one- and
         two-way messaging systems. The revenue from the sale of these products
         is recognized at the time the services are provided. Eagle's Messaging
         Services  revenues are reported under the category of Other on Eagle's
         Consolidated  Statements  of  Operations  included as page F-4 of this
         report and also under the  category  Eagle  within  Note 22 - Industry
         Segments.

         Eagle Paging Services - dba Contact Wireless, Inc.
         Contact  Wireless,  Inc.,  provides  customers  with paging and mobile
         telephone products and related monthly services.  Revenue from product
         sales is  recorded  at the time of  shipment.  Revenue  for the mobile
         phone and paging service is billed monthly as the service is provided.
         Eagle's  Paging  Services  revenues are reported under the category of
         Other on Eagle's  Consolidated  Statements of  Operations  included as
         page F-4 of this report and also under the category  Other within Note
         22 - Industry Segments.

         Eagle Security Services - dba DSS Security, Inc.
         DSS Security,  Inc.,  provides monthly security monitoring services to
         residential  customers.  The  customers  are  billed  three  months in
         advance of service  usage.  The  revenues  are deferred at the time of
         billing and ratably  recognized over the prepayment  period as service
         is provided.  Installation fees are recognized upon the completion and
         acceptance.  Eagle's Security Services revenues are reported under the
         category of Broadband Services on Eagle's  Consolidated  Statements of
         Operations  included  as page F-4 of this  report  and also  under the
         category EBS/DSS within Note 22 - Industry Segments.

         Eagle Technology Services - dba United Computing Group, Inc.
         United Computing Group, Inc., provides  business-to-business  hardware
         and software network solutions and network  monitoring  services.  The
         revenue from the hardware and software sales is recognized at the time
         of shipment.  The monitoring services  recognition policy is to record
         revenue on completion..  Eagle's Technology  Services product revenues
         are  reported  under the  category of  "Products"  while the  services
         components  are  reported  under  the  category   "Other"  on  Eagle's
         Consolidated  Statements  of  Operations  included as page F-4 of this
         report  and also  under the  category  UCG  within  Note 22 - Industry
         Segments.


                                       9
<PAGE>

                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


F)        Research and Development Costs

          For the three  months ended  November  30, 2003 and 2002,  the Company
          performed  research and development  activities for internal  projects
          related to its Orb'Phone Exchange, convergent set-top boxes as well as
          its multi-media  entertainment centers. Research and development costs
          of $119,000  and $32,000  were  expensed  for the three  months  ended
          November 30, 2003 and 2002, respectively.

          No  research  and  development  services  were  performed  for outside
          parties for the three months ended November 30, 2003 and 2002.

G)        Income Taxes

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

H)        Net Earnings Per Common Share

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

                                                      November 30, August 31,
                                                         2003        2003
                                                      -----------  ----------

           Weighted Average Number of Common
             Shares Outstanding Including

           Primary Common Stock Equivalents              159,696      95,465
           Fully Dilutive Common Stock Equivalents       159,696      95,465


I)        Impairment of Long-Lived Assets and Goodwill

          Our long-lived  assets include  predominantly  goodwill.  Statement of
          Financial  Accounting Standards No. 142 "Goodwill and Other Intangible
          Assets"  ("SFAS 142")  requires that goodwill and intangible assets be
          tested for impairment at the reporting unit level  (operating  segment
          or one  level  below an  operating  segment)  on an  annual  basis and
          between  annual  tests in certain  circumstances.  Application  of the
          goodwill   impairment   test   requires   judgment,    including   the
          identification of reporting units, assigning assets and liabilities to
          reporting units, assigning goodwill and intangible assets to reporting
          units,  and  determining  the  fair  value  of  each  reporting  unit.
          Significant judgments required to estimate the fair value of reporting
          units include  estimating future cash flows,  determining  appropriate
          discount rates and other  assumptions.  Changes in these estimates and
          assumptions  could materially  affect the  determination of fair value
          for each reporting unit.

          The  intangible  assets  primarily  are the Company  rights to deliver
          bundled  digital   services  such  as,  Internet,   telephone,   cable
          television  and  security   monitoring  services  to  residential  and
          business users.  The Company assessed the fair value of the intangible
          assets.  There were a number of  significant  and complex  assumptions
          used in the calculation of the fair value of the intangible assets. If
          any of these assumptions  prove to be incorrect,  the Company could be
          required to record a material impairment to its intangible assets. The
          assumptions  include  significant  market  penetration  in its current
          markets under contract and significant  market  penetration in markets
          where they are currently negotiating contracts.

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


                                       10
<PAGE>

                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


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

          At August 31, 2002,  Eagle  determined  that an impairment of Link Two
          paging network  equipment and nationwide  licenses  existed.  Link Two
          Communications   competes  with  many  established  companies  in  the
          nationwide  one  and  two-way  messaging  services  area.  The  paging
          industry  has  declined  over  the  past  year  and the  major  paging
          companies   have   undergone    significant    beneficial    financial
          restructurings. These companies are able to offer products and related
          services  at more  favorable  rates than Link Two.  Because the paging
          industry  and related  financial  credit  availability  from banks for
          financing  emerging  nationwide  networks has been  declining over the
          last year, Link Two has been unable to obtain  significant  funding to
          expand  and  provide  cost   effective   service  to  its   customers.
          Accordingly,  Link  Two  has  had  to  curtail  its  development  on a
          nationwide  basis and  restricted  its operations to serve the Houston
          and Dallas,  Texas,  markets.  The equipment  servicing the nationwide
          network  has been  inactive  and is being  dismantled.  The  equipment
          servicing the nationwide  network is inactive and has been impaired as
          well as the value of the related  FCC  licenses.  At August 31,  2002,
          management  estimated  through  recent sales of equipment and industry
          pricing of FCC licenses that an impairment  charge of $27,100,000  was
          necessary to reflect the ongoing value of its assets and licenses.

          At August 31, 2003,  management  determined that a $7,611,000 non-cash
          impairment charge was necessary  against realigned  operations and the
          discontinued  sale of low margin commodity  products,  residential and
          commercial  structured  wiring  operations and the withdrawal from its
          Austin  area  BDS  development  based on the  lack of  demand  for BDS
          services  resulting  from a slower build out of the  development  than
          originally  projected in  conjunction  with local market  competition.
          Included in the impairment  was the write down of goodwill  associated
          with the Comtel acquisition of $1,878,000.

          As of November 30, 2003, no impairment existed.

J)        Intangible Assets

          Goodwill  represents the excess of the cost of companies acquired over
          the fair  value of their net  assets at the dates of  acquisition  and
          were being amortized using the  straight-line  method over twenty (20)
          years for Atlantic Pacific Communications,  Inc., and twenty-five (25)
          years for Bundled Digital Services through June 30, 2001.

          Other  intangible  assets  consist of licenses and permits,  which are
          being  amortized using the  straight-line  method over their estimated
          useful  life of  twenty  (20)  years.  Eagle's  licenses  include  FCC
          licenses for designated narrowband personal  communications  services,
          radio  frequencies  or  spectrum  to service  providers.  Prior to the
          adoption of FAS 142, Eagle amortized these licenses using the straight
          line  method  over  twenty  years.  At  August  31,  2002,  management
          estimated  through  recent sales of equipment and industry  pricing of
          FCC licenses that an impairment charge of $27,100,000 was necessary to
          reflect the ongoing value of its assets and licenses;  thereby leaving
          an unamortized  balance of licenses on its books of $1,267,365.  Eagle
          does not maintain that these  licenses have an  indefinite  life,  but
          rather has ceased  amortizing  the remaining  balance of $1,267,365 as
          management  believes that this balance represents the salvage value of
          such  assets.   Eagle,   to  date,  has  maintained  all   operational
          requirements to keep its licenses current,  and periodically  assesses
          both  future  operating  requirements  as well as the  salvage of such
          assets.

          Goodwill is carried at cost less accumulated amortization.  Intangible
          assets were amortized on a straight-line basis over the economic lives
          of the respective assets, generally ten to twenty-five years. Prior to
          July  1,  2001,  goodwill  was  amortized  over  20 to 25  years.  The
          Company's  adoption of SFAS 142 eliminated the requirement to amortize
          goodwill  subsequent to the fiscal year ending August 31, 2001.  Under
          the  provisions  of SFAS 142, the Company is required to  periodically
          assess the  carrying  value of  goodwill  associated  with each of its
          distinct  business  units that  comprise its business  segments of the
          Company to determine if impairment  in value has occurred.  Impairment
          tests  completed  as of August 31, 2002 and August 31, 2001  concluded
          that the carrying  amount of goodwill for each acquired  business unit
          did not  exceed  its  net  realizable  value  based  on the  Company's
          estimate of expected future cash flows to be generated by its business
          units, except as described above in Note 1, I. The Company updated its
          assessment  as of  August  31,  2003  and  concluded  that  based on a
          valuation   model   incorporating   expected   future  cash  flows  in
          consideration  of  historical  cash  flows  and  results  to date,  no
          impairment charge was necessary.


                                       11
<PAGE>

                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


          Goodwill and other intangibles of $82,176,000 net of prior impairments
          and  amortization  were  recorded  under the  purchase  method for the
          purchases  of  ClearWorks.net,   Inc.,  Atlantic  Pacific,  Inc.,  DSS
          Security,  Inc., Contact Wireless, Inc., and Comtel, Inc. The majority
          of the intangibles  were from the ClearWorks  acquisition.  ClearWorks
          was  in  the  business  of  selling  telecommunications   services  to
          residential  neighborhoods.  In fiscal  2003,  Eagle  realized  it had
          failed to successfully  achieve profits using the ClearWorks  model of
          installing  fiber optic cable to  neighborhoods  under the speculative
          attempt to capture enough  individual  homeowners in each neighborhood
          via individual selling methods to pay for the cable infrastructure. In
          early 2003,  Eagle  modified  its  strategy to deliver the  ClearWorks
          developed  bundled  digital  services  approach  including   Internet,
          telephone,  cable  television  and  security  monitoring  services  to
          residential   and   business   users  by   targeting   municipalities,
          homebuilders and residential  real estate  developers that finance and
          install the fiber  optic  cable  backbone in every lot and offer Eagle
          exclusive  rights to deliver digital  bundled  services to homeowners,
          using  pre-selling  promotions  and  other  low  cost  mass  marketing
          techniques. In October 2003, Eagle hired a new Chief Executive Officer
          with an extensive  sales and  marketing  background  and proven senior
          management  and  operational  skills  leading  high-growth  technology
          companies to implement its modified strategy.  As of December 5, 2003,
          the date of the auditor's  report for the fiscal year ended August 31,
          2003, Eagle had realized  several initial  successes in projects where
          the municipalities, public utility districts and developers assume the
          predominate  capital cost  responsibility  and contract  with Eagle to
          provide the services and content;  thereby significantly  limiting the
          Company's capital outlays on such projects.

          Eagle assessed the fair value of the intangible  assets as of November
          30,  2003 and  concluded  that the  goodwill  valuation  remains at an
          amount greater than the current carrying value.

          There were a number of significant and complex assumptions used in the
          calculation  of the  fair  value  of  the  goodwill.  If any of  these
          assumptions prove to be incorrect, Eagle could be required to record a
          material   impairment  to  its  goodwill.   The  assumptions   include
          significant  market  penetration in its current markets under contract
          and significant market penetration in markets where they are currently
          negotiating contracts.

K)        Advertising Costs

          Advertising  costs have been capitalized and amortized on the basis of
          contractual  agreements  entered into by the Company.  These contracts
          are amortized over the life of the individual contracts or expensed in
          the period incurred. For the three months ended November 30, 2003, the
          Company has expensed $18,000 where $0 in costs has been deferred.

          For the three  months  ended,  November  30,  2002,  the  Company  has
          expensed $37,000 whereas $0 in costs has been deferred.

L)        Deferred Syndication Costs

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

M)        Use of Estimates

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

N)        Marketable Securities


          Eagle holds minority equity investments in companies having operations
          or technology in areas within Eagle's  strategic focus.  Eagle applies
          the equity method of accounting  for minority  investments  when Eagle
          has the ability to exert significant  influence over the operating and
          financial  policies of an investment.  In the absence of such ability,
          Eagle accounts for these minority  investments  under the cost method.
          Certain  investments  carry  restrictions  on  immediate  disposition.
          Investments in public  companies  (excluding those accounted for under
          the  equity  method)  with  restrictions  of less  than  one  year are
          classified as available-for-sale and are adjusted to their fair market
          value with  unrealized  gains and  losses,  net of tax,  recorded as a
          component of accumulated other comprehensive  income. Upon disposition
          of these investments,  the specific  identification  method is used to
          determine the cost basis in computing realized gains or losses,  which
          are reported in other  income and expense.  Declines in value that are
          judged to be other than  temporary  are  reported in other  income and
          expense.


O)       Other Comprehensive Income

          In 1997, the Financial  Accounting Standards Board issued Statement of
          Financial Accounting Standards No. 130, "Other Comprehensive  Income,"
          effective for fiscal years  beginning  after  December 15, 1997.  This
          statement  considers the presentation of unrealized  holding gains and
          losses  attributable  to debt  and  equity  securities  classified  as
          available-for-sale.  As stated, any unrealized holding gains or losses
          affiliated to these  securities are carried below net income under the
          caption  "Other  Comprehensive  Income."  For the three  months  ended
          November 30, 2003 and 2002, the Company recorded a comprehensive  gain
          of $309,000 and $13,000, respectively.



                                       12
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


P)        Beneficial Conversion Values

          Beneficial  conversion values are calculated at the difference between
          the conversion price and the fair value of the common stock into which
          the debt is convertible, multiplied by the number of shares into which
          the debt is convertible. The beneficial conversion value is charged to
          interest  expense  because  the  debt is  convertible  at the  date of
          issuance. The value is limited to the total proceeds received.

Q)        Reclassification

          The Company has reclassified certain assets costs and expenses for the
          three months ended  November 30, 2002 to facilitate  comparison to the
          three months ended November 30, 2003.

R)        Recent Pronouncements

          In July  2002,  the FASB  issued  Statement  of  Financial  Accounting
          Standards No. 146 ("SFAS 146"),  "Accounting for Costs Associated with
          Exit or Disposal  Activities,"  which  nullifies  EITF Issue No. 94-3,
          "Liability  Recognition for Certain Employee  Termination Benefits and
          Other Costs to Exit an Activity (including Certain Costs Incurred in a
          Restructuring)." SFAS 146 requires that costs associated with an exit
          or disposal activity be recognized only when the liability is incurred
          (that is, when it meets the  definition  of a liability  in the FASB's
          conceptual  framework). SFAS  146 also  establishes fair value as the
          objective for initial  measurement of  liabilities  related to exit or
          disposal  activities. SFAS  146 is  effective  for  exit or  disposal
          activities  that are initiated after December 31,  2002. The  Company
          adopted SFAS in the first quarter of fiscal 2003.

          In  November  2002,  the FASB issued  Interpretation  No. 45 (FIN 45),
          "Guarantor's  Accounting and Disclosure  Requirements  for Guarantees,
          Including Indirect Guarantees of Indebtedness of Others." For certain
          guarantees issued after December 31, 2002, FIN 45 requires a guarantor
          to recognize,  upon issuance of a guarantee,  a liability for the fair
          value of the  obligations it assumes under the  guarantee. Guarantees
          issued  prior  to  January  1,  2003,  are not  subject  to  liability
          recognition, but are subject to expanded disclosure requirements. The
          Company does not believe that the adoption of this  Interpretation has
          had a  material  effect  on its  consolidated  financial  position  or
          statement of operations.

          In  January  2003,  FASB  issued  Interpretation  No. 46 (FIN 46),  an
          interpretation of Accounting  Research Bulletin No. 51, which requires
          the Company to consolidate  variable interest entities for which it is
          deemed to be the primary  beneficiary and disclose  information  about
          variable  interest  entities  in which it has a  significant  variable
          interest.  FIN  46 became effective  immediately for variable interest
          entities  formed  after  January  31, 2003 and  effective  for periods
          ending after  December 15, 2003,  for any variable  interest  entities
          formed prior to February 1,  2003.  The  Company does not believe that
          this  Interpretation  will have a material impact on its  consolidated
          financial statements.

          In April  2002,  the FASB issued  Statement  of  Financial  Accounting
          Standards No. 145 ("SFAS 145"),  "Rescission of FASB Statements No. 4,
          44  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
          Corrections,"  which requires that the  extinguishment  of debt not be
          considered an extraordinary  item under APB Opinion No. 30 ("APB 30"),
          "Reporting the Results of Operations-Reporting the Effects of Disposal
          of a Segment of Business, and Extraordinary,  Unusual and Infrequently
          Occurring  Events and  Transactions,"  unless the debt  extinguishment
          meets the "unusual in nature and infrequent of occurrence" criteria in
          APB 30.  SFAS 145 is effective  for fiscal years  beginning  after May
          15, 2002, and, upon adoption,  companies must reclassify  prior period
          items that do not meet the extraordinary item classification  criteria
          in APB  30. The  Company  adopted  SFAS 145 and  related  rules as of
          August 31, 2002. The  adoption  of  SFAS  145 had no  effect  on the
          Company's financial position or results of operations.

          In May  2003,  the  FASB  issued  Statement  of  Financial  Accounting
          Standards  No. 150 ("SFAS  150"),  "Accounting  for Certain  Financial
          Instruments   with    Characteristics    of   both   Liabilities   and
          Equity." This  Statement  establishes  standards  for  how an  issuer
          classifies   and   measures   certain   financial   instruments   with
          characteristics  of both liabilities and equity. It  requires that an
          issuer  classify a financial  instrument that is within its scope as a
          liability (or an asset in some circumstances). The provisions of this
          Statement  are effective  for  financial  instruments  entered into or
          modified  after May 31,  2003,  and  otherwise  are  effective  at the
          beginning  of the  first  interim  period  beginning  after  June  15,
          2003. The  adoption of this  Statement  did not have an impact on the
          Company's financial results of operations and financial position.

          In April 2003,  the FASB issued SFAS No. 149,  "Amendment of Statement
          133 on Derivative  Instruments and Hedging  Activities,"  which amends
          and  clarifies   financial   accounting   and   reporting   derivative
          instruments,  including  certain  derivative  instruments  embedded in
          other  contracts  and for  hedging  activities  under  SFAS  No.  133,
          "Accounting for Derivative Instruments and Hedging  Activities." This
          statement is effective for contracts  entered into or modified and for
          hedging relationships designated after June 30, 2003. The adoption of
          this  statement  did not have an  impact  on the  Company's  operating
          results or financial position.


                                       13
<PAGE>


S)        Product Warranties

          The Company warrants its products against defects in design, materials
          and workmanship  generally for six months to a year.  Other warranties
          from our vendors which are  incorporated in our products are passed on
          to the customer at the completion of the sale. Provision for estimated
          warranty  costs is made in the  period  in  which  such  costs  become
          probable.  Historically,  Eagle has not incurred any material warranty
          costs  and,  accordingly,  Eagle has not  accrued  for these  costs at
          November 30, 2003 and 2002.  Eagle  provides for the estimated cost of
          product warranties at the time it recognizes revenue. Eagle engages in
          product quality programs and processes,  including actively monitoring
          and  evaluating  the  quality  of its  component  suppliers;  however,
          ongoing  product  failure rates,  material usage and service  delivery
          costs  incurred in correcting a product  failure,  as well as specific
          product class failures outside of Eagle's baseline experience,  affect
          the estimated  warranty  obligation.  If actual product failure rates,
          material  usage or  service  delivery  costs  differ  from  estimates,
          revisions to the estimated warranty liability would be required.

NOTE 2 - Accounts Receivable:

           Accounts receivable consist of the following, in thousands:

                                                   November 30,   August 31,
                                                      2003           2003
                                                   -----------    -----------
           Accounts Receivable                  $       2,724  $     2,116
           Allowance for Doubtful Accounts              (322)        (412)
                                                   -----------    -----------
           Net Accounts Receivable              $       2,402  $     1,704
                                                   ===========    ===========

NOTE 3 - Property, Plant & Equipment and Intangible Assets:

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

                                                    November 30,  August 31,
                                                      2003           2003
                                                   -----------    ------------
           Automobile                           $         143  $       143
           Head-End Facility and Fiber
            Infrastructure                             26,548       26,688
           Furniture & Fixtures                           560          565
           Leasehold Improvements                         122          122
           Office Equipment                               766          979
           Property, Manufacturing &
            Equipment                                   8,436        7,925
                                                   -----------    ------------
               Total Property, Plant & Equipment       36,575       36,422
                  Less: Accumulated Depreciation       (6,302)      (5,689)
                                                   -----------    ------------
               Net Property, Plant & Equipment  $      30,273  $    30,733
                                                   ===========    ============


          Eagle  expenses  repairs and  maintenance  against  income as incurred
          whereas  major  improvements  are  capitalized.  Eagle  defines  major
          improvements  as those  assets  acquired  that  extend the life of the
          underlying  base asset while defining other  improvements  that do not
          extend the life as repairs and maintenance. Eagle expensed repairs and
          maintenance  of $9,000 and $11,000 for the three years ended  November
          30,  2003  and  2002,  respectively,  whereas  it  did  not  have  any
          capitalized major improvements for the same time periods.

          Eagle's headend facility and fiber infrastructure consist primarily of
          digital  computing  and  telecommunications  equipment  that  comprise
          Eagle's main headend  facility at it  headquarters,  wireless  headend
          equipment,  a digital  headend  facility  and a fiber  backbone in the
          master  planned  communities  in which it  operates  and a fiber  ring
          connecting the various master planned communities in the Houston area.
          These  fiber and  headend  infrastructures  are  similar to those that
          would exist in a major telecommunications or cable television provider
          that offers  digital  services for internet,  cable TV,  telephone and
          security  monitoring  services.  Eagle  determined  that a twenty-year
          straight  line  depreciation  method is  appropriate  for its  Headend
          Facility  and Fiber  Infrastructure  based on industry  standards  for
          these asset types...


                                       14
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003



          Components of intangible assets are as follows, in thousands:

<TABLE>
<CAPTION>


                                                          November 30,       August 31,
                                                             2003              2003
                                                          -----------      ------------
             <S>                                              <C>              <C>
             Goodwill, gross value                   $        80,551  $         80,551
             Licenses & Permits                                5,330             5,330
                                                          -----------      ------------
                 Total Intangible Assets                      85,881            85,881
                    Less: Accumulated Amortization           (4,278)           (4,278)
                                                          -----------      ------------
                 Net Intangible Assets               $        81,603  $         81,603
                                                          ===========      ============

</TABLE>

          The changes in the  carrying  amount of goodwill,  net of  accumulated
          amortization  for the twelve  months  ended  November  30, 2003 are as
          follows (in thousands):

<TABLE>
<CAPTION>

                                              Eagle          Other          Total
              <S>                                  <C>             <C>             <C>
             Balance at August 31, 2003    $       74,711   $       1,562  $      76,273
             Acquisitions and other (1)                 0               0             0
             Balance at August 31, 2003    $       74,711   $       1,562  $      76,273
</TABLE>

NOTE 4  - Business Combinations:

          Effective  January 1, 2002, the Company  acquired DSS Security,  Inc.,
          and Contact  Wireless  in a business  combination  accounted  for as a
          purchase. DSS Security, Inc., provides security monitoring to business
          and residential customers.  Contact Wireless sells and services mobile
          phones and one- and two-way messaging  devices.  The Company paid cash
          of $450,000 and issued a  short-term  note payable of $130,000 for the
          assets of Contact  Wireless  for a total  purchase  price of $580,000.
          Additionally, the Company acquired DSS Security, Inc., for $2,002,147.
          In this transaction, the Company issued 2,002,147 shares of its common
          stock with a guaranteed value of $1 per share.  The Company  allocated
          $51,595 to the fair value of the property and equipment and $1,950,552
          in goodwill. The allocation of the purchase price is based on the fair
          value of the  assets  acquired  based on  management's  estimates  and
          existing  contracts.  At November 30, 2002, the Company had an accrual
          for  $921,000  for the portion of the  purchase  that  represents  the
          difference  between  purchase  price and market value of the Company's
          common stock on the date of purchase.

NOTE 5 -  Notes Payable:

          The  following  table  lists  the  Company's  note  obligations  as of
          November 30, 2003, and August 31, 2003, in thousands:

<TABLE>
<CAPTION>

                                                      Annual
                                                     Interest                      November 30,  August 31,
                                                       Rate           Due Date          2003         2003
                                                 ------------------------------------------------------------
                <S>                                  <C>               <C>                   <C>          <C>
              Vehicles                                Various         Various        $        4  $          4
              5% Convertible Debenture (Note 9)       5.0%            Demand                 ---        1,200
              Tail Wind Convertible Debenture         2.0%            Demand               1,595        1,595
              Notes Payable - Investor Group          10.0%           October                ---          900
                                                                       2003
              Notes Payable - Q Series Bonds          12.0%           Various              5,275        1,363
              Other                                   Various         Various                313          717

                                                                                     -----------  -----------
              Total notes payable                                                    $    7,187  $     5,779
                                                                                     -----------  -----------
              Less current portion                                                         7,187        5,779
                                                                                     -----------  -----------
              Total long-term debt                                                   $      ---  $       ---
                                                                                     ===========  ===========
</TABLE>

NOTE 6 -  Line of Credit:

          During the first quarter of fiscal 2002, APC entered into a new credit
          facility  with  SWBT to  provide  working  capital  and  fund  ongoing
          operations.  The new credit  facility is a purchase and sale agreement
          against accounts receivable,  provides for borrowings up to $1,000,000
          based on eligible  accounts  receivable and is secured by APC accounts
          receivable  and guaranteed by Eagle  Broadband,  Inc. As of August 31,
          2003,  APC reduced its accounts  receivable by $198,851 to reflect the
          gross sale of $360,003 to SWBT less  $161,851 of reserves held by SWBT
          against such  purchases.  During the first quarter of fiscal 2004, APC
          repaid and  canceled  the line of credit in full to SWBT in  September
          2003.



                                       15
<PAGE>

                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


          During July 2002,  UCG entered into a credit  facility with  Southwest
          Bank of Texas (SWBT) to provide working capital,  repay the IBM credit
          line  and  fund  ongoing  operations.  The new  credit  facility  is a
          purchase and sale agreement against accounts receivable,  provides for
          borrowings up to $3,000,000 based on eligible accounts  receivable and
          is  secured  by  UCG  accounts  receivable  and  guaranteed  by  Eagle
          Broadband,  Inc.  As of August 31,  2003,  UCG  reduced  its  accounts
          receivable  by $44,799  to  reflect  the gross sale of $52,210 to SWBT
          less $7,832 of reserves  held by SWBT against such  purchases.  During
          the first quarter of fiscal 2004,  APC repaid and canceled the line of
          credit in full to SWBT in September 2003.

NOTE 7 -  Convertible Debentures:

          During October 2002, the Company entered into a $3,000,000 convertible
          debenture  agreement with Cornell Capital Partners,  LP (CCP).  During
          the three month period ended November 30, 2003, the principal  balance
          of the debenture was repaid,  although a lawsuit remains outstanding -
          see Legal Proceedings.

          During  2001,  the Company  acquired  ClearWorks.net,  Inc.,  and as a
          result,  ClearWorks is a wholly owned  subsidiary  of Eagle.  Link Two
          Communications,  Inc., is a subsidiary of ClearWorks. Link Two entered
          an  agreement  with The Tail Wind Fund  Ltd.,  under  which  Tail Wind
          purchased from Link Two a 2% convertible note in the initial amount of
          $5,000,000.  As a result of the acquisition,  Eagle the parent of Link
          Two, has guaranteed the Link Two notes issued to Tail Wind and allowed
          Tail Wind to convert the above  mentioned debt into Eagle common stock
          and warrants at various rates. At August 31, 2002, Eagle and Tail Wind
          were  renegotiating  the terms of this note. At November 30, 2003, the
          Company owes Tail Wind $1,595,000 plus accrued  interest.  The Company
          is currently  negotiating the settlement of this debt and has recorded
          the entire debt as a current note payable.

NOTE 8 -  Securities Held for Resale:

          As discussed in Note 1, the Company adopted the provisions of SFAS No.
          115,   "Accounting   for  Certain   Investments  in  Debt  and  Equity
          Securities"  and SFAS No.  130,  "Accounting  for Other  Comprehensive
          Income." At November 30, 2003, all of the Company's  marketable equity
          securities  are classified as  available-for-sale;  they were acquired
          with the intent to dispose of them within the next year.


          Securities available for sale include 1,095,000 shares of common stock
          of Burst.com,  146,085,264 shares of Celerity Systems common stock and
          $350,000   Celerity  Systems  Bonds.   These  common  stock  and  bond
          investments  have  an  aggregate  cost  basis  of  $1,075,000  and  an
          aggregate  fair market  value of  $1,876,850  and are  included in the
          Balance Sheet Category of Securities Available for Sale as of November
          30, 2003.


NOTE 9 -  Income Taxes:

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

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

                                                      November 30,   August 31,
                                                           2003        2003
                                                            %          %
               U.S. Federal Statutory Tax Rate              34          34
               U.S. Valuation Difference                  (34)         (34)
               Effective U.S. Tax Rate                       0           0
               Foreign Tax Valuation                         0           0
               Effective Tax Rate                            0           0

          Income tax expense  (benefit)  attributable  to income from continuing
          operations  differed  from the  amounts  computed  by  apply  the U.S.
          Federal  income  tax  rate of 34% to  pretax  income  from  continuing
          operations as a result of the following: (in thousands)


                                       16
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


                                                      November 30,    August 31,
                                                        2003            2002
                                                      ---------       ---------
                  Computed expected tax benefit     $   (2,877)      $ (11,456)
                  Increase in valuation allowance        2,877          11,456
                                                      ---------       ---------
                                                    $      ---       $     ---
                                                      =========       =========

          The tax effects of temporary differences that give rise to significant
          portions of the deferred tax assets and  deferred tax  liabilities  at
          November  30, 2003,  and August 31,  2003,  are  presented  below,  in
          thousands,   and  include  the  balances  of  the   acquired   company
          ClearWorks.Net.

                                                      November 30,    August 31,
                                                        2003            2003
                                                      ---------       ---------
                  Deferred tax assets:
                  Accounts receivable,
                   principally due
                  to allowance for doubtful
                    accounts                        $      ---       $     ---

                  Net operating loss carry-forwards     38,380           35,503
                  Less valuation allowance             (38,380)         (35,503)
                                                      ---------       ---------
                  Net deferred tax assets                  ---             ---

                  Deferred tax liabilities:
                  Differences in depreciation              ---             ---
                                                      ---------       ---------
                  Net deferred tax liabilities      $      ---       $     ---
                                                      =========       =========

          The valuation  allowance for deferred tax assets of November 31, 2003,
          and August 31, 2003, was $38,380,000 and $35,503,000, respectively. At
          November 30, 2003, the Company has net operating  loss  carry-forwards
          of $112,881,588,  which are available to offset future federal taxable
          income, if any, with expirations from 2020 to 2021.

NOTE 10 - Issuance of Common Stock:

          For the three months  ended  November  30,  2003,  the Company  issued
          shares of common stock.  The following table  summarizes the shares of
          common stock issued, in thousands.

             Shares Outstanding August 31, 2003                         147,447
                                                               ----------------
             Shares issued for Retirement of Debt
                and Liabilities                                          34,257
             Shares  issued for  Services,  Compensation,
                Property and                                              3,354
             Other Assets
                                                                ----------------
                  Shares Outstanding November 30, 2003                  185,058
                                                                ================

NOTE 11 - Preferred Stock, Stock Options and Warrants:

          In July 1996, the Board of Directors and majority shareholders adopted
          an employee  stock  option plan under which  400,000  shares of Common
          Stock have been reserved for issuance.  Since that time,  the Board of
          Directors have amended the July 1996, employee stock option plan under
          which  1,000,000  shares  of  Common  Stock  have  been  reserved  for
          issuance.  As of November  30, 2003,  options to purchase  402,678 are
          outstanding and 551,370 are available to be issued.

          The Company has issued (or has acquired through its  acquisitions) and
          has  outstanding  the  following  warrants  which  have  not yet  been
          exercised at November 30, 2003:

          50,000 stock  purchase  options issued to L.A.  Delmonico  Consulting,
          Inc.,  expiring April 4, 2005. The warrants are to purchase fully paid
          and  non-assessable  shares of the common  stock,  par value $.001 per
          share at a  purchase  price of $1.04 per  share.  The shares of common
          stock  underlying  these warrants were registered for resale on August
          9, 2002,  under the  Securities  Act of 1933. As of November 30, 2003,
          none of these options have been exercised

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          January  1,  2004.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a purchase price of $2.00 per share.  As of November 30, 2003, none
          of these warrants have been exercised.

          41,667 stock purchase warrants issued to Peter Miles expiring July 20,
          2004.  The  warrants  are to  purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $2.00 per share.  The shares of common stock underlying these
          have not been registered as of November 30, 2002, under the Securities
          Act of 1933. As of November 30, 2003, none of these warrants have been
          exercised.

                                       17
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003

          41,667 stock purchase warrants issued to Peter Miles expiring July 20,
          2004.  The  warrants  are to  purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $2.25 per share.  The shares of common stock underlying these
          warrants have not been registered or issued,  under the Securities Act
          of 1933.  As of November 30, 2003,  none of these  warrants  have been
          exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          April  1,  2004.   The  warrants  are  to  purchase   fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $1.10 per share.  The shares of common  stock
          underlying  these  warrants  were  registered  for resale on August 9,
          2002,  under the Securities Act of 1933. As of November 30, 2003, none
          of these warrants have been exercised.

          58,333 stock purchase warrants issued to Peter Miles expiring July 20,
          2004.  The  warrants  are to  purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $3.00 per share.  The shares of common stock underlying these
          warrants have not been registered or issued,  under the Securities Act
          of 1933.  As of November 30, 2003,  none of these  warrants  have been
          exercised.

          25,000 stock purchase warrants issued to Synchton, Inc., expiring July
          1, 2004.  The warrants are to purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $1.35 per share.  The shares of common stock underlying these
          warrants  were  registered  for  resale on August 9,  2002,  under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          October  1,  2004.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.69 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities Act of 1933. As of November 30, 2003 none of these warrants
          have been exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          January  1,  2005.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.61 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          April  1,  2005.   The  warrants  are  to  purchase   fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.38 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.

          192,000 stock purchase warrants issued to Tech Technologies  Services,
          LLC,  expiring April 24, 2008. The warrants are to purchase fully paid
          and  non-assessable  shares of the common  stock,  par value $.001 per
          share at a  purchase  price of $7.50 per  share.  The shares of common
          stock  underlying  these warrants have not been  registered or issued,
          under the  Securities  Act of 1933.  As of November 30, 2003,  none of
          these warrants have been registered, issued or exercised.

          25,000 stock purchase warrants issued to Synchton, Inc., expiring July
          1, 2005.  The warrants are to purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $0.39 per share.  The shares of common stock underlying these
          warrants were not  registered  for resale under the  Securities Act of
          1933.  As of  November  30,  2003,  none of these  warrants  have been
          exercised.

          240,000 stock purchase  warrants issued to Shannon D. McLeroy expiring
          April  24,  2008.   The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $7.50 per share.  The shares of common  stock
          underlying  these warrants have not been  registered or issued,  under
          the  Securities  Act of 1933.  As  November  30,  2003,  none of these
          warrants have been registered, issued or exercised.

          168,000 stock purchase  warrants issued to Michael T. McClere expiring
          April  24,  2008.   The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $7.50 per share.  The shares of common  stock
          underlying  these warrants have not been  registered or issued,  under
          the  Securities  Act of 1933.  As  November  30,  2003,  none of these
          warrants have been registered, issued or exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          October  1,  2005.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.35 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.

          40,000 stock  purchase  warrants  issued to Rachel  McClere 1998 Trust
          expiring  April 24, 2008.  The warrants are to purchase fully paid and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $7.50 per share.  The shares of common  stock
          underlying  these warrants have not been  registered or issued,  under
          the  Securities  Act of 1933.  As of November 30, 2003,  none of these
          warrants have been registered, issued or exercised.

          160,000  stock  purchase  warrants  issued  to  McClere  Family  Trust
          expiring  April 24, 2008.  The warrants are to purchase fully paid and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $7.50 per share.  The shares of common  stock
          underlying  these warrants have not been  registered or issued,  under
          the  Securities  Act of 1933.  As  November  30,  2003,  none of these
          warrants have been registered, issued or exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          January  1,  2006.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.28 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.


                                       18
<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          April  1,  2006.   The  warrants  are  to  purchase   fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.26 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.

          25,000 stock purchase warrants issued to Synchton, Inc., expiring July
          1, 2006.  The warrants are to purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $0.38 per share.  The shares of common stock underlying these
          warrants were not  registered  for resale under the  Securities Act of
          1933. As of November  30August 31, 2003,  none of these  warrants have
          been exercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          October  1,  2006.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $0.45 per share.  The shares of common  stock
          underlying  these  warrants were not  registered  for resale under the
          Securities  Act of  1933.  As of  November  30,  2003,  none of  these
          warrants have been exercised.

          3,800,000 stock purchase warrants issued to Eagle Broadband  employees
          under incentive clauses of employment  contracts expiring September 1,
          2008. The warrants vest based on market  performance of Eagle's common
          stock at market  capitalization  between $50 million and $200 million.
          The warrants are to purchase fully paid and  non-assessable  shares of
          the common  stock,  par value  $.001 per share at a purchase  price of
          $0.41 per share.  The shares of common stock underlying these warrants
          were not registered for resale under the Securities Act of 1933. As of
          November 30, 2003, none of these warrants have been exercised.

          400,000 stock purchase  warrants  issued to Eagle  Broadband  employee
          under incentive clauses of employment  contracts expiring September 1,
          2008. The warrants vest based on market  performance of Eagle's common
          stock at market  capitalization  between $50 million and $200 million.
          The warrants are to purchase fully paid and  non-assessable  shares of
          the common  stock,  par value  $.001 per share at a purchase  price of
          $0.60 per share.  The shares of common stock underlying these warrants
          were not registered for resale under the Securities Act of 1933. As of
          November 30, 2003, none of these warrants have been exercised.

          500,000 stock purchase  warrants  issued to Eagle  Broadband  employee
          under incentive clauses of employment  contracts expiring September 1,
          2008. The warrants vest based on market  performance of Eagle's common
          stock at market  capitalization  between $50 million and $200 million.
          The warrants are to purchase fully paid and  non-assessable  shares of
          the common  stock,  par value  $.001 per share at a purchase  price of
          $0.75 per share.  The shares of common stock underlying these warrants
          were not registered for resale under the Securities Act of 1933. As of
          November 30, 2003, none of these warrants have been exercised.







                                       19
<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003



          The warrants  outstanding are segregated  into two categories  (issued
          and outstanding and exercisable):



                     Warrants Issued & Outstanding      Warrants Exercisable

         Class of    November 30,       August 31,     November 30,   August 31,
         Warrants       2003              2003            2003          2003
         ---------  ------------------------------    -------------------------
               0.26       25,000             25,000            25,000     25,000
               0.28       25,000             25,000            25,000     25,000
               0.35       25,000             25,000            25,000     25,000
               0.38       50,000             50,000            50,000     50,000
               0.39       25,000             25,000            25,000     25,000
               0.41    3,800,000          3,800,000         3,800,000  1,550,000
               0.45       25,000             25,000            25,000     25,000
               0.60      400,000            400,000           400,000          -
               0.61       25,000             25,000            25,000     25,000
               0.69       25,000             25,000            25,000     25,000
               0.75      500,000            500,000           500,000          -
               1.04       50,000             50,000            50,000     50,000
               1.10       25,000             25,000            25,000     25,000
               1.35       25,000             25,000            25,000     25,000
               2.00       25,000             25,000            25,000     25,000
               2.00       41,667             41,667            41,667     41,667
               2.25       41,667             41,667            41,667     41,667
               3.00       58,333             58,333            58,333     58,333
               7.50      192,000            192,000           192,000    192,000
               7.50      240,000            240,000           240,000    240,000
               7.50      168,000            168,000           168,000    168,000
               7.50      200,000            200,000           200,000    200,000
               ESOP      402,678  *         406,131  *        402,678    406,131
                    ------------     --------------    -------------- ----------
                       6,394,345  **      6,397,798  **     6,394,345  3,247,798
                    ============     ==============    ============== ==========

          *Denotes  warrants  which  would  have  an  anti-dilutive   effect  if
          currently  used to  calculate  earnings per share for the period ended
          November 30, 2003 and 2002.
          **Denotes  12,700,000 warrants for shares that have been excluded from
          this table that are  subject to issuance  to certain  employees  under
          incentive  clauses of employment  contracts  expiring 5 years from the
          date of  issuance.  The  warrants  vest based on  accumulated  revenue
          targets  ranging  from  $50  million  to $500  million  and on  market
          performance of Eagle's common stock at market  capitalization  between
          $450 million and $1 billion.  The warrants are to purchase  fully paid
          and  non-assessable  shares of the common stock,  par value $0.001 per
          share at purchase  prices  ranging from $0.41 to $1.50 per share.  The
          Company has determined that the probability of the achievement of such
          targets  is remote  as of the date of the  issuance  of the  Company's
          financial statements and thus has not included them in the outstanding
          warrant  table  above.  The shares of common  stock  underlying  these
          warrants were not  registered  for resale under the  Securities Act of
          1933.  As of  November  30,  2003,  none of these  warrants  have been
          exercised.

NOTE 12 - Capitalization Activities:

          Between  November  25,  2002  and  June  9,  2003,  the  Company  sold
          approximately  $6.5  million  of  convertible  debt  securities  to 45
          accredited  investors.  The  securities  consisted  of a $25,000,  12%
          five-year  bonds.  The bonds are due and payable upon  maturity at the
          end of the five-year  period.  Interest on the bonds is payable at the
          rate of 12% per annum, and is payable semiannually. The bondholder may
          require  the  Company  to  convert  the  bond  (including  any  unpaid
          interest) into shares of the Company's common stock at any time during
          the first  year but not  thereafter.  The  conversion  rates vary from
          $0.16 to $0.34 per share. The Company may redeem the bonds at any time
          after the first year.

          Between  October 30,  2003 and  November  5, 2003,  the  Company  sold
          approximately  $4.1  million  of  convertible  debt  securities  to 36
          accredited  investors.  The  securities  consisted  of a $25,000,  12%
          five-year  bonds.  The bonds are due and payable upon  maturity at the
          end of the five-year  period.  Interest on the bonds is payable at the
          rate of 12% per annum, and is payable semiannually. The bondholder may
          require  the  Company  to  convert  the  bond  (including  any  unpaid
          interest) into shares of the Company's common stock at any time during
          the first  year but not  thereafter.  The  conversion  rates vary from
          $0.50 to $0.75 per share. The Company may redeem the bonds at any time
          after the first year.

          The following  transactions were completed pursuant to Regulation D of
          the  Securities  Act.  With  respect  to the  issuances,  the  Company
          determined that each purchaser was an "accredited investor" as defined
          in Rule 501(a) under the Securities Act.


                                       20
<PAGE>

                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003



          Except as otherwise noted, all sales of the Company's  securities were
          made by officers of the Company who  received no  commission  or other
          remuneration for the solicitation of any person in connection with the
          respective  sales of securities  described  above.  The  recipients of
          securities  represented  their intention to acquire the securities for
          investment  only and not with a view to or for sale in connection with
          any distribution  thereof and appropriate  legends were affixed to the
          share certificates and other instruments issued in such transactions.

NOTE 13 - Risk Factors:

          For the three months ended  November 30, 2003 and 2002,  substantially
          all of the Company's  business  activities  have  remained  within the
          United States and have been  extended to the wireless  infrastructure,
          fiber,    cabling   computer   services   and   broadband    industry.
          Approximately,  ninety-four  percent  of the  Company's  revenues  and
          receivables  have been  created  solely  in the  state of Texas,  zero
          percent  have  been  created  in the  international  market,  and  the
          approximate six percent remainder have been created  relatively evenly
          over the rest of the nation during the three months ended November 30,
          2002. Whereas  approximately  eighty percent of the Company's revenues
          and receivables  have been created solely in the state of Texas,  zero
          percent  have  been  created  in the  international  market,  and  the
          approximate  twenty  percent  remainder  has been  created  relatively
          evenly over the rest of the nation for the three months ended November
          30, 2002. Through the normal course of business, the Company generally
          does not require its customers to post any collateral.

NOTE 14 - Foreign Operations:

          Although  the  Company is based in the United  States,  its product is
          sold on the international market. Presently, international sales total
          approximately 0% and 0% at November 30, 2003 and 2002, respectively.

NOTE 15 - Commitments and Contingent Liabilities:

          Leases

          The Company leases its primary office space in League City, Texas, for
          $36,352 per month with Gateway Park Joint Venture. This non-cancelable
          lease commenced on January 1, 2002, and expires on May 31, 2004.

          For the  three  months  ending  November  30,  2003 and  2002,  rental
          expenses of  approximately  $137,000 and $228,000  respectively,  were
          incurred.

          The Company also leased office space in Oxnard,  California with Tiger
          Ventura County,  L.P. This three-year  non-cancelable  lease commenced
          August 1, 2000,  and  expires  July 31,  2004.  Under the terms of the
          lease,  monthly  payments  will be $2,130 for the first twelve  months
          whereas the monthly payments will increase by 3.5% at the beginning of
          both the second and third years.

          The Company's wholly owned subsidiary, Atlantic Pacific, leases office
          space in Houston,  Texas with Houston Industrial  Partners,  Ltd. This
          non-cancelable  lease expires  December 2005. The monthly payments are
          $9,030 per month.

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

          Atlantic  Pacific also leased  office space in Houston,  Texas with WL
          and  Deborah   Miller  in  the  amount  of  $4,500  per  month.   This
          non-cancelable  lease expired September 2002 and maintains a five-year
          renewal option. The renewal option was waived in September 2002.

          The Company's subsidiary, ClearWorks.net, Inc., leased office space in
          Houston, Texas with 2000 North Loop. This non-cancelable lease expired
          on April 30,  2003.  The  monthly  payments  increased  from $7,306 to
          $11,091 on April 30,  2000,  and again on May 1, 2002,  to $11,217 for
          the remaining twelve months.

          Also,  ClearWorks.net,  Inc., leased office space in Phoenix,  Arizona
          with Airpark Holdings.  This non-cancelable  lease expired on July 31,
          2003. The monthly payments are variable.

          Also, ClearWorks.net,  Inc., leased office space in San Antonio, Texas
          with  Wade  Holdings.  This is a  month-to-month  lease.  The  monthly
          payments were $3,300.

          The Company's subsidiary,  United Computing Group, leased office space
          in Houston, Texas with Eastgroup Properties,  L.P. This non-cancelable
          lease  expired on August 31, 2003.  The monthly  payments were $8,570.
          UCG previously  leased office space with Techdyne,  Inc., that expired
          August 31, 2002.

          The Company's subsidiary, ClearWorks Home Systems, leases office space
          in Austin,  Texas with Ditto  Communications  Technologies,  Inc. This
          non-cancelable  lease  commenced  on  September  1, 2002,  and expires
          January 31, 2005. The monthly payments are $5,876.

                                       21
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


          The Company's subsidiary,  United Computing Group, leased office space
          in Dallas,  Texas with AMB Property II, LP. This non-cancelable  lease
          commenced on June 19, 2000, expired on June 30, 2002, and was extended
          to expire on June 30, 2003.  The monthly  payments are $2,794.  Future
          obligations under the non-cancelable lease terms areas follows:




               Period Ending August 31,                Amount
                         2004                      $ 521,000
                         2005                        116,000
                         2006                         58,000
                                                 -------------------
                        Total                      $ 695,000
                                                 ===================

          Legal Proceedings



          On February  23,  2001,  ClearWorks  and Eagle  became  defendants  in
          Kaufman Bros., LLP v. Clearworks.Net,  Inc. and Eagle Wireless,  Inc.,
          Index No. 600939/01,  pending in the Supreme Court of the State of New
          York,  County of New York.  In this  action,  plaintiff  alleges  that
          defendants have breached an agreement with ClearWorks to pay plaintiff
          a  fee  for  financial  advice  and  services  allegedly  rendered  by
          plaintiff.  The complaint  seeks  compensatory  damages of $4,000,000,
          plus  attorneys'  fees and costs.  The Company settled this lawsuit on
          November  4, 2003 by issuing  cash and stock  totaling  a fair  market
          value  of  $1,320,000  as of the  settlement  date  and  consequently,
          $1,320,000  was charged to  operations  in the  Company's  fiscal 2003
          financial statements..





          On December 17, 2001, Kevan Casey and Tommy Allen sued ClearWorks.net,
          Inc., ClearWorks Integration,  Inc., and Eagle Wireless International,
          Inc.  for breach of contract  and other  related  matters in Cause No.
          2001-64056;  in the 281st  Judicial  District  Court of Harris County,
          Texas.  This lawsuit is scheduled  for the two-week  docket  beginning
          December  1, 2003.  The  Company  denies  the  claims  and  intends to
          vigorously  defend  this  lawsuit  and claims  against it. The Company
          settled  this  lawsuit on  November  26, 2003 for cash and stock to be
          paid and issued  totaling a fair market value of  $3,000,000 as of the
          settlement date and consequently, $3,000,000 was charged to operations
          in the Company's fiscal 2003 financial statements.





          On July  10,  2003,  Eagle  became  a  defendant  in  Cornell  Capital
          Partners,  L.P. vs. Eagle  Broadband,  Inc., et al.,  Civil Action No.
          03-1860  (KSH),  and In the  United  States  District  Court  for  the
          District  of New  Jersey.  The suit  presents  claims  for  breach  of
          contract,  fraud and negligent  misrepresentation.  Plaintiff has also
          alleged  that  Eagle has  defaulted  on a  convertible  debenture  for
          failing to timely  register the shares of common stock  underlying the
          convertible  debenture and is seeking to accelerate  the maturity date
          of the  debenture.  During the three month period  ended  November 30,
          2003, the principal  balance of the debenture was  approximately  $1.2
          million was repaid, although the suit remains outstanding. The Company
          denies the claims and intends to  vigorously  defend this  lawsuit and
          the  claims  against  it . Eagle has  asserted  counterclaims  against
          Cornell for fraud and breach of contract.  The Company has not accrued
          any expenses against this lawsuit,  as the outcome cannot be predicted
          at this time.

 .


          On  December  14,  2000,  ClearWorks  became a  defendant  in State Of
          Florida Department Of Environmental  Protection vs. Reco Tricote, Inc.
          And Southeast Tire Recycling,  Inc. A/K/A Clearwork.net,  Inc.; In The
          Circuit  Court Of The Tenth  Judicial  Circuit In And For Polk County,
          Florida.  The Florida EPA sued  ClearWorks.net  presenting  claims for
          recovery costs and penalties for a waste tire processing facility. The
          suit  seeks  recovery  of costs  and  penalties  in a sum in excess of
          $1,000,000,  attorneys' fees and cost of court.  ClearWorks denies the
          claims and intends to  vigorously  contest all claims in this case and
          to enforce  its  indemnification  rights  against  the  principals  of
          Southeast  Tire  Recycling  The Company  has not accrued any  expenses
          against this lawsuit, as the outcome cannot be predicted at this time.



          On September 26, 2003 Intratech served a lawsuit on  ClearWorks.net in
          Intratech Capital Partners,  Ltd. vs.  ClearWorks.net,  Inc.; Case No.
          CF3  20136  in the High  Court of  Justice,  Queen's  Bench  Division,
          Cardiff District Registry.  This lawsuit presents claims for breach of
          contract for failing to pay the  plaintiff  for  financial  advice and
          services   allegedly   rendered.   The  complaint   seeks  damages  of
          $6,796,245.50,  plus attorneys' fees and costs.  ClearWorks denies the
          claims and  intends  to  vigorously  defend  this  lawsuit  and claims
          against  it The  Company  has  accrued  $100,000  in its  fiscal  2003
          financial  statements for litigation  expenses but has not accrued any
          settlement  costs  against  this  lawsuit  as the  outcome  cannot  be
          predicted at this time.



          On or about September 2003, Enron sued United Computing Group, Inc. in
          Enron Corp. (Debtors/Plaintiff) vs. United Computing Group, Inc.; Case
          No.  01-16034 in the United States  Bankruptcy  Court for the Southern
          District of New York.  The suit presents  claims  pursuant to sections
          547 and 550 of the Bankruptcy  Code to avoid and recover a transfer in
          the  amount of  approximately  $1,500,000.00.  Defendant  has filed an
          answer,  denies the  claims,  and  intends to  vigorously  defend this
          lawsuit and claims against it The Company has accrued  $100,000 in its
          fiscal 2003 financial  statements for litigation  expenses but has not
          accrued  any  settlement  costs  against  this  lawsuit as the outcome
          cannot be predicted at this time.



                                       22
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


          Eagle is involved in  lawsuits,  claims,  and  proceedings,  including
          those  identified  above,   consisting  of,  commercial,   securities,
          employment  and  environmental  matters,  which arise in the  ordinary
          course of business.  In accordance  with SFAS No. 5,  "Accounting  for
          Contingencies,"  Eagle  makes a provision  for a liability  when it is
          both probable that a liability has been incurred and the amount of the
          loss can be  reasonably  estimated.  Eagle  believes  it has  adequate
          provisions  for any such matters.  Eagle  reviews these  provisions at
          least quarterly and adjusts these provisions to reflect the impacts of
          negotiations, settlements, rulings, advice of legal counsel, and other
          information and events pertaining to a particular case.  Litigation is
          inherently  unpredictable.  However,  Eagle believes that it has valid
          defenses   with  respect  to  legal   matters   pending   against  it.
          Nevertheless,  it is possible that cash flows or results of operations
          could  be  materially   affected  in  any  particular  period  by  the
          unfavorable resolution of one or more of these contingencies.

          We intend to  vigorously  defend  these and other  lawsuits and claims
          against us. However,  we cannot predict the outcome of these lawsuits,
          as well as other  legal  proceedings  and claims  with  certainty.  An
          adverse resolution of pending litigation could have a material adverse
          effect on our business, financial condition and results of operations.
          The Company is subject to legal  proceedings  and claims that arise in
          the ordinary  course of business.  The Company's  management  does not
          expect that the results in any of these  legal  proceedings  will have
          adverse  affect on the  Company's  financial  condition  or results of
          operations.

NOTE 16 - Earnings Per Share:

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

<TABLE>
<CAPTION>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


                                                      For the three months ended November 30, 2003
                                                      --------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                    ------------       -------------      -----------
        <S>                                             <C>               <C>                <C>
         Net Loss                                     $(8,461)

         Basic EPS:
          Income available to
          common stockholders                         $(8,461)          159,696            $(0.05)

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

         Diluted EPS:
           Income available to
           common stockholders
             and assumed conversions.               $(8,461)           159,696            $(0.05)
                                                    ===========        ============       ===========

</TABLE>

<TABLE>
<CAPTION>

                                                      For the three months ended November 30, 2002
                                                      --------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                    ------------       -------------      -----------
        <S>                                             <C>               <C>                <C>
         Net Loss                                     $(831)

         Basic EPS:
          Income available to
          common stockholders                          $(831)           74,493            $(0.01)

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


         Diluted EPS:
           Income available to
           common stockholders
             and assumed conversions.                $(831)             74,647            $(0.01)
                                                    ===========        ============       ===========
</TABLE>

          For the three months ended  November 30, 2003 and 2002,  anti-dilutive
          securities existed (see Note 11).


                                       23
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


NOTE 17 - Employee Stock Option Plan:

          In July 1996, the Board of Directors and majority stockholders adopted
          a stock option plan under which 400,000 shares of the Company's common
          stock have been reserved for issuance.  Since that time,  the Board of
          Directors have amended the July 1996, employee stock option plan under
          which  1,000,000  shares  of  Common  Stock  have  been  reserved  for
          issuance.  Under this plan, as of November 30, 2003,  402,678  options
          have been issued and are outstanding to various employees

          The Company has elected to follow APB 25, "Accounting for Stock Issued
          to Employees."  Accordingly,  since employee stock options are granted
          at  market  price on the date of grant,  no  compensation  expense  is
          recognized.  However,  SFAS 123 requires presentation of pro forma net
          income and earnings per share as if the Company had  accounted for its
          employee  stock  options  granted  under the fair value method of that
          statement.  The weighted average fair value of the individual  options
          granted  during  2000 is  estimated  as $0.58 on the date of grant.  A
          meaningful  weighted  average  fair  value of the  individual  options
          granted during 2000 using the method  prescribed by SFAS 123 could not
          be  determined  due to the  volatility  of the share price  during the
          measurement  period.  Management  estimates the average fair value for
          options granted during 2001 to be comparable to those granted in 2000.
          The  impact  on net  income  is  minimal;  therefore,  the  pro  forma
          disclosure  requirements prescribed by SFAS 123 are not significant to
          the Company.  The fair values were  determined  using a  Black-Scholes
          option-pricing model with the following assumptions:

                                                2003            2002
                                              ----------      --------
                 Dividend Yield                 0.00%         0.00%
                 Volatility                     0.91          0.91
                 Risk-free Interest Rate        7.00%         7.00%
                 Expected Life                    5             5

          The pro forma  effect on net loss as if the fair value of  stock-based
          compensation  had  been  recognized  as  compensation   expense  on  a
          straight-line  basis over the  vesting  period of the stock  option or
          purchase  right  was as  follows  for the  three  month  period  ended
          November 30, 2003 and 2002:


                                                                 2003    2002

        Net loss, as reported                                 $(8,461)  $(831)
        Add: Stock-based employee compensation included in
         reported net earnings (loss), net of related tax
         effects                                                    -       -
        Less: stock-based employee compensation expense
         determined under fair-value based method for all
         awards, net of related tax effects                        (0)     (0)
                                                              -------- -------

        Pro forma net earnings (loss)                         $(8,461)  $(831)
                                                              ======== ========

        Net loss per share:
            As reported                                        $(0.05) $(0.01)
            Pro forma                                          $(0.05) $(0.01)
        Diluted net loss per share
            As reported                                        $(0.05) $(0.01)
            Pro forma                                          $(0.05) $(0.01)



                                       24
<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


          Option activity was as follows for the three months ended November 30,
          2003:


                                                          2003
                                                            Weighted-Average
                                                 Shares      Exercise Price
        Outstanding at beginning of year          406,131               $1.27
        Granted                                         -
        Assumed through acquisitions                    -                   -
        Exercised                                (3,453)-                0.60
        Forfeited/Cancelled                             -                   -
                                               -----------

        Outstanding at end of year                402,678                1.27
                                               ===========

        Exercisable at year-end                   402,678               $1.27
                                               ===========


          Information  about options  outstanding was as follows at November 30,
          2003:

<TABLE>
<CAPTION>

                          Options Outstanding                      Options Exercisable
                ----------------------------------------        -------------------------
                               Weighted-
                                Average
                              Remaining       Weighted-                        Weighted-
  Range of                    Contractual     Average                           Average
  Exercise        Number          Life        Exercise             Number       Exercise
   Prices       Outstanding   (in Years)        Price            Exercisable     Price
------------    ----------- ----------------------------        -------------  ----------
  <S>              <C>                 <C>         <C>               <C>              <C>
   $0-$1.00        261,412             5.0        $0.55              264,865       $0.55
$1.01-$2.00        115,766             5.0        $1.73              115,766       $1.73
$2.01-$7.50         25,500             5.5        $6.55               25,500       $6.55

                   402,628             5.2        $2.32              406,131       $2.32
                   =======                                           =======
</TABLE>

NOTE 18 - Retirement Plans:
        s
During  October  1997,  the Company  initiated a 401(k) plan for its  employees,
which is  funded  through  the  contributions  of its  participants.  This  plan
maintains  that  the  Company  will  match  up  to  3%  of  each   participant's
contribution.  For the three months ended  November 30, 2003 and 2002,  employee
contributions were approximately $27,298 and $71,351,  respectively. The Company
matched approximately $0 and $25,858, respectively for those same periods.

NOTE 19 - Major Customer:

The Company had gross sales of $2,397,000  and  $4,618,000  for the three months
ended  November  30, 2003 and 2002,  respectively.  The three month period ended
November  30, 2003  included  $866,213 or 36% of the  quarters  total sales from
Sweetwater  Security  Capital,  LLC in  conjunction  with a  contract  valued at
$1,082,767  that was executed  with the  Company's  security-monitoring  service
subsidiary,  DSS Security,  Inc. The  remaining  $216,553  associated  with this
contract has been deferred in conjunction with a six-month holdback provision of
the contract.  There were no parties  individually that represented greater than
ten percent of the revenues in the three months ended November 30, 2002.

NOTE 20 - Industry Segments:

The  Company  has adopted the  provisions  of SFAS No. 131,  "Disclosures  about
Segments of an  Enterprise  and Related  Information".  At August 31, 2001,  the
Company's   seven   business   units   have   separate   management   teams  and
infrastructures  that offer different products and services.  The business units
have been aggregated into five  reportable  segments (as described  below) since
the long-term financial  performance of these reportable segments is affected by
similar economic conditions.

Eagle Broadband, Inc., (Eagle) is a supplier of broadband and telecommunications
equipment  with  related  software  and  broadband  products.  (Including  Eagle
Wireless  International,   Inc.,  BroadbandMagic  and  Etoolz,  Inc.,  for  this
summary).

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

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

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


                                       25
<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003


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

Link Two  Communications,  Inc., (Link II) is in the development and delivery of
one and two way messaging systems.

DSS Security, Inc., is a security monitoring company.

ClearWorks.net,  Inc.,  (.NET)  is  inactive  with  exception  of  debt  related
expenses.

Contact Wireless,  Inc., is a paging, cellular, and mobile services provider and
reseller.


                      For the three months ending November 30, 2003

 (in thousands)        APC/HSI EBS/DSS UCG   Eagle    Other    Elim.   Consol.
                       ------- ------- ---- -------- ------- --------- --------
 Revenue                  392   1,564  274       87      81       ---    2,397
 Segment Loss            (220)    331  (68)  (1,758)    (23)      ---   (1,737)
 Total Assets           1,126  30,156  123  175,253  57,704  (137,455) 126,907
 Capital
  Expenditures            ---     128  ---       25     ---                153
 Depreciation              39     383   15      126      51       ---      614


                     For the three months ending November 30, 2002

 (in thousands)       APC/HSI EBS/DSS  UCG    Eagle    Other    Elim.   Consol.
                      ------- ------- ------ -------- ------- --------- --------
 Revenue               1,652     674  1,395      768     129       ---    4,618
 Segment Loss            320    (102)  (344)    (443)   (103)      ---     (672)
 Total Assets          5,137  30,381    431  157,155  58,006  (120,468) 130,642
 Capital
  Expenditures             8   1,419      2       42     ---       ---    1,471
 Dep. and Amort.          56     156     31        3      20       ---      266


 Reconciliation of Segment Loss from Operations    November 30,    November 30,
  to Net Loss:                                         2003         2002
 Total segment loss from operations                $   (1,737)  $    (672)
 Total Other Income (Expense)                          (6,724)       (159)

 Net Loss                                          $   (8,461)  $    (831))

 The accounting  policies of the  reportable  segments are the same as those
 described in Note 1. The Company evaluates the performance of its operating
 segments  based on  income  before  net  interest  expense,  income  taxes,
 depreciation and amortization expense, accounting changes and non-recurring
 items.

Note 21 - Supplemental Non-Cash Disclosures:

During the quarter ended  November 30, 2003,  the Company  issued  $3,000,000 of
convertible  debt which was retired through the issuance of 2,000,000  shares of
Series A Preferred Stock which was concurrently converted into 29,500,000 shares
of the Company's Common Stock.  Additionally,  the Company received  proceeds of
$3,912,000  from  the  sale  of  convertible  Q-Series  Bonds - see  "Note  12 -
Capitalization Activities".

The beneficial  conversion values  associated with these financings  aggregating
$6,912,000 are calculated at the difference between the conversion price and the
fair value of the common stock into which the debt is convertible, multiplied by
the number of shares into which the debt is  convertible.  Since the  beneficial
conversion   value   exceeded  the  $6,912,000   raised  on  these   convertible
instruments,  the value  charged to  interest  expense  during the  quarter  was
limited  to  $6,912,000.  This  non-cash  charge  comprises  $6,912,000  of  the
$7,080,000  interest  expense on the Company's  Statement of  Operations  and is
shown as an  adjustment  to  reconcile  net  loss to net  cash on the  Company's
Statement of Cash Flows.


                                       26
<PAGE>




Item 2.  Management's Discussion and Analysis.

         The following  discussion  and analysis  should be read in conjunction
with the Financial Statements and Notes thereto appearing elsewhere in this Form
10-Q.  Information  included  herein  relating  to  projected  growth and future
results and events  constitutes  forward-looking  statements.  Actual results in
future periods may differ materially from the forward-looking  statements due to
a number of risks and  uncertainties,  including but not limited to fluctuations
in the  construction,  technology,  communication  and industrial  sectors;  the
success of the Company's  restructuring and cost reduction plans; the success of
the  Company's   competitive  pricing;  the  Company's   relationship  with  its
suppliers;  relations  with the Company's  employees;  the Company's  ability to
manage  its  operating   costs;   the  continued   availability   of  financing;
governmental  regulations;  risks associated with regional,  national, and world
economies. Any forward-looking statements should be considered in light of these
factors.

Results of Operations

Three Months Ended November 30, 2003 Compared to the Three Months Ended November
30, 2002

The following table sets forth summarized consolidated financial information for
the three months ended November 30, 2003 and 2002.


Eagle Broadband, Inc.
SEC 10-Q - MD& A Tables
Period ended November 30, 2003

<TABLE>
<CAPTION>

 Condensed Financial Information
 -------------------------------


                                             Three Months Ended
                                                November 30,
                              -----------------------------------------------------------------
 ($ in thousands)                   2003           2002                  $Change      % Change
                              ----------- ------------------------ -------------- -------------
<S>                                <C>             <C>                    <C>               <C>
 Total Sales                       2,397           4,618                  (2,221)          -48%
 Cost of Goods Sold                1,295           2,626                  (1,331)          -51%
                              ----------- ------------------------ -------------- -------------
 Gross Profit                      1,102           1,992                    (890)          -45%
                              ----------- ------------------------ -------------- -------------
    % of Total Sales                  46%           43%                        3%            7%
 Operating Expenses                2,839           2,664                     175             7%
                              ----------- ------------------------ -------------- -------------
 Loss from Operations             (1,737)          (672)                  (1,065)          158%
                              ----------- ------------------------ -------------- -------------
 Other Income (Expense)           (6,724)          (159)                  (6,565)         4129%
                              ----------- ------------------------ -------------- -------------
 Net Loss                         (8,461)          (831)                  (7,630)          918%
                              =========== ======================== ============== =============

</TABLE>


Overview

         For the three month  period ended  November  30,  2003,  Eagle's
business  operations  reflected  further  investment  and expansion  into higher
margin business  segments  including  Eagle's broadband Bundled Digital Services
(Internet,  video,  voice and security) for residential  and business  customers
while  shifting  focus away from  low-margin  commodity  computer  products  and
services. The Company's consolidated operations generated revenues of $2,397,000
with a corresponding gross profit of $1,102,000 for the three-month period ended
November  30,  2003.  The  significant  decline in revenues in the first  fiscal
quarter of 2004 as compared to the  corresponding  period of 2003 was  primarily
attributable  to the  Company's  decision to no longer  pursue  direct  sales of
low-margin  commodity computer products and a decline in structured wiring sales
as the Company continues its previously announced strategy to shift its focus to
higher-margin product sales (i.e., set-top boxes,  Orb'Phone Exchange,  etc) and
recurring  services  sales  (i.e.,  broadband  services,  network  monitoring  /
security, IT managed services, etc.).

         The Company  incurred a net loss of $8,461,000  for the  three-month
period  ended  November  30,  2003.  The  loss  was  primarily  attributable  to
$6,912,000  of  non-cash  interest  expenses   associated  with  the  beneficial
conversion feature of certain convertible bonds and notes issued against certain
financing  activities  completed  during the quarter and a $1,737,000  loss from
operations.  The  Company's  loss from  operations  included  some  $614,000  in
depreciation  and  amortization  expenses  along  with  some  $313,000  of legal
expenses;  primarily  associated  with the  settlement  of  numerous  previously
disclosed lawsuits.

The Company is continuing the development and expansion of the Company's BDS
model for distribution on a nationwide  basis of voice,  video and data content;
increased sales efforts in the telephone, cable, internet, security services and
wireless  segments;  securing  of  long-term  relationships  for content for the
bundled digital services activities;  and marketing/sales  agreements with other
companies  for the sale of  broadband  products  and  services.  On a nationwide
basis, we are entering into business relationships with financial and technology
companies to provide bundled digital  services  (digital  content) to cities and
municipalities  that  currently  have  or  are  in  the  process  of  completing
construction of their own fiber  infrastructure to the home. We believe that our
companies  have the  technology,  products  and  capabilities  to provide  these
fiber-ready  cities with digital  content  set-top boxes and  structured  wiring
services.


                                       27
<PAGE>


The follow table sets forth  summarized  sales  information for the three months
ended November 30, 2003 and 2002.

<TABLE>
<CAPTION>

 Sales Information
 -----------------
                                        Three Months Ended
                                           November 30,
                      ----------------------------------------------------------------

 ($ in thousands)               2003        % of Total            2,002    % of Total    $Change       % Change
                      --------------- ---------------------- ----------- -------------- --------- --------------

<S>                              <C>           <C>                <C>               <C>   <C>                <C>
 Structured Wiring               392           16%                1,560             34%   (1,168)           -75%
 Broadband Services            1,564           65%                  674             15%      890            132%
 Products                        361           15%                2,044             44%   (1,683)           -82%
 Other                            80            3%                  340              7%     (260)           -76%
                      --------------- ---------------------- ----------- -------------- --------- --------------
 Total Sales                   2,397           100%               4,618            100%   (2,221)           -48%
                      --------------- ---------------------- ----------- -------------- --------- --------------

</TABLE>

Net Sales.  For the  three-month  period  ended  November  30,  2003,  net sales
declined to  $2,397,000  from  $4,618,000  during the  three-month  period ended
November 30, 2002. The overall decrease of 48% was primarily attributable to the
Company's  decision to no longer  pursue  direct sales of  low-margin  commodity
computer  products  and a decline  in  structured  wiring  sales as the  Company
continues its previously  announced strategy to shift its focus to higher-margin
product  sales (i.e.,  set-top  boxes,  Orb'Phone  Exchange,  etc) and recurring
services sales (i.e.,  broadband  services,  network  monitoring / security,  IT
managed  services,  etc.).  The  $890,000  increase  in sales  of the  Company's
broadband services was primarily attributable to a contract valued at $1,082,767
executed by the Company's  security-monitoring  subsidiary,  DSS Security, Inc.;
against which the Company realized sales of $866,213 during the quarter.

The following table sets forth summarized cost of goods sold information for the
three months ended November 30, 2003 and 2002.

<TABLE>
<CAPTION>

 Costs of Goods Sold:
 --------------------
                                        Three Months Ended
                                           November 30,
                      --------------- ---------------------- ----------- --------------

 ($ in thousands)               2003          2002              $Change       % Change
                      --------------- ---------------------- ----------- --------------
<S>                               <C>           <C>                <C>             <C>

 Direct Labor and
  Related Costs                  462           346                  116             34%
 Products and
  Integration Service            137          1,537              -1,400            -91%
 Structured wiring
  labor and materials            205           229                  -24            -10%
 Broadband Services
  costs                          190           276                  -86            -31%
 Depreciation and
  amortization                   285           114                  171            150%
 Other manufacturing
  costs                           16           124                 -108            -87%
                      --------------- ---------------------- ----------- --------------
 Total Operating
  Expenses                     1,295          2,626              -1,331            -51%
                      --------------- ---------------------- ----------- --------------

</TABLE>


     Cost Of Goods Sold.  For the  three-month  period ended  November 30, 2003,
cost of goods sold  decreased by 51% to $1,295,000  from  $2,626,000  during the
three-month   period  ended  November  30,  2002.  The  decrease  was  primarily
attributable  to the  Company's  decision to no longer  pursue  direct  sales of
low-margin  commodity computer products  referenced above. The Company's overall
gross  profit  percentage  was 46% and 43%  for the  three-month  periods  ended
November 30, 2003 and November 30, 2002. This increase is primarily attributable
to a shift away from lower  margin  commodity  products  and  services to higher
margin BDS and  security-monitoring  sales;  partially  offset by an increase in
depreciation  expenses  associated  with  the  build-out  of the  company's  BDS
infrastructure.



                                       28
<PAGE>


The following table sets forth summarized  operating expense information for the
three months ended November 30, 2003 and 2002.

<TABLE>
<CAPTION>


 Operating Expenses:
 --------------------
                                        Three Months Ended
                                           November 30,
                      -----------------------------------------------------------------

 ($ in thousands)               2003          2002              $Change       % Change
                      --------------- ---------------------- ----------- --------------
<S>                              <C>           <C>                  <C>            <C>
 Salaries and Related
  Costs                          959          1,508                -549            -36%
 Advertising and
  Promotion                       18           37                   -19            -51%
 Depreciation and
  Amortization                   319           153                  166            108%
 Other Support Costs           1,424           934                  490             52%
 Research and
  Development                    119           32                    87            272%
                      --------------- ---------------------- ----------- --------------
 Total Operating
  Expenses                     2,839          2,664                 175              7%
                      --------------- ---------------------- ----------- --------------
</TABLE>



The following  table breaks out other support  costs  information  for the three
months ended November 30, 2003 and 2002.


<TABLE>
<CAPTION>


 Other Support Costs:
 --------------------
                                        Three Months Ended
                                           November 30,
                      -----------------------------------------------------------------

 ($ in thousands)               2003          2002              $Change       % Change
                      --------------- ---------------------- ----------- --------------
<S>                               <C>          <C>                   <C>            <C>
 Advertising and                                                                    NA
  conventions                      0            0                     0
 Auto related                      9           11                    -2            -18%
 Bad debt                        104            0                   104             NA
 Contract labor                    0           24                   -24           -100%
 Delivery and postage             16           61                   -45            -74%
 Fees                             62           108                  -46            -43%
 Insurance                       111            5                   106           2120%
 Office and telephone             79           63                    16             25%
 Other                            12           29                   -17            -59%
 Professional                    733           84                   649            773%
 Rent                            137           228                  -91            -40%
 Travel                           56           75                   -19            -25%
 Taxes                             3           17                   -14            -82%
 Utilities                       102           229                 -127            -55%
                      --------------- ---------------------- ----------- --------------
 Total Other Support
  Costs                        1,424           934                  490             52%
                      --------------- ---------------------- ----------- --------------
</TABLE>


        Operating Expenses. For the three-month period ended November 30, 2003,
operating expenses increased by 7% to $2,839,000 as compared to $2,664,000 for
the three-month period ended November 30, 2002. Additionally, the mix of
expenses changed significantly during the reporting period. The primary
fluctuations that occurred as evidenced by the two preceding tables immediately
above are discussed below:

          --   A $549,000 decrease in salaries and related costs, as a result of
               overall  staffing  reductions  across  all  business  units;  the
               majority of which occurred in Atlantic Pacific / Home Systems and
               United Computing Group operations.

          --   A $19,000  decrease in  advertising  and promotion as the Company
               placed more  emphasis  on directly  marketing  its  products  and
               services  to its  customers  as well as  entering  into  business
               relationships with financial and technology  companies to provide
               BDS  services  to  cities  and   municipalities   and   decreased
               attendance at conventions and tradeshows.

          --   A  $166,000  increase  in  depreciation  and  amortization,   due
               principally  to the  additional  build-out of the  Company's  BDS
               infrastructure in fiscal 2003.

          --A  $490,000 increase in other support costs; the components of which
               are set forth on the table included  immediately above.  Included
               in this increase was a $313,000 in legal expenses associated with
               the settlement of various lawsuits.


                                       29
<PAGE>



          -    An  $87,000  increase  in  research  and  development   expenses,
               primarily  consisting  of the Company's  continued  investment in
               HDTV-ready multimedia set-top boxes for hospitality and broadband
               customers and the  Orb'Phone  Exchange  satellite  voice and data
               communications  products for military,  government and commercial
               customers.

         Net Loss. For the three months ended  November 30, 2003,  Eagle's net
loss was  $8,461,000,  compared to a net loss of $831,000 during the three month
period ended November 30, 2002.

         Changes in Cash Flow.  Eagle's  operating  activities used net cash of
$490,000 in the three-month  period ended November 30, 2003,  compared to use of
net cash of $720,000 in the  three-month  period ended  November  30, 2002.  The
decrease in net cash used by operating activities was primarily  attributable to
an increase in the Company's net operating loss, net of non-cash charges, offset
by stock  issued  for  services  rendered  combined  with cash used in  retiring
numerous accrued  liabilities for legal and restructuring costs and cash used in
working  capital  increases  for  inventory  and  accounts  receivable.  Eagle's
investing  activities used net cash of $268,000 in the three-month  period ended
November  30,  2003,  compared to  $1,355,000  in the  three-month  period ended
November 30, 2002.  The decrease was due primarily to a  significant  decline in
investment  activities and purchase of equipment associated with the prior years
build out of Eagle's  network and  infrastructure  for the delivery of broadband
services. Eagle's financing activities provided cash of $5,608,000, in the three
month period ended November 30, 2003, compared to $1,577,000 of cash provided in
the three month ended  November 30, 2002.  The  increase is  attributable  to an
increase in  convertible  notes  aggregating a net of $5,608,000 in  conjunction
with the Company's financing activities in the first fiscal quarter of 2004.

         Liquidity  and Capital  Resources.  Current  assets for the
three-month  period ended November 30, 2003 totaled  $14,458,000  (includes cash
and cash  equivalents of $5,673,000) as compared to $8,109,000  reported for the
year ended  August 31,  2003.  During the first  fiscal  quarter of 2004,  Eagle
received net proceeds of $5,993,000 from the sale of convertible bonds and notes
and through the sale of marketable securities held as short term investments and
has  retired  or reduced  certain  of its notes  payable  and  accrued  expenses
including  numerous  lawsuits;   thereby  reducing  the  Company's  current  and
contingent liabilities.

         The Company  anticipates that it will incur  significantly  less
capital expenditures for broadband fiber infrastructure on a going forward basis
as a result of an  emphasis of the sale of its BDS  services to  municipalities,
real estate  developers,  hotels,  multi-tenant units and service providers that
own or will build out their own fiber networks  versus the Company's  history of
building out and owning these networks. The Company's management believes it has
sufficient  capital to fund  operations for the next twelve months based on: (i)
the Company's reduced capital expenditure requirements for fiscal 2004, (ii) the
Company's  annualized cost savings expected from personnel and operating expense
reductions, and (iii) the Company's current cash and cash equivalents, including
recent net financing proceeds and sale of marketable  securities received during
the first fiscal quarter 2004.

         Historically,  we have  financed  operations  through  the sale of debt
and  equity  securities.  We do  not  have  any  significant  credit  facilities
available with financial  institutions or other third parties and  historically,
we have relied upon best efforts third-party funding from individual  accredited
investors.  Though we have been  successful at raising  additional  capital on a
best  efforts  basis in the past,  we can provide no  assurance  that we will be
successful  in any future best efforts  financing  efforts.  If we are unable to
either obtain  financing from external  sources or generate  internal  liquidity
from operations in the future, we may need to curtail operations or sell assets.
Our ability to raise capital through further equity offerings is limited because
nearly all shares of common  stock  have  either  been  issued or  reserved  for
issuance.

Contractual Obligations

           Contractual                  Payments due by period
           obligations
                            Total   Less than   1-3     3-5      More than 5
                                      1 year    years   years       years
      Long-Term Debt         7,187      7,187     ---      ---         ---
      Obligations
      Operating Lease          695        521     174      ---         ---
      Obligations
                   Total     7,882      7,708     174      ---         ---

         The Company's  contractual  obligations consist of long-term debt as
set forth in Note 5, (Notes Payable),  to the Company's financial statements and
certain   off-balance  sheet  obligations  for  office  space  operating  leases
requiring future minimal commitments under non-cancelable leases. - See Item 2 -
Management's Discussion and Analysis under non-cancelable leases as described in
Note 15 to the CompanyVs financial statements under the heading (Commitments and
Contingent Liabilities).


                                       30
<PAGE>



CRITICAL ACCOUNTING POLICIES

         The  Company  has  identified  the  following  policies  as critical to
its business and the  understanding  of its results of  operations.  The Company
believes it is improbable  that materially  different  amounts would be reported
relating  to  the  accounting  policies  described  below  if  other  acceptable
approaches were adopted.  However, the application of these accounting policies,
as described  below,  involve the exercise of judgment and use of assumptions as
to future uncertainties;  therefore,  actual results could differ from estimates
generated from their use.

Impairment of Long-Lived Assets and Goodwill

         Background:

         Goodwill and other intangibles of $82,164,000 net of prior impairments
and  amortization  were recorded under the purchase  method for the purchases of
ClearWorks.net,  Inc.,  Atlantic  Pacific,  Inc.,  DSS Security,  Inc.,  Contact
Wireless,  Inc., and Comtel,  Inc. The majority of the intangibles were from the
ClearWorks   acquisition.   ClearWorks   was  in   the   business   of   selling
telecommunications services to residential neighborhoods.

         ClearWorks.net, prior to the acquisition by Eagle, was still early in
the development of solutions focused on delivering fiber-to-the-home services in
pursuit of capturing future revenues from service  offerings  including  digital
cable, high speed internet and telephone  services.  ClearWorks.net  anticipated
that significant  capital  investments  would be required to generate  recurring
revenues from such services.  The ClearWorks.net  business model expected future
profitability  and  contemplated  that the  financing  for  such  infrastructure
investments would be available in the public markets.

         Eagle acquired ClearWorks.net at a point when raising additional
capital became difficult for  ClearWorks.net  and continued the build out of the
fiber network  post-acquisition.  Eagle was confronted with a number of business
and  market   factors  in  the  pursuit  of  building   out  the   digital-based
fiber-to-the-home  system.  These  included,  a higher cost than  anticipated to
implement the  fiber-to-the-home  model,  lower than expected market penetration
during the early stages of the build-out and an extremely  poor public  equities
market for  raising  additional  capital to finance  expansion  of the  network.
Throughout this expansion  period,  Eagle added content and related  services to
enhance the distribution system. Through technology enhancements to the original
ClearWorks.net  headend and content  delivery  system,  Eagle was able to expand
delivery  of  these  services  to a  larger  national  customer  base  including
developers  and  municipalities  who were  financing  and building out their own
systems.

         Strategy Change:



         Given the obstacles  discussed  immediately above and Eagle's
enhancement to the  digital-based  fiber-to  the-home  system,  Eagle's board of
directors and management began  reassessing it long-term  strategy in early 2003
and made a strategic decision to focus its fiber-to-the-home activities on being
a service  and  content  provider  to  developers  and  municipalities  who were
financing  and  building  out their own fiber  infrastructures.  In fiscal 2003,
Eagle  realized  it  had  failed  to  successfully  achieve  profits  using  the
ClearWorks  model of  installing  fiber optic cable to  neighborhoods  under the
speculative attempt to capture enough individual homeowners in each neighborhood
via individual  selling  methods to pay for the cable  infrastructure.  In early
2003,  Eagle modified its strategy to deliver the ClearWorks  developed  bundled
digital services approach including  Internet,  telephone,  cable television and
security  monitoring  services to  residential  and business  users by targeting
municipalities, homebuilders and residential real estate developers that finance
and  install  the fiber  optic  cable  backbone  in every  lot and  offer  Eagle
exclusive  rights to deliver  digital  bundled  services  to  homeowners,  using
pre-selling promotions and other low cost mass marketing techniques.  Eagle does
not expect to incur any upfront costs  associated  with being granted  exclusive
rights to deliver BDS to homeowners in the developer  financed  model,  although
the  developer  participates  in the revenue  stream from the BDS  proceeds.  In
testing the fair value of goodwill at August 31, 2003, the Company's BDS revenue
projections  included a bundled basic charge for digital TV, Internet,  security
and  telephone  services  of $143 per month  against  30,060  homes in  existing
developments  being  brought on over the next four years and 35,500 homes in new
development,  which  are  currently  under  negotiation.  The $143 per month BDS
charge  represented  the net  expected  average  monthly  proceeds  expected for
purposes  of  testing  the  fair  value of its  goodwill,  after  deducting  the
developers  participation.  The Company  assumed a 36% EBITDA result for the BDS
projections  used in testing  the fair  value of  goodwill  at August 31,  2003,
comprised of 68% gross  margin less a 32%  allocation  for selling,  general and
administrative  expenses. The Company's change in strategy did not result in the
sale or cancellation of customer  contracts,  restructuring  costs,  impairment,
sale or  abandonment  of  assets.  In  October  2003,  Eagle  hired a new  Chief
Executive  Officer with an extensive  sales and marketing  background and proven
senior  management  and  operational  skills  leading   high-growth   technology
companies to implement its modified  strategy.  As of December 5, 2003, the date
of the  auditor's  report,  Eagle had  realized  several  initial  successes  in
projects  where the  municipalities,  public  utility  districts and  developers
assume the predominate  capital cost  responsibility  and contract with Eagle to
provide the services and content;  thereby significantly  limiting the Company's
capital outlays on such projects Namely, the Company announced being selected to
video  content and BDS to Lake Las Vegas,  broadband  technology,  services  and
content  to  a  Phoenix-based  luxury  condominium  development  by  North  Peak
Construction  and  broadband  technology,  services  and  content to the Truckee
Donner  Public  Utility  District in Truckee,  California.  Revenues  from these
contracts  will be reflected in the Company's  BDS category in future  operating
periods, following build-out and implementation.




                                       31
<PAGE>



         Eagle's  strategy  change had the distinct  advantage of  minimizing
the front end capital outlays while improving the time to  profitability on such
projects.  Most importantly,  this change in strategy allows Eagle to market its
services to an existing customer base without investing significant capital. The
bundled digital  services  provided to the customers under the new developer and
municipal financed model are essentially  identical to those previously provided
under  the  ClearWorks.net  model.  The  Company  is  not  aware  of  any  known
uncertainties  that could  adversely  impact our ability to recover the carrying
value of its assets.  Though the Company has realized several initial  successes
since implementing this strategy change, there can be no assurances that we will
be  successful  in the future.  In the event that the  Company  fails to achieve
sales  sufficient  to recover the carrying  value of these  assets,  we would be
required to record a significant charge to earnings in our financial  statements
during the period in which any  impairment  of our  goodwill is  determined.  At
November 30, 2003, our goodwill was $76.3 million.



Impairment Assessment:

         Our  long-lived  assets  predominantly  include  goodwill.  Statement
of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS  142")  requires  that  goodwill  and  intangible  assets be  tested  for
impairment at the reporting unit level (operating  segment or one level below an
operating  segment)  on an annual  basis and  between  annual  tests in  certain
circumstances.  Application of the goodwill  impairment test requires  judgment,
including  the   identification   of  reporting  units,   assigning  assets  and
liabilities to reporting  units,  assigning  goodwill and  intangible  assets to
reporting  units,  and  determining  the  fair  value  of each  reporting  unit.
Significant  judgments  required to estimate the fair value of  reporting  units
include estimating future cash flows, determining appropriate discount rates and
other  assumptions.  Changes in these estimates and assumptions could materially
affect the determination of fair value for each reporting unit.

         Goodwill  is  primarily  the  Company  rights  to  deliver  bundled
digital  services such as Internet,  telephone,  cable  television  and security
monitoring  services to residential and business users.  The Company obtained an
independent  appraisal to assess the fair value of the intangible assets.  There
were a number of significant and complex  assumptions used in the calculation of
the fair value of the intangible assets. If any of these assumptions prove to be
incorrect,  the Company could be required to record a material impairment to its
intangible  assets. The assumptions  included  significant market penetration in
its current markets under contract and significant market penetration in markets
where they are currently negotiating contracts.

         The Company  evaluates the carrying  value of long-lived  assets and
identifiable  intangible assets for potential impairment on an ongoing basis. An
impairment  loss would be deemed  necessary  when the  estimated  non-discounted
future  cash flows are less than the  carrying  net  amount of the asset.  If an
asset were deemed to be impaired, the asset's recorded value would be reduced to
fair market value. In determining  the amount of the charge to be recorded,  the
following  methods  would be utilized to determine  fair market value (i) quoted
market prices in active markets, (ii) estimate based on prices of similar assets
and (iii)  estimate based on valuation  techniques.  The Company tested the fair
value of its goodwill  and  intangibles  as of November 30, 2003 and  determined
that these assets totaling $81.6 million were not impaired.

Revenue Recognition

         The Company  designs,  manufactures,  markets and services its products
and services  under its  principal  subsidiaries  and operating  business  units
including;  Eagle  Wireless  International,  Inc.;  BroadbandMagic;   ClearWorks
Communications,   Inc.;   ClearWorks  Home  Systems,   Inc.;   Atlantic  Pacific
Communications,  Inc.;  Contact  Wireless,  Inc.; DSS Security,  Inc.;  Link Two
Communications, Inc.; and United Computing Group, Inc., names.



         Eagle adopted EITF 00-21,  "Revenue  Arrangements  with Multiple
Deliverables," in the fourth quarter of fiscal 2003. The impact of adopting EITF
00-21 did not have a material effect to Eagle's  results of operations.  Eagle's
contracts that contain multiple  elements as of February 29, 2004, or prior were
immaterial. When elements such as hardware, software and consulting services are
contained  in a single  arrangement,  or in related  arrangements  with the same
customer,  Eagle  allocates  revenue to each element  based on its relative fair
value, provided that such element meets the criteria for treatment as a separate
unit of  accounting.  The price  charged  when the  element  is sold  separately
generally  determines  fair value.  In the absence of fair value for a delivered
element,  Eagle  allocates  revenue  first to the fair value of the  undelivered
elements and allocates the residual  revenue to the delivered  elements.  In the
absence of fair value for an undelivered  element,  the arrangement is accounted
for as a single unit of accounting,  resulting in a delay of revenue recognition
for the delivered elements until the undelivered  elements are fulfilled.  Eagle
limits the amount of revenue  recognition  for delivered  elements to the amount
that is not contingent on the future delivery of products or services or subject
to customer-specified return or refund privileges.



Deferred Revenues

         Revenues that are billed in advance of services  being  completed are
deferred until the conclusion of the period of the service for which the advance
billing  relates.  Deferred  revenues  are  included on the  balance  sheet as a
current  liability  under the  heading  Accrued  Expenses  until the  service is
performed  and then  recognized in the period in which the service is completed.
Eagle's deferred  revenues  primarily  consist of billings in advance for cable,
internet,  security and telephone services,  which generally are between one and
three months of services.  Eagle had deferred  revenues of $442,000 and $156,000
as of November 30, 2003 and 2002, respectively.


                                       32
<PAGE>


Eagle Wireless International, Inc.

         Eagle designs,  manufactures and markets  transmitters,  receivers,
controllers  and software,  along with other  equipment  used in commercial  and
personal communication systems, radio and telephone systems. Revenues from these
products  are  recognized  when  the  product  is  shipped.   Eagle's   Wireless
International  Product  revenues are reported  under the category of Products on
Eagle's  Consolidated  Statements  of  Operations  included  as page F-4 of this
report and also under the category Eagle within Note 22 - Industry Segments.


BroadbandMagic

         BroadbandMagic  designs,  manufactures  and  markets  the  convergent
set-top  boxes.  Products are sent  principally  to  commercial  customers for a
pre-sale  test period of ninety days.  Upon the end of the pre-sale test period,
the customer  either  returns the product or accepts the product,  at which time
Eagle recognizes the revenue. Eagle's Broadband Multimedia and Internet Products
revenues  are reported  under the  category of Products on Eagle's  Consolidated
Statements of Operations  included as page F-4 of this report and also under the
category  Eagle  within  Note 22 -  Industry  Segments.  Revenue  from  software
consists of software  licensing.  There is no  post-contract  customer  support.
Software  revenue is allocated to the license  using vendor  specific  objective
evidence of fair value ("VSOE") or, in the absence of VSOE, the residual method.
The price charged when the element is sold separately generally determines VSOE.
In the absence of VSOE of a delivered  element,  Eagle allocates  revenue to the
fair value of the undelivered elements and the residual revenue to the delivered
elements.  Eagle  recognizes  revenue  allocated  to  software  licenses  at the
inception of the license.


Eagle Broadband, Inc.

         Eagle Broadband,  Inc., engages  independent agents for sales
principally in foreign  countries and certain  geographic  regions in the United
States.  Under the terms of these one-year  agreements the  distributor or sales
agents  provide the  companies  with  manufacturing  business  sales leads.  The
transactions from these  distributors and agents are subject to Eagle's approval
prior to sale. The distributorship or sales agent receives  commissions based on
the amount of the sales invoice from the companies to the customer.  The sale is
recognized  at the time of shipment  to the  customer.  These  sales  agents and
distributors are not a significant  portion of total sales in any of the periods
presented.  Eagle's Broadband,  Inc. revenues are reported under the category of
Products on Eagle's  Consolidated  Statements of Operations included as page F-4
of this  report  and also under the  category  Eagle  within  Note 22 - Industry
Segments.


Eagle BDS Services - dba ClearWorks Communications, Inc.

         ClearWorks   Communications,   Inc.,  provides  Bundled  Digital
Services to business and residential  customers,  primarily in the Texas market.
Revenue  is derived  from fees  charged  for the  delivery  of  Bundled  Digital
Services, which includes telephone, long distance, internet, security monitoring
and cable services.  This subsidiary recognizes revenue and the related costs at
the time the services are rendered.  Installation  fees are recognized  upon the
completion and acceptance.  Eagle's BDS Services revenues are reported under the
category of Broadband Services on Eagle's Consolidated  Statements of Operations
included as page F-4 of this report and also under the category  EBS/DSS  within
Note 22 - Industry Segments.


Eagle Residential Structured Wiring - dba ClearWorks Home Systems, Inc.

         ClearWorks  Home Systems,  Inc.,  sells and installs  structured
wiring, audio and visual components to homes. This subsidiary recognizes revenue
and the related costs at the time the services are performed. Revenue is derived
from the billing of structured  wiring to homes and the sale of audio and visual
components to the homebuyers. Eagle's Residential Structured Wiring revenues are
reported  under  the  category  of  Structured  Wiring on  Eagle's  Consolidated
Statements of Operations  included as page F-4 of this report and also under the
category APC/HSI within Note 22 - Industry Segments.


Eagle Communication Services - dba Atlantic Pacific Communications, Inc.

         Atlantic Pacific  Communications,  Inc.,  provides project  planning,
installation,  project management,  testing and documentation of fiber and cable
to commercial and industrial  clients  throughout the United States. The revenue
from the fiber and cable installation and services is recognized upon percentage
of  completion  of the project.  Most  projects  are  completed in less than one
month, therefore,  matching revenue and expense in the period incurred. Service,
training and extended  warranty contract revenues are recognized as services are
completed.  Eagle's  Communications  Services  revenues are  reported  under the
category of Structured Wiring on Eagle's  Consolidated  Statements of Operations
included as page F-4 of this report and also under the category  APC/HSI  within
Note 22 - Industry Segments.



                                       33
<PAGE>


Etoolz, Inc.

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


Eagle Messaging Services - dba Link Two Communications, Inc.

         Link Two  Communications,  Inc.,  provides customers with one- and
two-way  messaging  systems.  The  revenue  from the sale of these  products  is
recognized at the time the services are  provided.  Eagle's  Messaging  Services
revenues  are  reported  under the  category  of Other on  Eagle's  Consolidated
Statements of Operations  included as page F-4 of this report and also under the
category Eagle within Note 22 - Industry Segments.


Eagle Paging Services - dba Contact Wireless, Inc.

         Contact Wireless,  Inc.,  provides customers with paging and mobile
telephone  products and related monthly services.  Revenue from product sales is
recorded  at the time of  shipment.  Revenue  for the  mobile  phone and  paging
service is billed monthly as the service is provided.  Eagle's  Paging  Services
revenues  are  reported  under the  category  of Other on  Eagle's  Consolidated
Statements of Operations  included as page F-4 of this report and also under the
category Other within Note 22 - Industry Segments.


Eagle Security Services - dba DSS Security, Inc.

         DSS  Security,  Inc.,  provides  monthly  security  monitoring
services to  residential  customers.  The  customers  are billed three months in
advance of service  usage.  The revenues are deferred at the time of billing and
ratably   recognized  over  the  prepayment   period  as  service  is  provided.
Installation  fees are recognized  upon the completion and  acceptance.  Eagle's
Security Services revenues are reported under the category of Broadband Services
on Eagle's  Consolidated  Statements of Operations  included as page F-4 of this
report and also under the category EBS/DSS within Note 22 - Industry Segments.


Eagle Technology Services - dba United Computing Group, Inc.

         United Computing Group, Inc.,  provides  business-to-business  hardware
and software network solutions and network monitoring services. The revenue from
the hardware  and  software  sales is  recognized  at the time of shipment.  The
monitoring  services  recognition  policy is to record  revenue on  completion..
Eagle's Technology  Services product revenues are reported under the category of
"Products" while the services components are reported under the category "Other"
on Eagle's  Consolidated  Statements of Operations  included as page F-4 of this
report and also under the category UCG within Note 22 - Industry Segments.

Receivables

         For the three month period ended  November 30, 2003,  Eagle accounts
receivables  increased to $2,402,000  from  $1,704,000  at August 31, 2003.  The
majority  of this  increase  was due to the  increased  sales  in the  Company's
security-monitoring subsidiary, DSS Security, Inc. discussed earlier herein.

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

Inventory

         Inventories  are  valued at the lower of cost or  market.  The cost is
determined by using the first-in first-out method. At November 30, 2003, Eagle's
inventory  totaled  $3,855,000 as compared to $3,199,000 at August 31, 2003. The
majority of this  increase  was due to an increase  in raw  materials  inventory
associated with in process set-top box manufacturing.

Recent Accounting Pronouncements

         In July 2002,  the FASB  issued  Statement  of  Financial  Accounting
Standards No. 146 ("SFAS 146"),  "Accounting  for Costs  Associated with Exit or
Disposal   Activities,"   which  nullifies  EITF  Issue  No.  94-3,   "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including  Certain  Costs  Incurred in a  Restructuring)."  SFAS  146
requires that costs  associated with an exit or disposal  activity be recognized
only when the liability is incurred  (that is, when it meets the definition of a
liability in the FASB's conceptual  framework).  SFAS  146 also establishes fair
value as the objective for initial measurement of liabilities related to exit or
disposal activities. SFAS 146 is effective for exit or disposal activities that
are initiated  after December 31,  2002.  The  Company adopted SFAS in the first
quarter of fiscal 2003.

         In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of Indebtedness of Others." For  certain guarantees issued
after December 31, 2002, FIN 45 requires a guarantor to recognize, upon issuance
of a guarantee,  a liability  for the fair value of the  obligations  it assumes
under the  guarantee. Guarantees  issued  prior to  January  1,  2003,  are not
subject  to  liability  recognition,  but are  subject  to  expanded  disclosure
requirements. The   Company   does  not  believe  that  the  adoption  of  this
Interpretation has had a material effect on its consolidated  financial position
or statement of operations.


                                       34
<PAGE>


         In January 2003, FASB issued  Interpretation  No. 46 (FIN 46), an
interpretation  of  Accounting  Research  Bulletin  No. 51,  which  requires the
Company to consolidate  variable  interest entities for which it is deemed to be
the  primary  beneficiary  and  disclose  information  about  variable  interest
entities  in  which  it has a  significant  variable  interest.  FIN  46  became
effective  immediately for variable  interest  entities formed after January 31,
2003 and effective for periods  ending after December 15, 2003, for any variable
interest  entities  formed  prior to February  1,  2003. The  Company  does not
believe that this Interpretation will have a material impact on its consolidated
financial statements.

         In April  2002,  the FASB  issued  Statement  of  Financial
Accounting Standards No. 145 ("SFAS 145"), "Rescission of FASB Statements No. 4,
44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which
requires that the extinguishment of debt not be considered an extraordinary item
under  APB   Opinion   No.   30  ("APB   30"),   "Reporting   the   Results   of
Operations-Reporting  the  Effects of  Disposal  of a Segment of  Business,  and
Extraordinary,  Unusual and  Infrequently  Occurring  Events and  Transactions,"
unless the debt  extinguishment  meets the "unusual in nature and  infrequent of
occurrence"  criteria  in  APB  30.  SFAS  145 is  effective  for  fiscal  years
beginning  after May 15, 2002,  and, upon adoption,  companies  must  reclassify
prior  period  items  that do not meet  the  extraordinary  item  classification
criteria  in APB  30.  The  Company  adopted  SFAS 145 and  related  rules as of
August 31,  2002.  The  adoption  of SFAS  145 had no  effect  on the  Company's
financial position or results of operations.

         In May  2003,  the FASB  issued  Statement  of  Financial  Accounting
Standards No. 150 ("SFAS 150"),  "Accounting for Certain  Financial  Instruments
with   Characteristics   of  both  Liabilities  and   Equity." This   Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a  liability  (or an asset in some  circumstances).  The  provisions  of this
Statement are effective for financial instruments entered into or modified after
May 31, 2003,  and otherwise are effective at the beginning of the first interim
period  beginning after June 15,  2003.  The  adoption of this Statement did not
have an impact on the Company's  financial  results of operations  and financial
position.

         In April 2003,  the FASB issued SFAS No. 149,  "Amendment of Statement
133  on  Derivative  Instruments  and  Hedging  Activities,"  which  amends  and
clarifies financial accounting and reporting derivative  instruments,  including
certain  derivative  instruments  embedded  in other  contracts  and for hedging
activities  under SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
Hedging Activities." This  statement is effective for contracts entered into or
modified  and for hedging  relationships  designated  after June 30,  2003.  The
adoption of this  statement  did not have an impact on the  Company's  operating
results or financial position.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate and Equity Market Risks

         The Company is exposed  both to market risk from  changes in interest
rates on funded debt and changes in equity values on common stock investments it
holds in publicly  traded  companies.  The Company also  previously had exposure
that related to the  Company's  revolving  credit  facility.  The Company  fully
retired its revolving  credit  facility in September 2003 and thus no longer has
such  exposure  related  to  interest  rate  risk.  Borrowings  under the credit
facility  bear  interest  at variable  rates  based on the bank prime rate.  The
extent  of this risk  with  respect  to  interest  rates on  funded  debt is not
quantifiable  or predictable  due to the  variability of future  interest rates;
however,  the  Company  does not  believe a change in these  rates  would have a
material adverse effect on the Company's operating results, financial condition,
and cash flows.

         The  Company's  cash and cash  equivalents  are invested in mortgage
and asset backed  securities,  mutual  funds,  money market  accounts and common
stock.  Accordingly,  the Company is subject to both changes in market  interest
rates and the equity  market  fluctuations  and risk.  There is an inherent roll
over risk on these funds as they accrue  interest at current  market rates.  The
extent of this risk is not quantifiable or predictable due to the variability of
future  interest  rates.  The  Company  does not believe a change in these rates
would  have a  material  adverse  effect  on the  Company's  operating  results,
financial  condition,  and cash flows with respect to invested funds in mortgage
and asset backed  securities,  mutual funds and money market accounts,  however;
the company does have both cash and liquidity  risks  associated with its common
stock  investments  aggregating  $1,876,850  in market  value as of November 30,
2003.

Credit Risks

         The Company monitors its exposure for credit losses and maintains
allowances for anticipated  losses,  but does not require  collateral from these
parties.  The company did not have any customers that  represented  greater than
10% of its revenues  during the first fiscal quarter of 2004 and, as such,  does
not believe  that the credit risk posed by any  specific  customer  would have a
material adverse affect on its financial condition.

Item 4.  Controls and Procedures

         The Company's Chief  Executive  Officer and Chief Financial  Officer
have  evaluated  the  effectiveness  of the  Company's  disclosure  controls and
procedures  (as such term is defined  in Rules  13a-15(b)  under the  Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period
covered by this quarterly report.  Based on such evaluation,  such officers have
concluded that the Company's disclosure controls and procedures are effective in
alerting them on a timely basis to material  information relating to the Company
(including  its  consolidated  subsidiaries)  required  to be  included  in  the
Company's periodic filings under the Exchange Act.


                                       35
<PAGE>

         There were no changes in Eagle's  internal  control over  financial
reporting  that occurred  during the quarter  ended  November 30, 2003 that have
materially affected, or reasonably likely to materially affect, Eagle's internal
control over financial reporting.

         Eagle's  disclosure  controls and  procedures  are designed to provide
a reasonable level of assurance of reaching Eagle's desired  disclosure  control
objectives and are effective in reaching that level of reasonable assurance.

Part 2. - Other Information

Item 1 - Legal Proceedings

         For a description of certain legal matters,  refer to Note 15.
"Commitments and Contingent  Liabilities" under the heading Legal Proceedings in
Part 1, Item 1. "Consolidated Financial Statements."

          The  Company  is also  subject to legal  proceedings  and claims  that
arise in the ordinary  course of business.  The  Company's  management  does not
expect that the results in any of these legal  proceedings  will have a material
adverse  effect on the  Company's  financial  condition or results of operations
(Note 15).

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

         None

Item 3 - Defaults Upon Senior Securities
         None

Item 4 - Submission of Matters to a Vote of Security Holders
         None

Item 5 - Other Information
         None


Item 6-Exhibits, Financial Statement Schedules and Reports on Form 8-K


(a)      Financial Statements and Schedules:

         The financial statements are set forth under Item 1 of this Quarterly
Report on Form 10-Q.  Financial statement schedules have been omitted since they
are either  not  required,  not  applicable,  or the  information  is  otherwise
included.

(b)      Reports on Form 8-K

         The following reports were furnished on Form 8-K during the three
months ended November 30, 2003:

         A report on Form 8-K, announcing information under Item 4 of the
report,  was filed on  September  11,  2003  with the  Securities  and  Exchange
Commission.

         A report on Form 8-K, announcing information under Item 5 of the
report,  was filed on  September  30,  2003  with the  Securities  and  Exchange
Commission.

         A report on Form 8-K, announcing information under Item 5 of the
report,  was  filed  on  October  3,  2003  with  the  Securities  and  Exchange
Commission.

         A report on Form 8-K, announcing information under Item 5 of the
report,  was  filed on  October  28,  2003  with  the  Securities  and  Exchange
Commission.


                                       36
<PAGE>

<TABLE>
<CAPTION>

(c)      Exhibit Listing

         EXHIBIT NO.                IDENTIFICATION OF EXHIBIT

        <S>                            <C>
         Exhibit 3.1                Eagle Wireless International, Inc. Articles of Incorporation, as Amended
                                    (incorporated by reference to Exhibit 3.1 of Form SB-2 file no. 333-20011)

         Exhibit 3.2                Amended and Restated Eagle Wireless International, Inc. Bylaws (Incorporated
                                    by reference to Exhibit 3.2 of Form 10-KSB for the fiscal year ended August
                                    31, 2001, filed November 16, 2001)

         Exhibit 4.1                Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of
                                    Form SB-2 file no. 333-20011)

         Exhibit 10.1               Asset Purchase Agreement between Eagle Telecom International, Inc., a Delaware
                                    corporation and Eagle Telecom International, Inc., a Texas corporation
                                    (incorporated by reference to Exhibit 10.1 of Form SB-2 file no. 333-20011)

         Exhibit 10.2               Stock Option Plan (incorporated by reference to Exhibit 10.2 of Form SB-2 file
                                    no. 333-20011)

         Exhibit 10.3               Agreement and Plan of Reorganization dated September 15, 2000 (incorporated by
                                    reference to Exhibit 10.1 of Form S-4 file no. 333-49688)

         Exhibit 10.4               Stock Purchase Agreement between Eagle Wireless International, Inc. and the
                                    shareholders of Comtel Communications, Inc. (incorporated by reference to
                                    Exhibit 10.4 of Form 10-KSB for the fiscal year ended August 31, 2000, filed
                                    December 13, 2000)

         Exhibit 10.5               Stock Purchase Agreement between Eagle Wireless International, Inc. and the
                                    shareholders of Atlantic Pacific Communications, Inc. (incorporated by
                                    reference to Exhibit 10.5 of Form 10-KSB for the fiscal year ended August 31,
                                    2000, filed December 13, 2000)

         Exhibit 10.6               Stock  Purchase   Agreement  between  Eagle  Wireless
                                    International,  Inc. and the  shareholders  of Etoolz,  Inc.  (incorporated  by
                                    reference  to Exhibit  10.6 of Form 10-KSB for the fiscal year ended August 31,
                                    2000, filed December 13, 2000)

         Exhibit 21.1               List of Subsidiaries (incorporated by reference to Exhibit 21.1 of Form S-4
                                    file no. 333-49688)

         Exhibit 31.1               Certification of Chief Executive Officer pursuant to Section 302 of the
                                    Sarbanes-Oxley Act of 2002

         Exhibit 31.2               Certification of Chief Financial Officer pursuant to Section 302 of the
                                    Sarbanes-Oxley Act of 2002

         Exhibit 32.1               Certification of Chief Executive Officer pursuant to Section 906 of
                                    the Sarbanes-Oxley Act of 2002

         Exhibit 32.2               Certification of Chief Financial Officer pursuant to Section 906 of
                                    the Sarbanes-Oxley Act of 2002

</TABLE>


SIGNATURES

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


                                        EAGLE BROADBAND, INC.


Date:  May 3, 2004


                                              By:  /s/David A. Weisman
                                                    David A Weisman
                                                    Chairman of the Board and
                                                    Chief Executive Officer
                                                   (Principal Executive Officer)

                                                   /s/Richard R. Royall
                                                    Chief Financial Officer
                                                    (Principal Financial &
                                                    Accounting Officer)



                                       37
<PAGE>