U.S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   ___________

                               Amendment No. 1 to

                                   FORM 10-Q/A

                                   ___________

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

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

                        Commission File Number: 000-23163

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

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

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

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

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

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

As of March 18,, 2004, there were 191,238,584 shares of common stock
outstanding.


<PAGE>

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

                                Table of Contents

Part 1 - Financial Information                                          Page

          Item 1. Consolidated Financial Statements (Unaudited)

                  Consolidated Balance Sheets at November 30, 2003,
                  and August 31, 2003                                    3

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

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

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

                  Notes to the Consolidated Financial Statements         7

          Item 2. Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                   24

          Item 3. Quantitative and Qualitative Disclosures about
                  Market Risk                                           30

          Item 4. Controls and Procedures                               31

Part 2 - Other Information

          Item 1. Legal Proceedings                                     31

          Item 2. Recent Sales of Unregistered Securities or Changes
                  in Securities and Use of Proceeds.                    31

          Item 3. Defaults Upon Senior Securities                       31

          Item 4. Submission of Matters to a Vote of Security Holders   31

          Item 5. Other Information                                     31

          Item 6. Exhibits and Reports on Form 8-K                      31

Signatures                                                              33


<PAGE>

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

                                     ASSETS

                                                        November 30,  August 31,
                                                           2003          2003
                                                        ------------ -----------
                                                        (Unaudited)   (Audited)

Current Assets:
    Cash and Cash Equivalents                            $   5,673      $   824
    Securities Held for Resale                               1,877        1,714
    Accounts Receivable, net                                 2,402        1,704
    Inventories                                              3,855        3,199
    Prepaid Expenses                                           651          668
                                                        ------------ -----------
        Total Current Assets                                14,458        8,109

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

Other Assets:
    Deferred Costs                                             334          334
    Goodwill                                                76,273       76,273
    Other Intangible Assets                                  5,330        5,330
    Other Assets                                               239          227
                                                        ------------ -----------
           Total Other Assets                               82,176       82,164
                                                        ------------ -----------

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

                      LIABILITIES AND SHAREHOLDERS' EQUITY

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

            Total Current Liabilities                      17,800        19,030

                Commitments and Contingent Liabilities

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

            Total Shareholders' Equity                    109,107       101,976

Total Liabilities and Shareholders' Equity              $ 126,907     $ 121,006


See accompanying notes to consolidated financial statements.

                                       3
<PAGE>


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

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

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

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

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

Loss from Operations                                   (1,737)   (672)

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

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

Other Comprehensive Loss:

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

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

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

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


See accompanying notes to consolidated financial statements.

                                       4
<PAGE>


<TABLE>
<CAPTION>

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

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

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

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

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

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

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

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

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

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

Syndication Costs                                      ---                     ---

Treasury Stock                                         ---                     ---

Unrealized Holding Loss                                ---                     309           309

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

See accompanying notes to consolidated financial statements.

</TABLE>


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


Cash Flows From Operating Activities
Net Loss                                             $ (8,461) $ (831)

Adjustments To Reconcile Net Loss to Net Cash
Used By Operating Activities:
  Interest for Beneficial Conversion Value              6,912      91
  Depreciation and Amortization                           614     266
  Stock Issued for Services Rendered                    2,304      54
  (Increase)/Decrease in Accounts Receivable             (390)    632
  (Increase)/Decrease in Inventories                     (656)   (428)

                                       5
<PAGE>

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

  (Increase)/Decrease in Prepaid Expenses                       17      (13)
  Increase/(Decrease) in Accounts Payable                      279     (345)
  Increase/(Decrease) in Accrued Expenses                   (1,109)    (146)
                                                             ------   ------
  Total Adjustment                                           7,971      111
                                                             ------   ------

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

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

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

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

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

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

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

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

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>

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

NOTE 1 - Basis of Presentation and Significant Accounting Policies:
-------------------------------------------------------------------

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

A)   Consolidation

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

B)   Cash and Cash Equivalents

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

Other marketable securities include 1,095,000 shares of common stock of
Burst.com, 146,085,264 shares of Celerity Systems common stock and $350,000
Celerity Systems Bonds. These common stock and bond investments have an
aggregate cost basis of $1,075,000 and an aggregate fair market value of
$1,876,850 and are included in the cash and cash equivalents category and are
held for resale as of November 30, 2003.

C)   Property and Equipment

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

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

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

D)   Inventories

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

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

                                       7
<PAGE>


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

E)   Revenue Recognition

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

Eagle adopted EITF 00-21, "Revenue Arrangements with Multiple Deliverables," in
the fourth quarter of fiscal 2003. The impact of adopting EITF 00-21 had no
affect to Eagle's results of operations as Eagle did not have any contracts that
have multiple elements as of January 2004 or prior. When elements such as
hardware, software and consulting services are contained in a single
arrangement, or in related arrangements with the same customer, Eagle allocates
revenue to each element based on its relative fair value, provided that such
element meets the criteria for treatment as a separate unit of accounting. The
price charged when the element is sold separately generally determines fair
value. In the absence of fair value for a delivered element, Eagle allocates
revenue first to the fair value of the undelivered elements and allocates the
residual revenue to the delivered elements. In the absence of fair value for an
undelivered element, the arrangement is accounted for as a single unit of
accounting, resulting in a delay of revenue recognition for the delivered
elements until the undelivered elements are fulfilled. Eagle limits the amount
of revenue recognition for delivered elements to the amount that is not
contingent on the future delivery of products or services or subject to
customer-specified return or refund privileges.

Deferred Revenues

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

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

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

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


                                       8
<PAGE>


the category of Products on Eagle's Consolidated Statements of Operations
included as page F-4 of this report and also under the category Eagle within
Note 22 - Industry Segments.

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

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

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

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

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

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

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

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

                                       9
<PAGE>


F)   Research and Development Costs

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

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

G)   Income Taxes

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

H)   Net Earnings Per Common Share

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


                                         November 30,    August 31,
                                             2003         2003
                                        ------------- ------------
Weighted Average Number of Common
 Shares Outstanding Including

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

I)   Impairment of Long-Lived Assets and Goodwill

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

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

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

          1)   Quoted market prices in active markets.

          2)   Estimate based on prices of similar assets

          3)   Estimate based on valuation techniques
                                       10
<PAGE>


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

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

As of November 30, 2003, no impairment existed.

J)   Intangible Assets

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

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

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

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

                                       11
<PAGE>


utility districts and developers assume the predominate capital cost
responsibility and contract with Eagle to provide the services and content;
thereby significantly limiting the Company's capital outlays on such projects.

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

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

K)   Advertising Costs

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

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

L)   Deferred Syndication Costs

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

M)   Use of Estimates

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

N)   Marketable Securities

In May 1993, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective for fiscal years beginning after December
15, 1993. This statement considers debt securities that the Company has both the
positive intent and ability to hold to maturity are carried at amortized cost.
Debt securities that the company does not have the positive intent and ability
to hold to maturity and all marketable equity securities are classified as
available-for-sale or trading securities and are carried at fair market value.
Unrealized holding gains and losses on securities classified as trading are
reported in earnings. Unrealized holding gains and losses on securities
classified as available-for-sale were previously carried as a separate component
of stockholders' equity. SFAS No. 115 as amended by Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 130,
"Other Comprehensive Income." Management determines the appropriate
classification of marketable equity and debt securities at the time of purchase
and re-evaluates such designation as of each balance sheet date.

O)   Other Comprehensive Income

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

P)   Beneficial Conversion Values

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

                                       12
<PAGE>


date of issuance. The value is limited to the total proceeds received.

Q)   Reclassification

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

R)   Recent Pronouncements

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

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

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

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

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

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

S)   Product Warranties

     The Company warrants its products against defects in design, materials and
     workmanship generally for six months to a year. Other warranties from our
     vendors which are incorporated in our products are passed on to the
     customer at the completion of the sale. Provision for estimated warranty
     costs is made in the period in which such costs

                                       13
<PAGE>


     become probable. Historically, Eagle has not incurred any material warranty
     costs and, accordingly, Eagle has not accrued for these costs at November
     30, 2003 and 2002. Eagle provides for the estimated cost of product
     warranties at the time it recognizes revenue. Eagle engages in product
     quality programs and processes, including actively monitoring and
     evaluating the quality of its component suppliers; however, ongoing product
     failure rates, material usage and service delivery costs incurred in
     correcting a product failure, as well as specific product class failures
     outside of Eagle's baseline experience, affect the estimated warranty
     obligation. If actual product failure rates, material usage or service
     delivery costs differ from estimates, revisions to the estimated warranty
     liability would be required.

NOTE 2 - Accounts Receivable:
         -------------------

            Accounts receivable consist of the following, in thousands:

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

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

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

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

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

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

     Components of intangible assets are as follows, in thousands:

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

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

                                       14
<PAGE>


                                    Eagle          Other         Total
Balance at August 31, 2003   $      74,711  $      1,562    $   76,273
Acquisitions and other(1)                0             0             0
Balance at August 31, 2003   $      74,711  $      1,562    $   76,273


NOTE 4 - Business Combinations:

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

NOTE 5 - Notes Payable:

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

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

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

NOTE 6 - Line of Credit:

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

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

NOTE 7 - Convertible Debentures:

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


                                       15
<PAGE>


     although a lawsuit remains outstanding - see Legal Proceedings.

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

NOTE 8 - Securities Held for Resale:

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

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

NOTE 9 - Income Taxes:

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

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

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


                                       16
<PAGE>


     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)

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

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

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

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

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

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

NOTE 10 - Issuance of Common Stock:

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

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

NOTE 11 - Preferred Stock, Stock Options and Warrants:

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

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

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

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

                                       17
<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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

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

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

     160,000 stock purchase warrants issued to McClere Family Trust expiring
     April 24, 2008. The warrants are to purchase fully paid and non-assessable
     shares of the common stock, par value $.001 per share at a purchase price
     of $7.50 per share. The shares of common

                                       18
<PAGE>


     stock underlying these warrants have not been registered or issued, under
     the Securities Act of 1933. As November 30, 2003, none of these warrants
     have been registered, issued or exercised.

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

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

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

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

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

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

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

                                       19
<PAGE>


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

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


*Denotes warrants which would have an anti-dilutive effect if currently used to
calculate earnings per share for the period ended November 30, 2003 and 2002.

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

NOTE 12 - Capitalization Activities:

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

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

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

     Except as otherwise noted, all sales of the Company's securities were made
     by officers of the Company who received no

                                       20
<PAGE>

     commission or other remuneration for the solicitation of any person in
     connection with the respective sales of securities described above. The
     recipients of securities represented their intention to acquire the
     securities for investment only and not with a view to or for sale in
     connection with any distribution thereof and appropriate legends were
     affixed to the share certificates and other instruments issued in such
     transactions.

NOTE 13 - Risk Factors:

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

NOTE 14 - Foreign Operations:

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

NOTE 15 - Commitments and Contingent Liabilities:

    Leases

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

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

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

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

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

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

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

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

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

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

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

                                       21
<PAGE>

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

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

Legal Proceedings

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

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

On July 10, 2003, Eagle became a defendant in Cornell Capital Partners, L.P. vs.
Eagle Broadband, Inc., et al., Civil Action No. 03-1860 (KSH), and In the United
States District Court for the District of New Jersey. The suit presents claims
for breach of contract, fraud and negligent misrepresentation. Plaintiff has
also alleged that Eagle has defaulted on a convertible debenture for failing to
timely register the shares of common stock underlying the convertible debenture
and is seeking to accelerate the maturity date of the debenture. During the
three month period ended November 30, 2003, the principal balance of the
debenture was approximately $1.2 million was repaid, although the suit remains
outstanding. The Company denies the claims and intends to vigorously defend this
lawsuit and the claims against it.

On December 14, 2000, ClearWorks became a defendant in State Of Florida
Department Of Environmental Protection vs. Reco Tricote, Inc. And Southeast Tire
Recycling, Inc. A/K/A Clearwork.net, Inc.; In The Circuit Court Of The Tenth
Judicial Circuit In And For Polk County, Florida. The Florida EPA sued
ClearWorks.net presenting claims for recovery costs and penalties for a waste
tire processing facility. The suit seeks recovery of costs and penalties in a
sum in excess of $1,000,000, attorneys' fees and cost of court. ClearWorks
denies the claims and intends to vigorously contest all claims in this case and
to enforce its indemnification rights against the principals of Southeast Tire
Recycling.

On September 26, 2003 Intratech served a lawsuit on ClearWorks.net in Intratech
Capital Partners, Ltd. vs. ClearWorks.net, Inc.; Case No. CF3 20136 in the High
Court of Justice, Queen's Bench Division, Cardiff District Registry. This
lawsuit presents claims for breach of contract for failing to pay the plaintiff
for financial advice and services allegedly rendered. The complaint seeks
damages of $6,796,245.50, plus attorneys' fees and costs. ClearWorks denies the
claims and intends to vigorously defend this lawsuit and claims against it.

On or about September 2003, Enron sued United Computing Group, Inc. in Enron
Corp. (Debtors/Plaintiff) vs. United Computing Group, Inc.; Case No. 01-16034 in
the United States Bankruptcy Court for the Southern District of New York. The
suit presents claims pursuant to sections 547 and 550 of the Bankruptcy Code to
avoid and recover a transfer in the amount of approximately $1,500,000.00.
Defendant has filed an answer, denies the claims, and intends to vigorously
defend this lawsuit and claims against it.

Eagle is involved in lawsuits, claims, and proceedings, including those
identified above, consisting of, commercial, securities, employment and
environmental matters, which arise in the ordinary course of business. In
accordance with SFAS No. 5, "Accounting for Contingencies," Eagle makes a
provision for a liability when it is both probable that a liability has been
incurred and the amount of the loss can be reasonably estimated. Eagle believes
it has adequate provisions for any such matters. Eagle reviews these provisions
at least quarterly and adjusts these provisions to reflect the

                                       22
<PAGE>

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

impacts of negotiations, settlements, rulings, advice of legal counsel, and
other  information  and events  pertaining to a particular  case.  Litigation is
inherently  unpredictable.  However,  Eagle  believes that it has valid defenses
with respect to legal matters pending against it.  Nevertheless,  it is possible
that cash flows or results of  operations  could be  materially  affected in any
particular  period  by  the  unfavorable  resolution  of one or  more  of  these
contingencies.

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

NOTE 16 - Earnings Per Share:
          -------------------

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

<TABLE>
<CAPTION>

                                                      For the three months ended November 30, 2003
                                                      --------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                     ---------        -----------        ---------
<S>                                                  <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)
                                                    =======            =======            ======

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

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

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


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

</TABLE>

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

NOTE 17 - Employee Stock Option Plan:
          ---------------------------

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

The Company has elected to follow APB 25,  "Accounting  for Stock Issued to
Employees."  Accordingly,  since  employee  stock  options are granted at market
price on the date of grant, no compensation expense is recognized. However, SFAS
123 requires  presentation  of pro forma net income and earnings per share as if
the Company had accounted for its employee stock options  granted under the fair
value  method  of  that  statement.  The  weighted  average  fair  value  of the
individual  options  granted  during 2000 is  estimated  as $0.58 on the date of
grant.  A  meaningful  weighted  average  fair value of the  individual  options



                                       23
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003

granted  during  2000  using  the  method  prescribed  by SFAS 123  could not be
determined  due to the  volatility  of the share  price  during the  measurement
period.  Management  estimates the average fair value for options granted during
2001 to be  comparable  to those  granted  in 2000.  The impact on net income is
minimal; therefore, the pro forma disclosure requirements prescribed by SFAS 123
are not  significant  to the Company.  The fair values were  determined  using a
Black-Scholes option-pricing model with the following assumptions:

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

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


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


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


Net loss per share:
   As reported                                                                    $    (0.05)    $    (0.01)

   Pro forma                                                                      $    (0.05)    $    (0.01)

Diluted net loss per share
   As reported                                                                    $    (0.05)    $    (0.01)

   Pro forma                                                                      $    (0.05)    $    (0.01)
</TABLE>



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

                                               2003
                                    ---------------------------
                                      Shares       Weighted-
                                                    Average
                                                   Exercise
                                                     Price
                                    ------------ --------------
---------------------------------------------------------------
Outstanding at beginning of year        406,131  $          1.27
Granted                                       -
Assumed through acquisitions                  -             -
Exercised                                (3,453)-           0.60
Forfeited/Cancelled                           -             -
                                        -------             ----
Outstanding at end of year              402,678             1.27
                                        =======

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


<TABLE>
<CAPTION>

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

                                                           Options Outstanding                      Options Exercisable
                                           ----------------------------------------------------  ---------------------------
        Range of Exercise Prices                 Number            Weighted-      Weighted-         Number       Weighted-
                                                                    Average
                                                                   Remaining       Average                        Average
                                                                  Contractual      Exercise                      Exercise
                                               Outstanding       Life in Years      Price         Exercisable      Price
-----------------------------------------  --------------------  -------------- ---------------  -------------- ------------
<S>                                                   <C>                   <C> <C>            <C>    <C>       <C>
$0-$1.00                                              261,412               5.  $            0.55     264,865   $         0.55
$1.01-$2.00                                           115,766               5.  $            1.73     115,766   $         1.73
$2.01-$7.50                                            25,500               5.  $            6.55      25,500   $         6.55

                                                      402,628               5.  $            2.32     406,131   $         2.32
                                                      =======                                         =======

</TABLE>


                                       24
<PAGE>

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


NOTE 18 - Retirement Plans:
          -----------------

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

NOTE 19 - Major Customer:
          ---------------

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

NOTE 20 - Industry Segments:
          -----------------

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

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

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

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

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

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

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

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

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

Contact Wireless, Inc., is a paging, cellular, and mobile services provider
and reseller.
<TABLE>
<CAPTION>

                                   For the three months ending November 30, 2003

                (in thousands)           APC/HSI     EBS/DSS    UCG       Eagle     Other      Elim.     Consol.
                                       ----------- ---------- --------- ---------- ---------- ---------- ----------
<S>                                          <C>      <C>          <C>         <C>       <C>                <C>
                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>


                                       25
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2003

<TABLE>
<CAPTION>

                                   For the three months ending November 30, 2002

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

</TABLE>

<TABLE>
<CAPTION>

Reconcilation of Segment Loss from Operations to Net           November 30,       November 30,
Loss:                                                              2003               2002
<S>                                                        <C>                <C>
Total segment loss from operations                         $         (1,737)  $           (672)
Total Other Income (Expense)                                         (6,724)              (159)
                                                                     ------               ----
Net Loss                                                   $         (8,461)  $           (831))
</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 21 - Supplemental Non-Cash Disclosures:
          ----------------------------------

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

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


                                       26
<PAGE>

Item 2.  Management's Discussion and Analysis.

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

Results of Operations

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

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

<TABLE>
<CAPTION>

Condensed Financial Information
                                                       Three Months Ended
                                                          November 30,
                                              --------------------------------------------------

($ in thousands)                                 2003         2002      $ Change     % Change
                                                 ----         ----      --------     --------

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

</TABLE>


Overview

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

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

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



                                       27
<PAGE>


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

<TABLE>
<CAPTION>

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

($ in thousands)                                 2003      % of Total      2002     % of Total   $ Change     % Change
                                                 ----      ----------      ----     -----------  ---------    --------

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

</TABLE>

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

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

                                                          Three Months Ended
                                                            November 30,
                                              --------------------------------------------------

($ in thousands)                                 2003         2002      $ Change     % Change
                                                 ----         ----      --------     --------

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

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


                                       28
<PAGE>

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

<TABLE>
<CAPTION>

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

($ in thousands)                                 2003         2002      $ Change     % Change
                                                 ----         ----      --------     --------

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

</TABLE>

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

<TABLE>
<CAPTION>

Other Support Costs:
--------------------                                    Three Months Ended
                                                          November 30,
------------------------------------------------------------------------------------------------
($ in thousands)                                 2003         2002      $ Change     % Change
                                                 ----         ----      --------     -------
<S>                                                     <C>          <C>         <C>
Advertising and conventions                             0            0           0          NA
Auto related                                            9           11          (2)        -18%
Bad debt                                              104            0         104          NA
Contract labor                                          0           24         (24)       -100%
Delivery and postage                                   16           61         (45)        -74%
Fees                                                   62          108         (46)        -43%
Insurance                                             111            5         106        2120%
Office and telephone                                   79           63          16          25%
Other                                                  12           29         (17)        -59%
Professional and legal                                733           84         649         773%
Rent                                                  137          228         (91)        -40%
Travel                                                 56           75         (19)        -25%
Taxes                                                   3           17         (14)        -82%
Utilities                                             102          229        (127)        -55%
                                              --------------------------------------------------
Total Other Support Costs                           1,424          934         490          52%
                                              --------------------------------------------------

</TABLE>

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

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

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

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

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


                                       29
<PAGE>


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

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

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

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

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

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

Contractual Obligations

<TABLE>
<CAPTION>

                               Contractual                  Payments due by period
                               obligations
                                                Total  Less than  1-3     3-5      More than 5
                                                         1 year    years   years      years

<S>                                              <C>        <C>
                          Long-Term Debt         7,187      7,187     ---      ---          ---
                          Obligations
                          Operating Lease          695        521     174      ---          ---
                          Obligations
                                          Total  7,882      7,708     174      ---          ---
</TABLE>

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


                                       30
<PAGE>

CRITICAL ACCOUNTING POLICIES

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

Impairment of Long-Lived Assets and Goodwill

     Background:

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

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

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

     Strategy Change:

     Given the obstacles discussed  immediately above and Eagle's enhancement to
the  digital-based  fiber-to  the-home  system,  Eagle's  board of directors and
management  began  reassessing  it  long-term  strategy in early 2003 and made a
strategic decision to focus its fiber-to-the-home  activities on being a service
and content  provider to developers  and  municipalities  who were financing and
building out their own fiber infrastructures.  In fiscal 2003, Eagle realized it
had  failed  to  successfully  achieve  profits  using the  ClearWorks  model of
installing fiber optic cable to neighborhoods  under the speculative  attempt to
capture enough individual homeowners in each neighborhood via individual selling
methods to pay for the cable  infrastructure.  In early 2003, Eagle modified its
strategy to deliver the ClearWorks  developed  bundled digital services approach
including Internet, telephone, cable television and security monitoring services
to residential and business users by targeting municipalities,  homebuilders and
residential  real  estate  developers  that  finance and install the fiber optic
cable backbone in every lot and offer Eagle exclusive  rights to deliver digital
bundled services to homeowners,  using pre-selling promotions and other low cost
mass marketing  techniques.  In October 2003,  Eagle hired a new Chief Executive
Officer with an  extensive  sales and  marketing  background  and proven  senior
management and operational skills leading  high-growth  technology  companies to
implement  its  modified  strategy.  As of  December  5,  2003,  the date of the
auditor's report, Eagle had realized several initial successes in projects where
the   municipalities,   public  utility  districts  and  developers  assume  the
predominate  capital cost  responsibility and contract with Eagle to provide the
services and content;  thereby  significantly  limiting  the  Company's  capital
outlays on such projects.

     Eagle's strategy change had the distinct  advantage of minimizing the front
end capital outlays while improving the time to  profitability on such projects.
Most importantly, this change in strategy allows Eagle to market its services to
an existing customer base without  investing  significant  capital.  The bundled
digital services provided to the customers under the new developer and municipal
financed model are essentially  identical to those previously provided under the
ClearWorks.net  model. Though the Company has realized several initial successes
since implementing this strategy change, there can be no assurances that we will
be  successful  in the future.  In the event that the  Company  fails to achieve
sales  sufficient  to recover the carrying  value of these  assets,  we would be
required to record a significant charge to earnings in our financial  statements
during the period in which any  impairment  of our  goodwill is  determined.  At
Novembert 30, 2003, our goodwill was $76.3 million.

     Impairment Assessment:

     Our  long-lived  assets  predominantly   include  goodwill.   Statement  of
Financial  Accounting  Standards No. 142 "Goodwill and Other Intangible  Assets"
("SFAS  142")  requires  that  goodwill  and  intangible  assets be  tested  for


                                       31
<PAGE>

impairment at the reporting unit level (operating  segment or one level below an
operating  segment)  on an annual  basis and  between  annual  tests in  certain
circumstances.  Application of the goodwill  impairment test requires  judgment,
including  the   identification   of  reporting  units,   assigning  assets  and
liabilities to reporting  units,  assigning  goodwill and  intangible  assets to
reporting  units,  and  determining  the  fair  value  of each  reporting  unit.
Significant  judgments  required to estimate the fair value of  reporting  units
include estimating future cash flows, determining appropriate discount rates and
other  assumptions.  Changes in these estimates and assumptions could materially
affect the determination of fair value for each reporting unit.

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

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

Revenue Recognition

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

     Eagle   adopted   EITF   00-21,   "Revenue   Arrangements   with   Multiple
Deliverables," in the fourth quarter of fiscal 2003. The impact of adopting EITF
00-21 had no affect to Eagle's  results of  operations as Eagle did not have any
contracts that have multiple elements as of January 2004 or prior. When elements
such as hardware,  software and  consulting  services are  contained in a single
arrangement,  or in related arrangements with the same customer, Eagle allocates
revenue to each element  based on its relative  fair value,  provided  that such
element meets the criteria for treatment as a separate unit of  accounting.  The
price  charged when the element is sold  separately  generally  determines  fair
value.  In the absence of fair value for a delivered  element,  Eagle  allocates
revenue  first to the fair value of the  undelivered  elements and allocates the
residual revenue to the delivered elements.  In the absence of fair value for an
undelivered  element,  the  arrangement  is  accounted  for as a single  unit of
accounting,  resulting  in a delay  of  revenue  recognition  for the  delivered
elements until the undelivered  elements are fulfilled.  Eagle limits the amount
of  revenue  recognition  for  delivered  elements  to the  amount  that  is not
contingent  on the  future  delivery  of  products  or  services  or  subject to
customer-specified return or refund privileges.

Deferred Revenues

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




Eagle Wireless International, Inc.

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


BroadbandMagic

     BroadbandMagic  designs,  manufactures  and markets the convergent  set-top
boxes. Products are sent principally to commercial customers for a pre-sale test
period of ninety days.  Upon the end of the pre-sale  test period,  the customer
either  returns  the  product  or  accepts  the  product,  at which  time  Eagle
recognizes  the revenue.  Eagle's  Broadband  Multimedia  and Internet  Products


                                       32
<PAGE>

revenues  are reported  under the  category of Products on Eagle's  Consolidated
Statements of Operations  included as page F-4 of this report and also under the
category  Eagle  within  Note 22 -  Industry  Segments.  Revenue  from  software
consists of software  licensing.  There is no  post-contract  customer  support.
Software  revenue is allocated to the license  using vendor  specific  objective
evidence of fair value ("VSOE") or, in the absence of VSOE, the residual method.
The price charged when the element is sold separately generally determines VSOE.
In the absence of VSOE of a delivered  element,  Eagle allocates  revenue to the
fair value of the undelivered elements and the residual revenue to the delivered
elements.  Eagle  recognizes  revenue  allocated  to  software  licenses  at the
inception of the license.


Eagle Broadband, Inc.

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


Eagle BDS Services - dba ClearWorks Communications, Inc.

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


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

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


Eagle Communication Services - dba Atlantic Pacific Communications, Inc.

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


Etoolz, Inc.

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


Eagle Messaging Services - dba Link Two Communications, Inc.

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


Eagle Paging Services - dba Contact Wireless, Inc.

     Contact Wireless, Inc., provides customers with paging and mobile telephone
products and related monthly services. Revenue from product sales is recorded at
the time of shipment.  Revenue for the mobile phone and paging service is billed


                                       33
<PAGE>

monthly  as the  service is  provided.  Eagle's  Paging  Services  revenues  are
reported  under the  category  of Other on Eagle's  Consolidated  Statements  of
Operations included as page F-4 of this report and also under the category Other
within Note 22 - Industry Segments.


Eagle Security Services - dba DSS Security, Inc.

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


Eagle Technology Services - dba United Computing Group, Inc.

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

Receivables

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

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

Inventory

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

Recent Accounting Pronouncements

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

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

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

     In April 2002, the FASB issued Statement of Financial  Accounting Standards
No. 145 ("SFAS 145"), "Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB  Statement No. 13, and Technical  Corrections,"  which requires that the
extinguishment of debt not be considered an extraordinary item under APB Opinion
No. 30 ("APB 30"), "Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of Business,  and Extraordinary,  Unusual and Infrequently
Occurring Events and  Transactions,"  unless the debt  extinguishment  meets the


                                       34
<PAGE>

"unusual in nature and infrequent of occurrence" criteria in APB 30. SFAS 145 is
effective for fiscal years  beginning  after May 15, 2002,  and, upon  adoption,
companies must reclassify prior period items that do not meet the  extraordinary
item classification criteria in APB 30. The Company adopted SFAS 145 and related
rules as of  August  31,  2002.  The  adoption  of SFAS 145 had no effect on the
Company's financial position or results of operations.

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

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate and Equity Market Risks

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

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

Credit Risks

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

Item 4.  Controls and Procedures

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

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

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


                                       35
<PAGE>

Part 2. - Other Information

Item 1 - Legal Proceedings

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

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

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

         None

Item 3 - Defaults Upon Senior Securities
         None

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

Item 5 - Other Information
         None


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


(a)      Financial Statements and Schedules:

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

(b)      Reports on Form 8-K

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

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

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

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

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

(c)      Exhibit Listing

         EXHIBIT NO.                IDENTIFICATION OF EXHIBIT

<TABLE>
<CAPTION>

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

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

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

</TABLE>


                                       36
<PAGE>
<TABLE>
<CAPTION>


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

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

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

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

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

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

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

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

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

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

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

</TABLE>





SIGNATURES

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


                                               EAGLE BROADBAND, INC.


         Date: March 30, 2004                  By:      /s/David A.Weisman
                                                        -------------------
                                                        David Weisman
                                                        Chief Executive Officer

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


                                       37