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

                                    FORM 10-Q

                                   -----------

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2004

[ ]  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: 001-154649


                              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 January 6, 2005, there were 225,491,457 shares of common stock
outstanding.


<PAGE>




<TABLE>
<CAPTION>

                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                                    Form 10-Q
                     For the Quarter Ended November 30, 2004

                                Table of Contents

<S>                                                                                                         <C>
Part 1 - Financial Information                                                                              Page

         Item 1.  Consolidated Financial Statements (Unaudited)

                  Consolidated Balance Sheets at November 30, 2004, and August 31, 2004                       1

                  Consolidated Statements of Operations for the Three Months
                  Ended November 30, 2004 and 2003                                                            2

                  Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended
                  November 30, 2004, and Twelve Months Ended August 31, 2004                                  3

                  Consolidated Statements of Cash Flows for the Three Months
                  Ended November 30, 2004 and 2003                                                            4

                  Notes to the Consolidated Financial Statements                                              5

         Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations      18

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                 24

         Item 4.  Controls and Procedures                                                                    25

Part 2 - Other Information

         Item 1.  Legal Proceedings                                                                          25

         Item 2.  Recent Sales of Unregistered Securities or Changes in Securities and Use of Proceeds.      25

         Item 3.  Defaults upon Senior Securities                                                            25

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

         Item 5.  Other Information                                                                          25

         Item 6.  Exhibits and Reports on Form 8-K                                                           25

Signatures                                                                                                   27
</TABLE>


<PAGE>


Part 1 - Financial Information
Item 1. Consolidated Financial Statements (Unaudited)


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


<TABLE>
<CAPTION>
                                                                      November 30,    August 31,
                                                                         2004            2004
                                                                      ----------      --------
                        ASSETS
<S>                                                                   <C>             <C>
CURRENT ASSETS
  Cash and Cash Equivalents                                           $     474       $   2,051
  Securities Available for Sale                                            --               551
  Accounts Receivable, net                                                1,363           1,470
  Inventories                                                             1,641             403
  Net investment in direct financing leases                                 427             291
  Prepaid Expenses                                                          406             327
                                                                      ---------       ---------
      Total Current Assets                                                4,311           5,093
                                                                      ---------       ---------
PROPERTY AND EQUIPMENT
  Operating Equipment                                                    36,559          36,415
  Less:  Accumulated Depreciation                                        (8,312)         (7,837)
                                                                      ---------       ---------
      Total Property and Equipment                                       28,247          28,578
                                                                      ---------       ---------
OTHER ASSETS:
  Deferred Costs                                                           --              --
  Net investment in direct financing leases                                 938             623
  Goodwill, net                                                           4,095           4,095
  Contract rights, net                                                   21,200          21,678
  Customer relationships, net                                             5,312           5,431
  Other Intangible assets, net                                            3,978           4,034
  Other Assets                                                              679             679
                                                                      ---------       ---------
      TOTAL OTHER ASSETS                                                 36,202          36,540
                                                                      ---------       ---------
TOTAL ASSETS                                                          $  68,760       $  70,211
                                                                      =========       =========
         LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts Payable                                                    $   4,926       $   4,445
  Accrued Expenses                                                        7,403           9,647
  Notes Payable                                                           5,401           5,920
  Deferred revenue                                                           71              96
                                                                      ---------       ---------
      TOTAL CURRENT LIABILITIES                                          17,801          20,108
                                                                      ---------       ---------
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 350,000,000 shares
      Issued and Outstanding at November 30, 2004 and August 31,
        2004, 212,598,000 and 205,509,000, respectively                     213             206
  Additional Paid in Capital                                            213,348         208,051
  Accumulated Deficit                                                  (162,602)       (157,106)
  Accumulated Comprehensive Income (Loss)                                  --            (1,048)
                                                                      ---------       ---------
      TOTAL SHAREHOLDERS' EQUITY                                         50,959          50,103
                                                                      ---------       ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                            $  68,760       $  70,211
                                                                      =========       =========
</TABLE>



SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       1

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

<TABLE>
<CAPTION>
                                                    For the three months
                                                     ended November 30,
                                                   ----------------------
                                                     2004          2003
                                                   -------      ---------
<S>                                                <C>           <C>
NET SALES:
  Structured wiring                                $   262       $   392
  Broadband services                                 1,216         1,564
  Products                                              26           361
  Other                                                 24            80
                                                   -------       -------
TOTAL SALES                                          1,528         2,397
                                                   -------       -------
COSTS OF GOODS SOLD:
  Direct Labor and Related Costs                       262           462
  Products and Integration Service                      38           137
  Impairment Slow Moving & Obsolete Inventory         --            --
  Structured Wiring Labor and Materials                175           205
  Broadband Services Costs                             920           190
  Depreciation and Amortization                        290           285
  Other Manufacturing Costs                             16
                                                   -------       -------
TOTAL COSTS OF GOODS SOLD                            1,685         1,295
                                                   -------       -------
GROSS PROFIT                                          (157)        1,102
                                                   -------       -------
OPERATING EXPENSES:
  Selling, General and Administrative:
  Salaries and Related Costs                           399           959
  Advertising and Promotion                             10            18
  Depreciation and Amortization                        841           319
  Other Support Costs                                2,949         1,424
  Research and Development                             143           119
  Impairment, Write-Downs &
  Restructuring Costs                                 --            --
                                                   -------       -------
TOTAL OPERATING EXPENSES                             4,342         2,839
                                                   -------       -------
LOSS FROM OPERATIONS                                (4,499)       (1,737)
                                                   -------       -------
OTHER INCOME/(EXPENSES):
  Interest Income,                                       4             4
  Interest Expense                                    (102)       (7,080)
  Gain (Loss) on Sale of Assets                        149           352
                                                   -------       -------
TOTAL OTHER INCOME (EXPENSE)                            51        (6,724)
                                                   -------       -------
NET LOSS                                            (4,448)       (8,461)
                                                   -------       -------
OTHER COMPREHENSIVE LOSS:
  Unrealized Holding Gain (Loss)                     1,048           309
                                                   -------       -------
TOTAL OTHER COMPREHENSIVE LOSS                     $ 1,048       $   309
                                                   =======       =======
COMPREHENSIVE LOSSES                               $(3,400)      $(8,152)
                                                   =======       =======
NET LOSS PER COMMON SHARE:
  Basic                                              (0.02)        (0.05)
  Diluted                                            (0.02)        (0.05)
  Comprehensive Loss                                 (0.02)        (0.05)
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       2
<PAGE>
                     EAGLE BROADBAND, INC., AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (in thousands)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                 Additional               Accumulated    Total
                                                Common Stock         Preferred    Paid in      Retained  Comprehensive Shareholders'
                                           ----------------------    ---------   ---------    ---------   ----------   ---------
                                             Shares       Value        Stock      Capital      Earnings     Income       Equity
                                           ---------    ---------    ---------   ---------    ---------   ----------   ---------
<S>                                          <C>        <C>          <C>         <C>         <C>          <C>          <C>
TOTAL SHAREHOLDERS' EQUITY
  AS OF AUGUST 31, 2003                      147,447    $     147                $ 177,017   $(118,101)   $    (727)   $  58,336
                                           ---------    ---------    ---------   ---------   ----------   ---------    ---------


Net Loss                                        --           --           --          --        (39,005)        --        (39,005)

New Stock Issued to Shareholders:                                                                                             --
  For Services and Compensation               11,016           12         --         6,335         --           --          6,347
  For Retirement of Debt and Liabilities      47,046           47         --        13,294         --           --         13,341
  Stock-Based Compensation                      --           --           --         4,493         --           --          4,493
  Beneficial Conversion Features on
     Convertible Debentures                     --           --           --         6,912         --           --          6,912
  Unrealized Holding Loss                       --           --           --                       --          (321)         (321)
                                           ---------    ---------    ---------   ---------   ----------   ---------    ---------

TOTAL SHAREHOLDERS' EQUITY
  AS OF AUGUST 31, 2004                      205,509    $     206    $    --     $ 208,051   $ (157,106)  $  (1,048)   $   50,103
                                           =========    =========    =========   =========   ==========   =========    =========

NET LOSS FOR THE THREE MONTHS ENDED
  NOVEMBER 30, 2004                                                                              (4,448)                   (4,448)

New Stock Issued to Shareholders:
  For Services and Compensation                  732            1                    1,518                                  1,519
  For Retirement of Debt and Liabilities       6,357            6                    3,779                                  3,785
  Stock-Based Compensation                                                                                                    --
  Beneficial Conversion Features on
     Convertible Debentures                                                                                                   --
Unrealized Holding Loss                                                                          (1,048)      1,048           --

                                           ---------    ---------    ---------   ---------    ---------   ---------    ---------
TOTAL SHAREHOLDERS' EQUITY
  AS OF NOVEMBER 30, 2004                    212,598    $     213         --     $ 213,348   $ (162,602)        --     $   50,959
                                           =========    =========    =========   =========   ==========   =========    =========
</TABLE>

 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       3

<PAGE>


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

<TABLE>
<CAPTION>
                                                             For the Three Months
                                                             Ended November 30,
                                                            ------------------
                                                             2004       2003
                                                            -------    -------
<S>                                                         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                    $(4,448)   $(8,461)
                                                            -------    -------
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
 Impairment, write-downs & restructuring costs                 --         --
 Gain (Loss) on sale of Assets                                 --         --
 Interest for beneficial conversion value                      --        6,912
 Depreciation and Amortization                                1,131        614
 Stock Issued for Interest Expense                               96       --
 Stock Issued for Services Rendered                           1,423      2,304
 Provision for bad debt                                          19        103
 (Increase)/Decrease in Accounts Receivable                      88       (493)
 (Increase)/Decrease in Inventories                          (1,238)      (656)
 (Increase)/Decrease in Prepaid Expenses                        (79)        17
 Increase/(Decrease) in Accounts Payable                        481        279
 Increase/(Decrease) in Accrued Expenses                      1,657     (1,109)
                                                            -------    -------
    Total Adjustment                                          3,578      7,971
                                                            -------    -------
NET CASH USED BY OPERATING ACTIVITIES                          (870)      (490)
                                                            -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES
  (Purchase)/Disposal of Property and Equipment                (144)       (94)
  Increase/(Decrease) Deferred Costs                           --         --
  Increase/(Decrease) in Intangible Costs                        (3)      --
  Increase/(Decrease) in Marketable Securities                  551       (163)
  (Increase)/Decrease in Other Assets                          --          (12)
  (Purchase)/Disposal of Contact Wireless & DSS Security,
    Net of Cash Acquired                                                  --
  Gross Equipment Purchase for Direct Financing Leases         (641)      --
  Principal Collections on Direct Financing Leases               49       --
                                                            -------    -------
NET CASH USED BY INVESTING ACTIVITIES                          (188)      (269)
                                                            -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES
  Increase/(Decrease) in Notes Payable & Long-Term Debt        (519)     5,608
  Increase/(Decrease) in Capital Leases                                    --
  Increase/(Decrease) in Line of Credit                                    --
  Increase/(Decrease) in Deferred Taxes                                    --
  Proceeds from Sale of Common Stock, Net                                  --
  Syndication costs                                                        --
  Treasury Stock
                                                            -------    -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES               (519)     5,608
                                                            -------    -------
NET INCREASE/(DECREASE) IN CASH                              (1,577)     4,849
CASH AT THE BEGINNING OF THE YEAR                             2,051        824
                                                            -------    -------
CASH AT THE END OF THE YEAR                                 $   474    $ 5,673
                                                            =======    =======
Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for:
  Interest                                                  $     6    $   168

</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       4

<PAGE>


NOTE 1 - Basis of Presentation and Significant Accounting Policies:

            Eagle Broadband, 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 leading  provider of broadband,  Internet
            protocol (IP) and satellite communications  technology and services.
            The Company is focused on three core businesses:  broadband  bundled
            services, IP set-top boxes and satellite communications  technology.
            The Company's  product  offerings  include an exclusive  "four-play"
            suite  of  IP-based   broadband  bundled  services  with  high-speed
            Internet, cable TV, telephone and security monitoring, and a turnkey
            suite of financing, network design, operational and support services
            that  enables  municipalities,  utilities,  real estate  developers,
            hotels,   multi-tenant  owners  and  service  providers  to  deliver
            exceptional value, state-of-the-art entertainment and communications
            choices  and  single-bill   convenience  to  their  residential  and
            business customers. Eagle offers the HDTV-ready Media Pro IP set-top
            box product line that enables hotel operators and service  providers
            to   maximize   revenues  by   offering   state-of-the-art   in-room
            entertainment  and video  services.  The Company  also  develops and
            markets  the SatMAX  satellite  communications  system  that  allows
            government,  military,  homeland  security,  aviation,  maritime and
            enterprise customers to deliver reliable,  non-line-of-sight,  voice
            and data  communications  services via the Iridium satellite network
            from any location on Earth.

            The condensed balance sheet of the Company as of November 30,
            2004, the related condensed statements of operations for the
            three months ended November 30, 2004 and 2003, and the
            statements of cash flows for the three months ended November
            30, 2004 and 2003, included in the condensed financial
            statements have been prepared by the Company without audit.
            In the opinion of management, the accompanying condensed
            financial statements include all adjustments (consisting of
            normal, recurring adjustments) necessary to summarize fairly
            the Company's financial position and results of operations.
            The results of operations for the three months ended
            November 30, 2004, are not necessarily indicative of the
            results of operations for the full year or any other interim
            period. The information included in this Form 10-Q should be
            read in conjunction with Management's Discussion and
            Analysis and Financial Statements and notes thereto included
            in the Company's August 31, 2004, Form 10-K.


                                       5
<PAGE>
 NOTE 2 - Related Party Transactions:

            Sale of Assets:

            During the fiscal year ended August 31, 2004, the Company  completed
            a transaction  with an effective date of October 1, 2003, with Eagle
            RF  International,  Inc.  (dba ERF),  to sell certain  assets of its
            subsidiary Contact Wireless, Inc. Eagle RF International, Inc., is a
            private  company  engaged in providing  products and services to the
            wireless  industry.  ERF has a board  member who is also a member of
            the Company's board of directors,  namely H. Dean Cubley. The assets
            sold related to the Contract  Wireless  paging network  business and
            included a switch center lease and tower lease,  network  equipment,
            network contracts, paging licenses, accounts receivable,  inventory,
            furniture and fixtures.  The Company had downsized  this  subsidiary
            during the course of fiscal 2003 and during the three  months  ended
            February  29,  2004,  elected  to exit this  business  segment.  The
            Company has  recorded  approximately  $329,000  in  revenues  with a
            corresponding  segment  loss of  approximately  $387,000  from  this
            business segment in fiscal 2003 and recorded  approximately  $80,000
            in  revenues  with a  corresponding  loss of  $25,000  in the  first
            quarter of fiscal  2004.  The Company had no  competing  offers with
            respect to the sale of assets  and/or sale of the  business  and the
            Company's  board of  directors  determined  that the offer  from ERF
            represented  fair  value.  The  Company   terminated  its  remaining
            employees  associated  with this subsidiary and ERF entered into new
            employment   arrangements   with   certain   of   these   employees.
            Additionally,  ERF assumed certain liabilities and subleased certain
            property from the Company in Houston and San Antonio. In conjunction
            with this  transaction,  the Company  recorded a loss of $642,000 on
            the sale of assets and certain other costs incurred in the exit from
            this line of business.

           Compensation

           Eagle renewed a professional  service  agreement  effective  April 1,
           2004,  with  the  son  of  a  director.  The  agreement  states  that
           consulting  services  provided  will include  support in the areas of
           management  information  systems,  investor relations,  and corporate
           finance  and  accounting.  Compensation  includes  monthly  salary of
           $10,000 and quarterly  issuance of stock  options to purchase  common
           stock of Eagle Broadband.

            In addition, in February 2004, compensation for certain officers and
            key employees under incentive clauses of their employment  contracts
            (i)  includes a non-cash  expense of  $4,493,000  incurred  upon the
            modification  of  warrants  for  4,200,000  common  shares  and (ii)
            reflects  a  guaranteed   compensation   of  the  modified   options
            equivalent  to $1.75  less the  option  strike  price,  which was an
            additional  $4,074,000  accrued  in August  2004.  The amount of the
            accrual  varies each quarter end depending on the stock market value
            fluctuation  or upon  exercise  of  options  subject  to  employment
            agreement.


                                       6
<PAGE>

NOTE 3 - Accounts Receivable:

           Accounts receivable consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                              November 30,                August 31,
                                                                  2004                       2004
                                                            ---------------            ---------------
<S>                                                                <C>                        <C>
                    Accounts Receivable                            $ 2,705                    $ 3,866
                    Completed Contracts                                463                          -
                    Unbilled Completed Contracts                       335                          -
                    Unbilled Contracts in Progress                      87                          -
                    Contract in Progress                                97                          -
                    Allowance for Doubtful Accounts                 (2,324)                    (2,396)
                                                            ---------------            ---------------
                    Accounts Receivable, Net                       $ 1,363                    $ 1,470
                                                            ===============            ===============

                    Allowance for Doubtful Accounts
                     Percentage of Accounts Receivable                  63%                        62%
</TABLE>


NOTE 4 - Property, Plant & Equipment and Intangible Assets:

           Components  of  property,  plant and  equipment  are as  follows  (in
thousands):

<TABLE>
<CAPTION>

                                                                     November 30,             August 31,
                                                                        2004                    2004
                                                                    --------------         --------------
<S>                                                                         <C>                    <C>
                      Automobile                                         $    143             $      143
                      Headend facility and fiber infrastructure            27,214                 27,146
                      Furniture and fixtures                                  522                    516
                      Leasehold improvements                                  185                    133
                      Office equipment                                      7,454                  7,454
                      Property, manufacturing and equipment                 1,041                  1,023
                                                                    --------------         --------------
                      Total Property, Plant and Equipment                $ 36,559             $   36,415
                      Less accumulated depreciation                        (8,312)                (7,837)
                                                                    --------------         --------------
                      Net property, plant and equipment                  $ 28,247             $   28,578
                                                                    ==============         ==============
</TABLE>

           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 $12,000  and $9,000 for the three  months  ended
           November 30, 2004 and 2003, 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 its  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.


                                       7
<PAGE>

           Components of intangible assets are as follows (in thousands):


<TABLE>
<CAPTION>
                                                           November 30,   August 31,
                                                             2004            2004
                                                          ---------        --------

<S>                                                       <C>              <C>
                          Goodwill                        $  5,596         $  5,596
                          Accumulated Amortization          (1,501)          (1,501)
                                                          --------         --------
                                                          $  4,095         $  4,095
                                                          ========         ========

                          Contract Rights                 $ 28,691         $ 28,691
                          Accumulated Amortization          (7,491)          (7,013)
                                                          --------         --------
                                                          $ 21,200         $ 21,678
                                                          ========         ========

                          Customer Relationships          $  7,189         $  7,189
                          Accumulated Amortization          (1,877)          (1,758)
                                                          --------         --------
                                                          $  5,312         $  5,431
                                                          ========         ========

                          Other Intangible Assets         $  6,882         $  6,839
                          Accumulated Amortization          (2,904)          (2,805)
                                                          --------         --------
                                                          $  3,978         $  4,034
                                                          ========         ========
</TABLE>

NOTE 5 - Notes Payable:

           The  following  table  lists the  Company's  note  obligations  as of
November 30 and August 31, 2004 (in thousands):

<TABLE>
<CAPTION>
                                                                                           Amount
                                                                               ----------------------------
                                                  Annual                         November 30,     August 31,
                                               Interest Rate    Due Date            2004              2004
                                               -------------   ------------    -------------     -----------
<S>                                                <C>         <C>               <C>             <C>
Notes Payable: Investor Group                      8.0%          Demand              $ 3,704         $ 4,888
Notes Payable: Q Series Bonds                     12.0%          Various                 744             744
Other                                            Various         Various                 953             288
                                                                               --------------    ------------
Total Notes Payable                                                                  $ 5,401         $ 5,920
                                                                               --------------    ------------
Less Current Portion                                                                   5,401           5,920
                                                                               --------------    ------------
Total Long-Term Debt                                                                 $    --         $    --
                                                                               ==============    ============
</TABLE>

            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 $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.  At November  30,  2004,  $744,000 is
            outstanding.

            Eagle  Broadband,   Inc.  ("Eagle"  or  "Company")  entered  into  a
            Securities  Purchase Agreement dated June 2, 2004, (the "Agreement")
            with four  accredited  investors  (collectively,  the  "Investors"),
            pursuant to which Eagle agreed to sell, and the Investors  agreed to
            purchase,  debentures in the principle amount of $4,888,400  bearing
            interest  at the  rate  of 8%  per  annum,  maturing  in  June  2007
            ("Debentures"), convertible into an aggregate of 5,360,088 shares of
            Eagle common stock,  par value $.001 per share (the "Common Stock"),
            together  with  five-year  warrants  to  purchase  an  aggregate  of
            1,340,022  shares of Common Stock at an exercise price of $1.265 per
            share (the " Warrants") ( the funding of the Debentures and issuance
            of the  Warrants  referred to as the  "Financing").  At November 30,
            2004, $3,704,000 is outstanding.

            The  Debentures  are  convertible  immediately.  Subject  to certain
            exceptions,  in the event  that on or  before  the date on which the
            Debentures  are  converted,  Eagle issues or sells,  or is deemed to
            have issued or sold in accordance  with the terms of the Debentures,
            any shares of Common Stock for consideration per share less than the
            conversion  price of the  Debentures  as then in effect (a "Dilutive
            Issuance"),  then the  conversion  price of the  Debentures  will be
            adjusted to equal the consideration per share of Common Stock issued
            or sold or  deemed  to have been  issued  and sold in such  Dilutive
            Issuance.

                                       8
<PAGE>

            All of the Warrants are exercisable immediately.  Subject to certain
            exceptions,  in the event  that on or  before  the date on which the
            Warrants are exercised,  Eagle issues or sells, or is deemed to have
            issued  or sold in  accordance  with the  terms of the  Warrants,  a
            Dilutive  Issuance,  then the exercise price of the Warrants will be
            adjusted to equal the consideration per share of Common Stock issued
            or sold or  deemed  to have been  issued  and sold in such  Dilutive
            Issuance.

NOTE 6 - 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.

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


<TABLE>
<CAPTION>
                                                          November 30, 2004    August 31, 2004
                                                                 (%)                   (%)
                                                         -------------------  ----------------
<S>                                                            <C>                   <C>
                     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
</TABLE>


            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):


<TABLE>
<CAPTION>
                                                           November 30, 2004    August 31, 2004
                                                           -----------------    --------------
<S>                                                               <C>               <C>
                     Computed Expected Tax Benefit                $ (1,512)         $ (13,262)
                     Increase in Valuation Allowance                 1,512             13,262
                                                            ---------------     --------------
                     Income Tax Expense                           $      -          $       -
                                                            ===============     ==============
</TABLE>


            The  tax  effects  of  temporary   differences  that  give  rise  to
            significant  portions of the  deferred  tax assets and  deferred tax
            liabilities  at November 30, 2004 and August 31, 2004, are presented
            below (in  thousands) and include the balances of the merged company
            ClearWorks.net.

<TABLE>
<CAPTION>
                                                                   November 30, 2004     August 31, 2004
                                                                   -----------------     ---------------
                     Deferred Tax Assets:
<S>                                                                       <C>                  <C>
                     Net Operating Loss Carry Forwards                    $ 65,118             $ 63,606
                     Less Valuation Allowance                              (65,118)             (63,606)
                                                                   ----------------      ---------------
                     Net Deferred Tax Assets                              $     --             $     --
                                                                   ================      ===============
</TABLE>

            The  valuation  allowance  for  deferred  tax assets of November 30,
            2004,  and  August  31,  2004,  was  $65,118,000  and   $63,606,000,
            respectively.  At November 30, 2003, the Company has a net operating
            loss  carry-forward  of  $112,079,000,  which is available to offset
            future federal taxable income, if any, with expirations from 2021 to
            2023.

                                       9
<PAGE>

NOTE 7 - Uncompleted Contracts:

            Costs,  estimated earnings and billings on uncompleted contracts for
            the three months ended November 30, 2004 and 2003, are summarized as
            follows (in thousands):

<TABLE>
<CAPTION>

                                                                       November 30, 2004     November 30, 2003
                                                                       -----------------    -----------------
<S>                                                                      <C>                    <C>
                     Costs Incurred on Uncompleted Contracts                     $ 175                  $ -
                     Estimated Revenue                                               9                    -
                                                                        ---------------       --------------
                     Gross Revenue                                                 184                    -
                                                                        ---------------       --------------
                     Less:  Billings to Date                                       184                    -
                     Costs and Estimated Revenue in Excess of
                                                                        ---------------       --------------
                     Billings on Uncompleted Contracts                             $ -                  $ -
                                                                        ===============       ==============
</TABLE>

NOTE 8 - Preferred Stock, Stock Options and Warrants:

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

<TABLE>
<CAPTION>
                                        Options/Warrants
                                      Issued & Outstanding            Options/Warrants Exercisable
                                  -----------------------------     ------------------------------
  Class of        Expiration        November 30,      August 31,      November 30,       August 31,
  Warrants           Date             2004              2004             2004              2004
----------------------------------------------------------------------------------------------------
<S>                 <C>              <C>              <C>            <C>                <C>
0.41                Sep-08            3,875,000        3,800,000         3,875,000        1,550,000
0.48                Oct-06               25,000           25,000            25,000           25,000
0.60                Sep-06              400,000          400,000                 -                -
0.61                Jan-05               25,000           25,000            25,000           25,000
0.73                Oct-07               25,000                -                 -                -
0.75                Sep-08              500,000          500,000                 -                -
0.78                Sep-09               33,332                -            33,332                -
0.97                Jul-07               25,000           25,000                 -                -
1.00                May-09              312,500                -           312,500                -
1.04                Apr-05               50,000           50,000            50,000           50,000
1.23                Apr-07               25,000           25,000            25,000                -
1.31                Jan-07               25,000           25,000            25,000           25,000
7.50                Apr-08              800,000          800,000           800,000          800,000
ESOP                Various             516,120  *       346,002  *        346,002          346,002
                                  -------------     -------------    --------------     ------------
                                      6,636,952  **    6,021,002  **     5,516,834        2,821,002
                                  ==============    =============    ==============     ============
</TABLE>

                *Denotes  warrants which would have an  anti-dilutive  effect if
                currently  used to  calculate  earnings  per share for the three
                months ended November 30, 2004, and fiscal year ended August 31,
                2004.
                **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 August 31, 2004, none of these
                warrants have been exercised.

NOTE 9 - Risk Factors:

           For the three months ended  November 30, 2004,  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 industries.  Approximately,
           71% of the  Company's  revenues  and  receivables  have been  created
           solely in the state of Texas, 0% in the international market, and the
           approximate  29%  remainder  relatively  evenly  over the rest of the
           nation  during the three  months ended  November  30,  2004;  whereas
           approximately,  94% of the Company's  revenues and  receivables  were
           created solely in the state of Texas, 0% in the international market,
           and the approximate 6% remainder  relatively  evenly over the rest of
           the nation during the three months ended  November 30, 2003.  Through
           the normal course of business, the Company generally does not require
           its customers to post any collateral.



                                       10
<PAGE>


NOTE 10 - Foreign Operations:

           Although  the Company is based in the United  States,  its product is
           sold on the  international  market.  Presently,  international  sales
           total  approximately  0%  and  0% at  November  30,  2004  and  2003,
           respectively.

NOTE 11 - Commitments and Contingent Liabilities:

           Leases

           For the  three  months  ended  November  30,  2004 and  2003,  rental
           expenses of approximately  $94,000 and $137,000,  respectively,  were
           incurred.

           The Company  renewed its primary  office  lease space in League City,
           Texas,  for $24,983 per month with South  Shore  Harbor  Development,
           Ltd. The renewal lease  commenced on June 1, 2004, and expires on May
           31, 2009. The Lessor agreed to grant the Company a one-time option to
           terminate  the lease at 36 months  by paying an  unamortized  leasing
           commission of $35,000 and a penalty of 1.5 months rent of $37,000 for
           a combined total of $72,000.


                                      Period Ending
                                       August 31           Amount
                                   -----------------   -------------
                                         2005          $    224,851
                                         2006               299,801
                                         2007               306,180
                                         2008               325,316
                                         2009               243,987
                                                       -------------
                                        Total          $  1,400,135
                                                       =============
           Legal Proceedings

           In July 2003,  Eagle became a defendant in Cornell Capital  Partners,
           L.P. vs. Eagle  Broadband,  Inc.,  et al.,  Civil Action No.  03-1860
           (KSH),  In the United States  District  Court for the District of New
           Jersey.  The suit presents  claims for breach of contract,  state and
           federal securities 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. In November 2003, the principal balance of the
           debenture was repaid, although the suit remains outstanding.  Cornell
           claims damages in excess of $1,000,000. 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 in the amount of  $2,000,000.  The Company has not
           accrued any expenses  against this lawsuit,  as the outcome cannot be
           predicted at this time.

           In December 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.

            In 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.  Defendant has filed an
            answer,  denies the claims and  intends to  vigorously  defend  this
            lawsuit  and claims  against  it. The  Company  has not  accrued any
            expenses against this lawsuit, as the outcome cannot be predicted at
            this time.

           In fiscal 2004, The Tail Wind Fund Ltd. sued Link Two  Communications
           and Eagle,  Civil Action  04-CV-05776,  in the United States District
           Court for the Southern  District of New York. Tail Wind claims breach
           of contract  seeking $25 million.  The Company  intends to vigorously
           defend  this claim.  The  Company  has  accrued  $500,000 in expenses
           against this  lawsuit,  although  the outcome  cannot be predicted at
           this time.

                                       11
<PAGE>

           In November 2004,  Palisades  Master Fund L.P. sued Eagle  Broadband,
           Ind., and David Weisman,  Civil Action 04603626,  in New York County,
           New York  Supreme  Court.  Palisades  seeks an  injunction  setting a
           conversion price on certain  convertible debt and warrants at $0.4456
           per share of Eagle common  stock and seeks  damages in excess of $3.1
           million.  The Company  intends to vigorously  defend this claim.  The
           Company has not  accrued any  expenses  against the  lawsuit,  as the
           outcome cannot be predicted at this time.

           Eagle is involved in lawsuits,  claims,  and  proceedings,  including
           those  identified  above,  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 12 - Earnings Per Share:

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


<TABLE>
<CAPTION>
                                                            For the three months ended November 30, 2004
                                                  --------------------------------------------------------------
                                                     Income                 Shares                   Per-Share
                                                  (Numerator)            (Denominator)                Amount
                                                  -------------          --------------             ------------
<S>                                                 <C>                     <C>                     <C>
Net Loss                                            $   (4,448)             $        -              $          -
Basic EPS:
  Income Available to Common Stockholders               (4,448)                209,418                     (0.02)
  Effect of Dilutive Securities Warrants                     -                       -                         -
Diluted EPS:
                                                  -------------          --------------             -----------
Income Available to Common Stockholders
  and Assumed Conversions                               (4,448)                209,418                     (0.02)
                                                  =============          ==============             ===========

</TABLE>


<TABLE>
<CAPTION>
                                                            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>


            For  the  three  months  ended  November  30,  2004,   anti-dilutive
            securities existed. (See Note 8.)

NOTE 13 - 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, 2004,
           a total of 516,120 options have been issued 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  issued and granted during the three months
            ended November 30, 2004, is estimated as $1.08 on the date of grant.
            Management  estimates  the average  fair value for  options  granted
            during 2004, to be  comparable to those granted in 2003.  The impact
            on  net  loss  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:


                                       12
<PAGE>
<TABLE>
<CAPTION>
                                                                   November 30,
                                                          ------------------------------
                                                             2004              2003
                                                          ------------      ------------
<S>                                                          <C>               <C>
                     U. S. Federal Statutory Tax Rate        0.00%             0.00%
                     U.S. Valuation Difference               0.91%             0.91%
                     Effective U. S. Tax Rate                4.00%             4.00%
                     Foreign Tax Valuation                   4.00%             7.00%
                     Effective Tax Rate                     5 years           5 years
</TABLE>

            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 months  ended  November
            30, 2004 and 2003:

<TABLE>
<CAPTION>

               (in thousands, except share amounts)                   2,004                     2,003
                                                                   ------------             ------------

<S>                                                                   <C>                      <C>
             Net loss, as reported                                    $ (4,448)                $ (8,461)
               Add: Stock-Based Employee
               Compensation Included in Reported
               Net Earnings (Loss, Net of Related
               Tax Effects                                                   -                        -

               Less: Stock-Based Employee
               Compensation Expenses Determined
               under Fair-Value Based Methods for All
               Awards, Net of Related Tax Effects                         (61)                        -
                                                                   ------------             ------------
             Pro Forma Net Earnings (Loss)                            $ (4,509)                $ (8,461)
                                                                   ============             ============

             Net loss per share:
               As reported                                            $  (0.02)                $  (0.05)
               Pro forna                                              $  (0.02)                $  (0.05)

             Diluted net loss per share:
               As reported                                            $  (0.02)                $  (0.05)
               Pro forna                                              $  (0.02)                $  (0.05)

</TABLE>

Option activity was as follows for the three months ended November 30, 2004:


           Information about options  outstanding was as follows at November 30,
2004:
                                                                     2005
                                                              Weighted-Average
                                           Shares              Exercise Price
                                          -------              --------------
Outstanding at Beginning of Year          346,002                $   1.27
Granted                                   170,118                $   0.50
Assumed Through Acquisitions
Exercised                                       0                       -
                                          -------                --------
Forfeited/Cancelled
Outstanding Throughout the Period         516,120                $   1.08
                                          =======                ========
Exercisable at Year-End                   516,120                $   1.08
                                          =======                ========


   Information about options outstanding was as follows at November 30, 2004:



<TABLE>
<CAPTION>

                                       Remaining        Average                        Average
     Range of            Number       Contractual      Exercise        Number          Exercise
 Exercise Prices       Outstanding    Life in Years      Price       Exercisable        Price
-------------------    ------------   -------------   ------------   ------------    -------------
<S>                    <C>            <C>              <C>            <C>            <C>
$0    - $1.00              379,278        4.50           0.53            379,278         0.53
$1.01 - $2.00              111,342        4.00           1.73            111,342         1.73
$2.01 - $7.50               25,500        4.50           6.55             25,500         6.55
                       ------------                                  ------------
                           516,120                       1.08            516,120         1.08
                       ============                                  ============
</TABLE>


NOTE 14 - Retirement Plans:

            During  October  1997,  the Company  initiated a 401(k) plan for its
            employees  which  is  funded  through  the   contributions   of  its
            participants.   Prior  to  March  2003,  the  Company   matched  the
            participant's  contribution up to 3% of their salary.  Subsequent to
            March  2003,  the plan was  amended  and the  Company  match  became
            elective.  For the three  months  ended  November 30, 2004 and 2003,
            employee  contributions  were  approximately  $27,989  and  $27,298,
            respectively. The Company matched $0 and $0, respectively, for those
            same periods.



                                       13
<PAGE>

NOTE 15 - Major Customer:

            The Company had gross  revenues of $1,528,000 and $2,397,000 for the
            three months ended November 30, 2004 and 2003, respectively.

            The three-month period ended November 30, 2004, included $753,000 or
            49% of the quarter's total sales from Sweetwater  Security  Capital,
            LLC,  that  were  executed  with the  Company's  security-monitoring
            service subsidiary, DSS Security, Inc. There were no other customers
            individually  that  represented  greater than 10% of the revenues in
            the three months ended November 30, 2004.

NOTE 16 - Industry Segments:

            The Company has four operating segments as described in the tables
            below:

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

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

            United  Computing Group,  Inc., (UCG) is an accelerator  company and
            computer  hardware  and  software  reseller.  UCG / INT  maintain  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., (DSS) 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.  Contact  Wireless,  Inc.,  assets were sold
            October 10, 2003. (See Note 2 - Related Party Transactions.)



For the three months ended November 30, 2004

<TABLE>
<CAPTION>
   (in thousands)       APC/HSI      EBS/DSS       UCG        Eagle        Other       Elim.      Consol.
                      ---------------------------------------------------------------------------------------
<S>                           <C>      <C>             <C>        <C>           <C>                  <C>
Revenue                       $ 21     $ 1,216         $ -        $ 291         $ -                  $ 1,528
Segment Loss                   (35)       (839)          -       (3,604)        (21)                  (4,499)
Total Assets                    30      28,579          32      125,551      56,935    (142,367)      68,760
Capital Expenditures             -          70           -           74           -                      144
Depreciation                    10         397           1          702          21                    1,131

For the three months ended 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

</TABLE>


                                       14
<PAGE>

<TABLE>
<CAPTION>
Reconciliation of Segment Loss                   Novmember 30,              November 30,
from Operations to Net Loss                          2004                      2003
----------------------------------              --------------             --------------
<S>                                                   <C>                       <C>
Total segment loss from operations                    $ (4,499)                 $ (1,737)
Total Other Income (Expense)                                51                    (6,724)
                                                ---------------            --------------
Net Loss                                              $ (4,448)                 $ (8,461)
                                                ===============            ==============
</TABLE>

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

NOTE 17 - Quarterly Financial Data:

<TABLE>
<CAPTION>

                                       Nov. 30           Feb. 28            May 31          Aug. 31
                                       -------           -------           -------          -------
Year Ended August 31,
2005
<S>                                  <C>                 <C>               <C>               <C>
Revenues                               $ 1,528
 Net Earnings (Loss)                     (4,448)
 Basic Loss per Share                     (0.02)
 Diluted Loss per Share                   (0.02)

2004
 Revenues                               $ 2,397           $ 3,744           $ 5,091          $ 1,258
 Net Earnings (Loss)                     (8,461)           (9,398)           (4,373)         (16,773)
 Basic Loss per Share                     (0.05)            (0.05)            (0.02)           (0.08)
 Diluted Loss per Share                   (0.05)            (0.05)            (0.02)           (0.08)

2003
 Revenues                               $ 4,618           $ 3,063           $ 1,947          $ 1,965
 Net Earnings (Loss)                     (1,533)           (2,012)           (3,833)         (29,123)
 Basic Loss per Share                     (0.02)            (0.03)            (0.05)           (0.28)
 Diluted Loss per Share                   (0.02)            (0.03)            (0.05)           (0.28)

</TABLE>


NOTE 18 - Supplemental Non-Cash Disclosures:

            During the fiscal year ended  August 31,  2004,  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 to 29,500,000 shares of the Company's common
            stock.  Additionally,  the Company  received  proceeds of $3,912,000
            from the sale of convertible bonds.

            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  raised  on  these  convertible  instruments,  the  value
            charged to interest  expense during the fiscal year ended August 31,
            2004,  was limited to  $6,912,000.  This non-cash  charge  comprises
            $6,912,000  of the  $8,325,000  interest  expense  on the  Company's
            Statement of  Operations  as is shown as an  adjustment to reconcile
            net loss to net cash on the Company's Statement of Cash Flows.

            In addition, in February 2004, compensation for certain officers and
            key employees under incentive clauses of their employment  contracts
            (i)  includes a non-cash  expense of  $4,493,000  incurred  upon the
            modification  of  warrants  for  4,200,000  common  shares  and (ii)
            reflects  a  guaranteed   compensation   of  the  modified   options
            equivalent  to $1.75  less the  option  strike  price,  which was an
            additional  $4,074,000  accrued  in August  2004.  The amount of the
            accrual  varies each quarter end depending on the stock market value
            fluctuation  or upon  exercise  of  options  subject  to  employment
            agreement.

NOTE 19 - Exit Activities:

           During the quarter  ended  November 30,  2004,  we  implemented  cost
           reductions  in various  operating  segments.  In the  aggregate,  the
           Company  reduced  its overall  personnel  by 114  headcount  or a 50%
           reduction  for the fiscal  year ended  August 31, 2003 as compared to
           the fiscal year ended August 31, 2002. The  predominate  reduction in
           headcount  related to the Company's  Atlantic Pacific / Homes Systems
           structured  wiring and  commercial  cabling  segment  with  headcount
           reductions of nine,  six and 57 personnel in the first three quarters
           of fiscal 2003;  aggregating an overall headcount  reduction of 72 or
           71% of this segments workforce. Additionally, the Company reduced its
           United  Computing Group computer  hardware sales segment by 18, nine,


                                       15
<PAGE>

           and two  personnel  in the  first  three  quarters  of  fiscal  2003;
           aggregating  an  overall  reduction  of 29 or  59% of  this  segments
           workforce.  These two operating segments accounted for 101 of the 114
           headcount reductions affected in fiscal 2003.  Specifically,  certain
           components of these operating segments, i.e., home systems structured
           wiring,  commercial  cabling and computer  hardware  sales,  were not
           expected to provide significant long-term revenues and profitability,
           and therefore  were reduced.  Following the series of cost  reduction
           activities  implemented  during the first  three  quarters  of fiscal
           2003,  Eagle's   management   assessed  the  viability  of  continued
           financial  investment  in these  unprofitable  segments in the fourth
           quarter of fiscal  2003 and into early  first  quarter of fiscal 2004
           and made further reductions. In conjunction with the appointment of ,
           Mr.  Weisman as our new Chief  Executive  Officer,  in early  October
           2003,  the Company  completed the final  consolidation  of the United
           Computing  Group  segment into other Eagle  operations  while further
           reducing  the  Atlantic  Pacific  /  Home  Systems  operations  to an
           outsource  commercial  cabling and structured  wiring  operation that
           project manages affiliate contractors.

            Additionally,  in conjunction with the appointment of Mr. Weisman as
            Chief Executive Officer,,  the Company made certain decisions during
            the preparation of its Form 10-K in our first quarter of fiscal 2004
            that  affected  the value of certain  assets as of August 31,  2003.
            These decisions included:

               o    A  revised   collection   assessment  of  certain   accounts
                    receivables  from these and other  down-sized Eagle business
                    segments.


               o    The decision to no longer pursue new  commercial  structured
                    cabling opportunities on a direct basis versus the outsource
                    model;  thereby resulting in the impairment of goodwill from
                    its Atlantic Pacific operations.

               o    The  decision to no longer  pursue Home  Systems  structured
                    wiring  opportunities  on a direct  standalone  model  basis
                    outside its BDS model;  thereby  resulting in the impairment
                    of its Home Systems inventory.

               o    The  decision  to withdraw  from  certain  unprofitable  BDS
                    projects,  namely its Austin area BDS developments;  thereby
                    impairing  certain  assets  including  property,  plant  and
                    equipment.

               o    The  decision to settle  numerous  existing  and  threatened
                    legal proceedings versus continuing the timing consuming and
                    costly  process  of  defending  such  proceedings;   thereby
                    resulting  in the  accrual  of  numerous  reserves  for such
                    settlements.

               o    The decisions to consolidate its operating segments into its
                    corporate  lease  space;  thereby  resulting in reserves for
                    property lease settlements.

               o    The decision to negotiate  the  settlement  of certain sales
                    tax  liabilities  that  resulted  from a sales  tax audit of
                    United  Computing Group operations for periods that preceded
                    the acquisition date of this subsidiary.

            Accordingly,  Eagle incurred certain asset impairments and operating
            charges in the fourth quarter associated with these decisions. These
            asset  impairment  charges,  allowances,   write-offs  and  reserves
            included the following:

               o    Accounts  receivable  write-off's  and reserves  aggregating
                    $2,177,000;  of which  $1,348,000  was  attributable  to the
                    decisions  affecting the Company's  Atlantic  Pacific / Home
                    Systems  operations,  $15,000  attributable to the decisions
                    affecting its United Computing Group operations and $814,000
                    attributable to the Company's  Eagle,  EBS and Other segment
                    operations.

               o    Inventory   impairment  charges  of  $2,627,000;   of  which
                    $501,000 was  attributable  to the  decisions  affecting the
                    Company's  Atlantic  Pacific / Home Systems  operations  and
                    $74,000  attributable to the decisions  affecting its United
                    Computing  Group  operations.   Additionally,   the  Company
                    recorded an impairment  charge of $1,125,000 for slow-moving
                    and obsolete inventory in its Eagle operations.  This charge
                    primarily resulted from a major client's decision to upgrade
                    from a 400 MHz chip to a 500 MHz chip for the  Company's  IP
                    set top box.

               o    Litigation  settlement  costs  and  reserves  of  $3,650,000
                    against   certain  of  the  legal   proceedings   previously
                    discussed in Item 3. Legal  Proceedings.  Additionally,  the
                    Company  recorded charges  aggregating  $2,274,000 to settle
                    threatened and existing  legal  proceeding  associated  with
                    prior   financing   transactions,   including   the  Kaufman
                    litigation.

               o    Lease   settlement  costs  and  reserves  of  $171,000  were
                    attributable   to  the  decision  to   consolidate   various
                    operating  segments into its corporate lease space;  thereby
                    resulting in reserves for early exit of such leases.

               o    Impairment, write-down's and restructuring costs aggregating
                    $7,611,000;  of  which  $1,878,000  was  attributable  to an
                    impairment  of goodwill in the  Company's  Atlantic  Pacific
                    operations  following  the  Company's  decision to no longer
                    pursue  commercial  cabling  opportunities on a direct basis
                    versus an outsource  model.  These costs were also comprised
                    of  $3,412,000  in  impairment  of  property  and  equipment
                    following  the  Company's  decision to withdraw from certain
                    unprofitable  BDS projects,  namely in the Austin area,  and
                    $323,000 of impairment  of property and  equipment  from the
                    Company's   Atlantic  Pacific  /  Home  Systems   operations
                    following the decision to no longer pursue structured wiring
                    opportunities  on a direct  standalone  basis outside of its
                    BDS model.  Additionally,  the  aggregate  total  included a
                    $553,000  charge  for  certain  sales tax  liabilities  that
                    resulted  from an audit of the  Company's  United  Computing
                    Group   operations   for  time  periods  that  preceded  the
                    acquisition date of this operation.

            Eagle incurred  approximately  $0 for severance and accrued vacation
            related to employees  terminated in the three months ended  November
            30, 2004.


                                       16
<PAGE>

            An  analysis  of  accrued  costs and  amounts  charged  against  the
provision are as follows:

<TABLE>
<CAPTION>
                                Beginning Balance        Period Costs                         Ending Balance
                                 August 31, 2004         (Additional)        Payments        November 30, 2004
                              ---------------------     -------------      -----------      ------------------
<S>                             <C>                     <C>                <C>              <C>
Accrued Exit Expenses:
Severance                                 $       -              $  -              $ -               $       -
Terminated Lease Costs                      171,000                 -                -                 171,000
                               ---------------------    --------------     ------------     -------------------
                                          $ 171,000               $ -              $ -               $ 171,000
                               =====================    ==============     ============     ===================
</TABLE>



            For the year ended August 31, 2003, the Company  incurred exit costs
            of $267,000 which are  principally  severance and lease  termination
            costs.  The total  expected exit costs for severance and  terminated
            leases are  $96,000  and  $171,000,  respectively.  These  costs are
            included  in  the   consolidated   statement  of  income  under  the
            categories of salaries and related costs and other support costs.

            These  period and  accumulated  costs are  included  in the  segment
reporting as follows:


<TABLE>
<CAPTION>
          Costs                APC/HIS          KBS/DSS            UCG              Eagle            Other            Total
--------------------------   -------------    ------------     -------------     ------------     -------------    ------------
<S>                              <C>             <C>               <C>              <C>                    <C>        <C>
Severance                        $ 37,000        $ 24,000          $ 14,000         $ 21,000               $ -        $ 96,000
Terminated Lease Costs             50,000               -            44,000                -             7,700         101,700
                             -------------    ------------     -------------     ------------     -------------    ------------
Total                            $ 87,000        $ 24,000          $ 58,000         $ 21,000           $ 7,700       $ 197,700
                             =============    ============     =============     ============     =============    ============
</TABLE>



NOTE 20  Subsequent Events:

           LLV Broadband, LLC, Agreement

           In November,  2004,  Eagle entered into a Limited  Liability  Company
           Agreement with Neva Holdings, LLC ("Neva"),  whereby both parties are
           members of LLV Broadband,  LLC ("LLV"),  a Delaware limited liability
           company). The purpose of LLV is to construct,  develop, and operate a
           system for the  provision  of  television  services,  video-on-demand
           services,  audio  services,  broadband  data and  Internet  services,
           telephone   services,   and  security   monitoring  services  to  the
           commercial,  recreational,  and residential  buildings located within
           the  Lake  Las  Vegas  Resort  in  Clark  County,   Nevada,  and  the
           surrounding geographic area.

           LLV  currently  owns  cable  television  assets  including,   without
           limitation,   cable   real   property   easements,   franchises   and
           governmental and third-party  consents necessary for the operation of
           the  system  (collectively  the  "Existing  System  Assets").  Neva's
           capital account shall consist of the initial capital  contribution of
           the "Existing  System Assets" and existing system documents having an
           aggregate net fair value of $3,000,000 plus amounts funded by Neva or
           its affiliates to or for the benefit of LLV between  January 1, 2004,
           and the effective date of this agreement.

           Eagle's  capital  account  shall be an initial cash  contribution  of
           $3,000,000  plus amounts  funded by Eagle or its affiliates to or for
           the benefit of LLV between January 1, 2004, and the effective date of
           this agreement.

           If at any time  LLV's  Board  determines  that  additional  funds are
           needed  as  set  forth  in the  approved  budget  and  plan  for  the
           development,  construction  or marketing of the system for any direct
           out-of-pocket  costs and expenses  incurred by LLV in connection with
           the  formation,  financing and operation of LLV or normal  day-to-day
           business  affairs  of LLV,  then  Eagle  shall  be  required  to make
           additional  cash  contributions  in the amount of such deficit not to
           exceed $2 million.

           Eagle shall act as the initial  Manager of LLV. The Manager  shall be
           responsible for the conduct of the business of LLV including  without
           limitation the design,  construction and operation of the system. The
           Manager  shall  have full  power,  authority  and duty to manage  the
           operations  and  affairs of LLV and to act for and to bind LLV to the
           extent  provided by the Act, and shall have the duty and authority to
           do all things  appropriate to the  accomplishment  of the purposes of
           LLV.  The  Manager  shall be  reimbursed  for the  direct  costs  and
           expenses of its employees and agents who provide services to LLV.

           As of November 30, 2004, Eagle had not funded the $3,000,000  initial
           capital contribution. Allocations of net income and distributions are
           generally  made to each  member  in  proportion  to their  respective
           ownership.  Final determination of percentage of ownership has yet to
           be determined.

                                       17
<PAGE>

Item 2. Management's Discussion and Analysis

Overview

         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,  and risks  associated with regional,  national,  and
world economies. Any forward-looking statements should be considered in light of
these factors.

         Eagle Broadband, Inc. (the "Company" or "Eagle"), is a leading provider
of broadband, Internet protocol (IP) and satellite communications technology and
services.  The Company is focused on three core  businesses:  broadband  bundled
services,  IP  set-top  boxes  and  satellite  communications   technology.  The
Company's product  offerings include an exclusive  "four-play" suite of IP-based
broadband  bundled  services with high-speed  Internet,  cable TV, telephone and
security  monitoring,  and  a  turnkey  suite  of  financing,   network  design,
operational and support services that enables  municipalities,  utilities,  real
estate developers,  hotels, multi-tenant owners and service providers to deliver
exceptional value, state-of-the-art entertainment and communications choices and
single-bill  convenience  to their  residential  and business  customers.  Eagle
offers the  HDTV-ready  Media Pro IP set-top box product line that enables hotel
operators   and   service   providers   to   maximize   revenues   by   offering
state-of-the-art  in-room  entertainment  and video  services.  The Company also
develops  and markets  the SatMAX  satellite  communications  system that allows
government,  military,  homeland  security,  aviation,  maritime and  enterprise
customers to deliver reliable, non-line-of-sight,  voice and data communications
services via the Iridium satellite network from any location on Earth.

         During the three months  ended  November  30,  2004,  Eagle's  business
strategy  has  focused on the bundled  digital  services  and  related  products
business.  We expect  this  trend to  continue  in fiscal  2005 with our goal of
growing sales of the SatMAX satellite voice and data communications products for
military,  government  and  commercial  customers.  Set  forth  below is a table
presenting  the revenue  derived from our business  segments in the three months
ended November 30, 2004 and 2003:


<TABLE>
<CAPTION>
        ($ in thousands)            2004         % of Total         2003         % of Total      $ Change        % Change
                                 ------------   -------------   -------------   -------------   ------------    ------------
<S>                                    <C>               <C>           <C>               <C>         <C>                 <C>
Structured Wiring                      $ 262             17%           $ 392             16%         $ (130)             1%
Broadband Services                     1,216             80%           1,564             65%           (348)            14%
Products                                  26              2%             361             15%           (335)           -13%
Other                                     24              2%              80              3%            (56)            -2%
                                 ------------   -------------   -------------   -------------   ------------    ------------
Total                                $ 1,528            100%         $ 2,397            100%         $ (869)           -36%
                                 ============   =============   =============   =============   ============    ============
</TABLE>


     During the three months ended November 30, 2004, Eagle recognized 30% of
its revenues from sales of bundle digital services and 2% product sale as
compared to 2003 sales of bundled digital services and product sales
representing 65% and 2% of revenues, respectively.

                                       18
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED NOVEMBER 30, 2004, COMPARED TO THREE MONTHS
ENDED NOVEMBER 30, 2003

         The  following  table  sets  forth  summarized  consolidated  financial
information for the three months ended November 30, 2004 and 2003:

         CONDENSED FINANCIAL INFORMATION


<TABLE>
<CAPTION>
                             Three Months Ended November 30,
                             --------------------------------
    ($ in thousands)             2004              2003                  $ Change       % Change
                             --------------    --------------          ------------    ------------
<S>                                <C>               <C>                    <C>                <C>
Total Sales                        $ 1,528           $ 2,397                $ (869)           -36%
Cost of Goods Sold                   1,685             1,295                   390             30%
                             --------------    --------------          ------------    ------------
Gross Profit                          (157)            1,102                (1,259)          -114%
                             --------------    --------------          ------------    ------------
Percent of Total Sales                -10%               46%                  -56%           -122%
Operating Expenses                   4,342             2,839                 1,503             53%
                             --------------    --------------          ------------    ------------
Loss from Operations                (4,499)           (1,737)               (2,762)           159%
                             --------------    --------------          ------------    ------------
Other Income (Expense)                  51            (6,724)                6,775           -101%
                             --------------    --------------          ------------    ------------
Net Loss                            (4,448)           (8,461)                4,013            -47%
Unrealized Holding Loss              1,048               309                   739            239%
                             --------------    --------------          ------------    ------------
Comprehensive Loss                 $(3,400)          $(8,152)               $4,752            -58%
                             ==============    ==============          ============    ============
</TABLE>

         For  the  three  months  ended  November  30,  2004,  Eagle's  business
operations  reflected  emphasis and further  expansion of its products
BDS business  segments  including  Eagle's  broadband  bundled digital  services
(Internet,  video,  voice and security) for residential and business  customers.
The Company's  consolidated  operations  generated revenues of $1,528,000 with a
corresponding  negative  gross  margin of $157,000  for the three  months  ended
November 30, 2004. The overall  decrease of 36% in revenues for the three months
ended  November  30, 2004,  as compared to the three  months ended  November 30,
2003, was primarily  attributable to a $869,000  decrease in the Company's sales
of  bundled  digital  services,  products,  ancillary  equipment,  and
structured wiring.

         The  Company  incurred a net loss of  $4,448,000  for the three  months
ended  November 30, 2004. The loss was  attributable  primarily to $2,669,000 of
non-cash charges and increased operating expenses.

The  Company's net loss for the three months ended  November 30, 2004,  included
approximately  $841,000 in depreciation and amortization expenses and $2,290,000
in expenses associated with a net increase in professional services fees.

         The  Company  is  continuing  the  development  and  expansion  of  the
Company's  bundled digital services model for distribution on a nationwide basis
of voice,  video and data content;  increased  sales  efforts in the  telephone,
cable, Internet, and security services; 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  real   estate   developments,   cities  and
municipalities  that  currently  have  or  are  in  the  process  of  completing
construction of their own fiber infrastructure to the home.

         The following  table sets forth  summarized  sales  information for the
three months ended November 30, 2004 and 2003:

<TABLE>
<CAPTION>

                                                  Three Months Ended November 30,
                               -----------------------------------------------------------
    ($ in thousands)              2004         % of Total         2003       % of Total           $ Change        % Change
                               ------------    ------------    ------------  -------------       ------------    ------------
<S>                                  <C>               <C>           <C>              <C>             <C>              <C>
Structured Wiring                  $   262             17%         $   392            16%             $ (130)         -33.2%
Broadband Services                   1,216             80%           1,564            65%               (348)         -22.3%
Products                                26              2%             361            15%               (335)         -92.8%
Other                                   24              2%              80             3%                (56)         -70.0%
                               ------------    ------------    ------------  -------------       ------------    ------------
Total Sales                        $ 1,528            100%         $ 2,397           100%             $ (869)         -36.3%
                               ============    ============    ============  =============       ============    ============
</TABLE>


                                       19
<PAGE>

         SALES INFORMATION

         Net Sales.  For the three  months ended  November  30, 2004,  net sales
decreased to $1,528,000  from  $2,397,000,  compared to the  three-month  period
ended  November  30, 2003.  The overall  decrease of 36% was  attributable  to a
$335,000  decrease in the Company's  product sales,  a decrease of $348,000 in
the Company's BDS sales;  decreases of $130,000 in  structured  wiring
operations  and a $56,000  decrease in other sales. The $348,000 decrease in
sales of the Company's broadband services during the three month ended November
30, 2004, was primarily  attributable  to a prior year sale of security
contracts of $866,000 by the Company's security-monitoring subsidiary,  DSS
Security,  Inc., and is offset by sales to Sweetwater  Capital, LLC, of $753,000
for installing  surveillance systems.  Also, the Company's base broadband
services sales decreased by approximately $145,000 in the three months ended
November 30, 2004. This decrease was primarily attributable to the decline in
recurring  security  monitoring  sales  resulting  from the sale of  certain
security monitoring in the Company's portfolio to Sweetwater Capital, LLC.

         The $130,000  decrease in structured  wiring sales  corresponded to the
Company's  previously  announced  strategy to no longer pursue structured wiring
and commercial  cabling  opportunities  on a direct basis outside of the its BDS
model.  The $56,000  decrease in other sales was primarily  attributable  to the
other sales  components  from various  operating  segments that were divested or
phased out  during  fiscal  2004  including  Contact  Wireless,  UCG,  and Eagle
Wireless.

         The  following   table  sets  forth   summarized  cost  of  goods  sold
information for the three months ended November 30, 2004 and 2003:

         COST OF GOODS SOLD

<TABLE>
<CAPTION>
                                                    Three Months Ended November 30,
                                                  ------------------------------------
               ($ in thousands)                       2004                    2003          $ Change               % Change
                                                  -------------            ------------    ------------           ------------
<S>                                                      <C>                     <C>            <C>                     <C>
Direct Labor and Related Costs                          $  262                 $   462          $ (200)                -43.3%
Products and Integration Service                            38                     137             (99)                -72.3%
Impairment Slow Moving & Obsolete Inventory                  -                       -               -
Structured Wiring Labor and Material                       175                     205             (30)                -14.6%
Broadband Services Costs                                   920                     190             730                 384.2%
Depreciation and Amortization                              290                     285               5                   1.8%
Other Manufacturing Costs                                    -                      16             (16)               -100.0%
                                                  -------------            ------------    ------------           ------------
Total Operating Expenses                                $1,685                 $ 1,295          $  390                  30.1%
                                                  =============            ============    ============           ============
</TABLE>

         Cost of Goods Sold. For the three months ended November 30, 2004,  cost
of goods sold increased by 30% to $1,685,000  from $1,295,000 as compared to the
three months  ended  November  30,  2003.  The overall  increase of $390,000 was
primarily  attributable  to the  Company's  cost  associated  with  the  sale to
Sweetwater  Capital  LLC  on  the  installation  of  surveillance  systems.  The
Company's  overall negative gross profit percentage was 10% for the three months
ended November 30, 2004,  compared to an overall gross profit  percentage of 46%
for the three months ended November 30, 2003. This substantial decrease in gross
profit  percentage is primarily  attributable to (i) liquidating  inventory at a
cost less than book value;  (ii) an increase in depreciation  expense in our BDS
model associated with the buildout of the Company's BDS infrastructure, which is
being aggressively addressed with an increased sales force that has expanded the
Company's  customer base in recent months;  and (iii) the dilutive effect of the
security monitoring transactions recorded in the three months ended November 30,
2004 (sales recorded of $753,000 with corresponding cost of sales of $716,000).

         The following table sets forth summarized operating expense information
for the three months ended November 30, 2004 and 2003:

         OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                        Three Months Ended November 30,
                                                    -------------------------------------
                ($ in thousands)                        2004                    2003              $ Change         % Change
                                                    -------------            ------------       -------------     ------------
<S>                                                        <C>                     <C>                <C>                 <C>
Salaries and Related Costs                              $    399                 $   959             $  (560)            -58%
Advertising and Promotion                                     10                      18                  (8)            -44%
Depreciation and Amortization                                841                     319                 522             164%
Research and Development                                     143                     119                  24              20%
Other Support Costs                                        2,949                   1,424               1,525             107%
Impairment, Write-Downs & Restructuring Costs                  -                       -                   -                -
                                                    -------------            ------------       -------------     ------------
Total Operating Expenses                                 $ 4,342                 $ 2,839             $ 1,503              53%
                                                    =============            ============       =============     ============
</TABLE>


                                       20
<PAGE>

         The following table breaks out other support costs  information for the
three months ended November 30, 2004 and 2003:

         Other Support Costs

<TABLE>
<CAPTION>
                                       Three Months Ended Novembeer 30,
                                    ------------------------------------
         ($ in thousands)              2004                     2003                  $ Change                 % Change
                                    -----------            -------------            ------------             ------------
<S>                                         <C>                      <C>                    <C>                       <C>
Auto Related                                $ 3                      $ 5                    $ (2)                    -40%
Bad Debt                                     19                      103                     (84)                    -82%
Delivery and Postage                         13                       16                      (3)                    -19%
Fees                                         36                       62                     (26)                    -42%
Insurance and Office                         83                      111                     (28)                    -25%
Professional Fees                         2,290                      733                   1,557                     212%
Rent                                         94                      137                     (43)                    -31%
Repairs and Maintenance                      12                        4                       8                     200%
Travel                                       88                       56                      32                      57%
Taxes                                       132                        3                     129                    4300%
Telephone and Utilities                     156                      181                     (25)                    -14%
Other                                        23                       13                      10                      77%
                                    ------------            ------------             -----------              -----------
Total Operating Expenses                $ 2,949                  $ 1,424                 $ 1,525                     107%
                                    ============            ============             ============             ===========
</TABLE>





         Operating  Expenses.  For the three  months  ended  November  30, 2004,
operating  expenses increased by 53% to $4,342,000 as compared to $2,839,000 for
the three months ended November 30, 2003. The primary fluctuations that occurred
as evidenced by the two preceding tables immediately above are discussed below:

               o    A $560,000  decrease in  salaries  and  related  costs.  The
                    decrease was attributable to a  market-to-market  adjustment
                    of $336,000,  reducing the original guarantee liability from
                    $4,074,000   at  August  31,   2004.   The   adjustment   to
                    compensation  is variable until the options are exercised by
                    key employees.  This reflects a guaranteed  compensation  of
                    the modified  options  equivalent  to $1.75 less the warrant
                    strike price.

               o    A $522,000  increase in depreciation and  amortization,  due
                    principally to amortization of intangible assets of $656,000
                    not reflected in the  prior-year  quarter ended November 30,
                    2003.

               o    A $525,000  increase in other support costs,  the components
                    of which  are set forth on the  table  included  immediately
                    above.  Included in this increase was a $129,000 increase in
                    property   taxes   recorded   against  the   Company's   BDS
                    infrastructure;  a $1,557,000  increase in professional fees
                    that included costs associated with 404 compliance, year-end
                    audit,  consulting  and  litigation;  offset  by an  $84,000
                    decrease in bad debt, a $43,000 decrease in rent expense and
                    an  $80,000  decrease  in  telephone,  utilities,  fees  and
                    insurance.

               o    A $24,000  increase in research  and  development  expenses,
                    primarily  consisting of the Company's continued  investment
                    in HDTV-ready IP set-top boxes for hospitality and broadband
                    customers   and  the   SatMAX   satellite   voice  and  data
                    communications   products  for  military,   government   and
                    commercial customers.

         Net Loss For the three months ended November 30, 2004, Eagle's net loss
was  $4,448,000,  compared to a net loss of  $8,461,000  during the three months
ended November 30, 2003.

         Changes in Cash Flow.  Eagle's  operating  activities  used net cash of
$870,000 in the three  months ended  November  30, 2004,  compared to use of net
cash of $490,000 in the three  months ended  November 30, 2003.  The increase in
net cash used by operating  activities  was  primarily  attributable  to fund an
increase in the Company's net operating loss, net of non-cash charges,  totaling
$2,669,000  combined with $909,000 of cash provided by  fluctuations  in working
capital  requirements  consisting  of the  combination  of accounts  receivable,
inventory,  prepaid  expenses,  accounts payable and accrued  expenses.  Eagle's
investing  activities  used net  cash of  $188,000  in the  three  months  ended
November 30, 2004,  compared to $269,000 in the three months ended  November 30,
2003.  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 used net cash of $519,000 in the three months ended
November 30, 2004,  compared to  $5,608,000 of cash provided in the three months
ended  November 30, 2003. The decrease  resulted from less borrowing  activities
and the paying off of current debt during the three  months  ended  November 30,
2004.

         Liquidity and Capital  Resources:  Current  assets for the three months
ended November 30, 2004, totaled $4,311,000  (includes cash and cash equivalents
of  $474,000) as compared to  $5,093,000  reported for the year ended August 31,
2004.  During the three months  ended  November  30,  2004,  Eagle  received net
proceeds  of  $700,000  through  the  sale  of  marketable  securities  held  as
short-term  investments  and has retired or reduced certain of its notes payable
and accrued expenses.


                                       21
<PAGE>


         The Company  anticipates that it will incur  significantly less capital
expenditures  for broadband fiber  infrastructure  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 a their own
fiber  networks.  Historically,  the Company built out these  networks,  thereby
incurring significant capital expenditures.  The Company incurred  approximately
$144,000 in capital  expenditures  during the three  months  ended  November 30,
2004. The Company  currently  intends to continue its nationwide  expansion into
the delivery of bundled digital services using  partnerships and joint marketing
agreements funded through cash in amounts equal to or exceeding  expenditures in
fiscal 2005 as well as through equity securities.

         The  Company  expects  that  certain of its  liabilities  listed on the
balance sheet under the headings Accounts Payable, Accrued Liabilities and Notes
Payable will be retired by issuing  stock versus cash during the next 12 months.
The Company has historically used stock for retirement of certain liabilities on
a  negotiated  basis.  The  Company  issued  stock  for  retirement  of  certain
liabilities aggregating $3,586,000, $13,878,000 and $13,341,000 for fiscal years
2002, 2003 and 2004, respectively.  During the first three months of fiscal 2005
ended November 30, 2004,  the Company  retired  $3,785,000 in  liabilities  with
stock versus cash. Eagle Broadband  expects to continue its practice of retiring
certain  liabilities as may be negotiated  through a combination of cash and the
issuance of shares of Eagle common stock. The Company cannot quantify the amount
of common  stock  expected to be issued to retire such debts at this time and as
such will report these results on a quarterly basis.

         Historically,  we have financed operations through the sale of debt and
equity  securities.  In fiscal 2005 we raised $850,000 cash through the issuance
of common stock upon the exercise of derivative  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.  Management  believes that it will fund  operations for the next twelve
months from current cash and cash equivalents and from future financing.  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  endeavors.  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.

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 $34,585,000 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.

Impairment Assessment

         Our long-lived  assets  predominantly  include  goodwill.  Statement of
Financial   Accounting  Standards  No.  142  (SFAS  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  as of August 31,  2004,  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 August 31, 2004, and determined that
these net assets totaling $35,238,000 were not impaired.


                                       22
<PAGE>


Revenue Recognition

         The Company  designs,  manufactures,  markets and services its products
and services  under the name of Eagle Broadband, Inc. and its subsidaries.

         The Company records revenues from its fixed-price , long-term contracts
using the  percentage-of-completion  method, whereby revenues are recorded based
on  construction  costs incurred to date as a percentage of estimated total cost
at  completion.  The  percentage-of-completion,  determined by using total costs
incurred  to date as a  percentage  or  estimated  total  costs  at  completion,
reflects the actual physical  completion of the project.  This method of revenue
recognition  is used  because  management  considers  total  cost to be the best
available  measure  of  progress  on the  contracts.  Because  of  the  inherent
uncertainties in estimating  costs, it is at least reasonably  possible that the
estimates used will change within the near term.

         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 November 30, 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  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 for between one and three  months of  services.
Eagle had deferred  revenues of $71,000 and $96,000 as of November 30, 2004, and
August 31, 2004, respectively.

Receivables

         For the fiscal year ended November 30, 2004, Eagle accounts  receivable
decreased to $1,363,000 from $1,470,000 at August 31, 2004. The majority of this
decrease was due to collections of current  receivables  and lower than expected
sales on account in the first quarter.

         The  Company's  accounts  receivable  aging as  measured  by days sales
outstanding (DSO) totaled 36 days at November 30, 2004 and 29 days at August 31,
2004, on an adjusted basis after  recording the  write-off's  and reserves.  The
primary  increase in DSO from 29 days at August 31, 2004, to 36 days at November
30, 2004, was attributable to slow paying customers during the first quarter.

         The Company's  allowance for doubtful  accounts totaled  $2,324,000 and
$2,396,000  for the three  months  ended  November  30,  2004 and the year ended
August 31, 2004,  respectively.  These allowance for doubtful  accounts  amounts
represented 63% and 62% of the gross accounts  receivable balances for the three
months ended November 30, 2004 and the year ended August 31, 2004, respectively;
while they likewise  represented 77% and 7% of the Company's greater than 90-day
accounts for these same respective time periods.

         The Company  reviews its accounts  receivable  balances by customer for
accounts  greater  than 90 days  old and  makes a  determination  regarding  the
collectability  of the accounts based on specific  circumstances and the payment
history that exists with such customers. The Company also takes into account its
prior experience, the customer's ability to pay and an assessment of the current
economic  conditions in determining the net realizable value of its receivables.
The Company also reviews its allowances  for doubtful  accounts in aggregate for
adequacy following this assessment.  Accordingly,  the Company believes that its
allowances for doubtful accounts fairly represent the underlying  collectability
risks associated with its accounts receivable.

         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.

                                       23
<PAGE>

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, 2004, Eagle's
inventory  totaled  $1,641,000  as compared to $403,000 at August 31, 2004.  The
majority of this  increase  was due to an increase  in raw  materials  inventory
associated   with   in-process   set-top  box   manufacturing.   Management  has
incorporated  "just in time"  inventory  practices  to  avoid  future  inventory
obsolesce.  Eagle is outsourcing most, if not all,  production based on contract
orders from customers.


Recent Accounting Pronouncements

         In March  2004,  the FASB  issued a  proposed  Statement,  "Share-Based
Payment,  an amendment of FASB  Statements  Nos. 123 and 95," that addresses the
accounting for  share-based  payment  transactions  in which a Company  receives
employee  services in exchange for either equity  instruments  of the Company or
liabilities that are based on the fair value of the Company's equity instruments
or that may be settled by the issuance of such equity instruments.  The proposed
statement would  eliminate the ability to account for  share-based  compensation
transactions  using the  intrinsic  method that the Company  currently  uses and
generally  would  require  that  such  transactions  be  accounted  for  using a
fair-value-based  method and recognized as expense in the consolidated statement
of  operations.  The  effective  date of the  proposed  standard  is for periods
beginning  after June 15, 2005. It is expected  that the final  standard will be
issued before  December 31, 2004 and should it be finalized in its current form,
it will have a significant impact on the consolidated statement of operations as
the Company  will be required to expense the fair value of stock  option  grants
and stock purchases under employee stock purchase plan.

         In April 2004, the Emerging Issues Task Force ("EITF") issued Statement
No.  03-06  "Participating  Securities  and  the  Two-Class  Method  Under  FASB
Statement No. 128,  Earnings Per Share" ("EITF  03-06").  EITF 03-06 addresses a
number of questions regarding the computation of earnings per share by companies
that have issued securities other than common stock that  contractually  entitle
the holder to participate in dividends and earnings of the Company when, and if,
it declares  dividends  on its common  stock.  The issue also  provides  further
guidance in applying the  two-class  method of  calculating  earnings per share,
clarifying  what  constitutes  a  participating  security  and how to apply  the
two-class  method of computing  earnings per share once it is determined  that a
security is participating,  including how to allocate  undistributed earnings to
such a security.  EITF 03-06 became  effective during the quarter ended June 30,
2004,  the  adoption  of which  did not have an  impact  on the  calculation  of
earnings per share of the Company.

         In July  2004,  the EITF  issued a draft  abstract  for EITF  Issue No.
04-08,  "The Effect of  Contingently  Convertible  Debt on Diluted  Earnings per
Share" ("EITF 04-08"). EITF 04-08 reflects the Task Force's tentative conclusion
that  contingently  convertible  debt should be included in diluted earnings per
share computations  regardless of whether the market price trigger has been met.
If  adopted,  the  consensus  reached  by the Task  Force in this  Issue will be
effective for reporting  periods  ending after  December 15, 2004.  Prior period
earnings per share amounts presented for comparative  purposes would be required
to be restated to conform to this consensus and the Company would be required to
include  the shares  issuable  upon the  conversion  of the Notes in the diluted
earnings  per  share  computation  for all  periods  during  which the Notes are
outstanding.  Currently,  there would be no effect of this proposed statement on
our financial position and results of operations

         In  September  2004,  the  EITF  delayed  the  effective  date  for the
recognition and measurement  guidance previously  discussed under EITF Issue No.
03-01,  "The Meaning of  Other-Than-Temporary  Impairment and Its Application to
Certain  Investments"  ("EITF  03-01") as  included in  paragraphs  10-20 of the
proposed  statement.   The  proposed  statement  will  clarify  the  meaning  of
other-than-temporary  impairment and its  application to investments in debt and
equity securities,  in particular investments within the scope of FASB Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities," and
investments  accounted for under the cost method.  Currently,  there would be no
effect of this  proposed  statement  on its  financial  position  and results of
operations.

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.

                                       24
<PAGE>

Credit Risks

         The Company  monitors  its  exposure  for credit  losses and  maintains
allowances for anticipated  losses,  but does not require  collateral from these
parties.  Only one customer,  Sweetwater Capital,  LLC, represented greater than
10% of the Company's  revenues  during the three months ended November 30, 2004.
The Company does not believe that the credit risk posed by  Sweetwater  Capital,
LLC, or any other specific  customer would have a material adverse affect on its
financial condition.

Item 4.  Controls and Procedures

         The Company's Chief Executive Officer and Principal  Accounting Officer
have  evaluated  the  effectiveness  of the  Company's  disclosure  controls and
procedures (as such term is defined in Rules  13a-15(be) or Rule 15d-15(e) under
the Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end our fourth fiscal quarter of 2003. 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. Our Chief  Accounting
Officer, instead of our Chief Financial Officer,  evaluated the effectiveness of
our disclosure controls and procedures as of November 30, 2004, and certifies to
such effect pursuant to Section 302 and 906 of the  Sarbanes-Oxley  Act of 2002.
Our prior Chief  Financial  Officer  resigned  in November  2004 and our current
Chief Financial  Officer was hired in November 2004. From August 31, 2004 to the
date hereof, our Principal  Accounting Officer has performed the function of our
Chief Financial Officer.

Changes in Internal Controls

         There  has  been no  change  in the  Company's  internal  control  over
financial  reporting  identified in connection with our evaluation as of the end
our first fiscal quarter ended November 30, 2004, that has materially  affected,
or is reasonably likely to materially  affect,  the Company's  internal controls
over financial reporting.

Part 2. - Other Information

Item 1 - Legal Proceedings

         For a description of certain legal matters,  refer to Part 1, Item 1. -
"Consolidated  Financial  Statements,"  Note 11 -  "Commitments  and  Contingent
Liabilities" under the heading Legal Proceedings.

          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 (see Note
11).

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.

                                       25
<PAGE>

(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.

(c)      Exhibit Listing

   EXHIBIT NO.         IDENTIFICATION OF EXHIBIT

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

Exhibit32.2             Certification  of Chief  Financial  Officer  pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002



                                       26
<PAGE>



SIGNATURES

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


         EAGLE BROADBAND, INC.


Date:  January 18, 2005


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



                                           /s/ Eric Blachno
                                      --------------------------------------
                                               Eric Blachno
                                               Chief Financial Officer



                                           /s/ Tom Matura
                                      --------------------------------------
                                               Tom Matura
                                               Corporate Controller
                                              (Principal Financial &
                                               Accounting Officer)



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