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

                                    FORM 10-Q
                                   -----------

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

As of July 15, 2003, there were 125,931,965 shares of common stock outstanding.


                                       1
<PAGE>

<TABLE>
<CAPTION>



                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                                      INDEX


Part 1 - Financial Information                                                                   Page
        <S>        <C>                                                                            <C>
         Item 1.  Consolidated Financial Statements (Unaudited)

                  Consolidated Balance Sheets at May 31, 2003, and August 31, 2002                 3

                  Consolidated Statements of Earnings for the Three and Nine
                  Months Ended May 31, 2003 and 2002                                               4

                  Consolidated Statements of Changes in Shareholders' Equity for the
                  Nine Months Ended May 31, 2003, and Twelve Months Ended
                  August 31, 2002                                                                  5

                  Consolidated Statements of Cash Flows for the Nine Months Ended
                  May 31, 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                                             25

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                      29

         Item 4.  Controls and Procedures

Part 2 - Other Information

         Item 1.  Legal Proceedings                                                               30

         Item 2.  Recent Sales of Unregistered Securities or Changes
                  in Securities and Use of Proceeds.                                              30

         Item 3.  Defaults Upon Senior Securities                                                 30

         Item 4.  Submission of Matters to a Vote of Security Holders                             30

         Item 5.  Other Information                                                               30

         Item 6.  Exhibits and Reports on Form 8-K                                                30

Signatures                                                                                        31
</TABLE>


                                       2
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<TABLE>
<CAPTION>


                                                                     ASSETS

                                                                             May 31,          August 31,
                                                                              2003                2002
                                                                          (Unaudited)          (Audited)
        <S>                                                                    <C>              <C>
         Current Assets:
              Cash and Cash Equivalents                                 $        2,284   $         3,421
              Accounts Receivable                                                3,494             5,028
              Inventories                                                        7,183             6,059
              Prepaid Expenses                                                   1,137               358
                                                                         -------------   ---------------
                  Total Current Assets                                          14,098            14,866

         Property and Equipment:
              Operating Equipment                                               40,805            34,509
              Less:  Accumulated Depreciation                                  (4,554)           (3,661)
                                                                         -------------    --------------
                  Total Property and Equipment                                  36,251            30,848

         Other Assets:
              Deferred Costs                                                       334               334
              Goodwill                                                           7,916             7,916
              Other Intangible Assets                                           80,109            79,900
              Less:  Accumulated Amortization                                  (4,278)           (4,278)
              Other Assets                                                         424               397
                                                                         -------------    --------------

                  Total Other Assets                                            84,505            84,269
                                                                         -------------    --------------

         Total Assets                                                    $     134,854    $      129,983
                                                                         =============    ==============

                                   LIABILITIES AND SHAREHOLDERS' EQUITY
         Current Liabilities:
              Accounts Payable                                           $       5,838    $        4,757
              Accrued Expenses                                                   2,925             2,873
              Notes Payable                                                      4,933             3,653
              Capital Lease Obligations                                             80                48
                                                                         -------------    --------------

                  Total Current Liabilities                                     13,776            11,331

         Long-Term Liabilities:
              Capital Lease Obligations
                (net of current maturities)                                         11                70
              Long-Term Debt                                                                       1,202
                                                                         -------------    --------------

                  Total Long-Term Liabilities                                       11             1,272

                                         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 May 31, 2003, and
                  August 31, 2002, 110,085,000 and 73,051,000, respectively        110                73
              Paid in Capital                                                  167,707           158,731
              Retained Earnings                                               (46,750)          (41,424)
                                                                         -------------    --------------

                  Total Shareholders' Equity                                   121,067           117,380
                                                                         -------------    --------------

         Total Liabilities and Shareholders' Equity                      $    134,854    $      129,983
                                                                         ============    ==============

         See accompanying notes to consolidated financial statements.

</TABLE>


                                       3
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<TABLE>
<CAPTION>


                                                     For the Three Months ended May 31       For the Nine Months ended May 31
                                                                (Unaudited)
                                                        2003               2002                 2003                 2002
                                                        ----               ----                 ----                 ----
       <S>                                                  <C>               <C>                <C>                    <C>
        Net sales:
            Structured wiring                               598               1,988               3,198                5,580
            Broadband services                              657                 348               2,219                  914
            Products                                        527               3,278               2,722               14,491
            Other                                            65                 871               1,389                1,641
                                                    -------------       ------------        -------------        ------------
        Total sales                                       1,847               6,485               9,528               22,626
                                                    -------------       ------------        -------------        ------------
        Costs of Goods Sold:
            Materials other than Cable and Wire               0                   0                   0                    1
            Direct Labor and Related Costs                  245                 670                 993                2,108
            Products and Integration Service                605               2,167               2,256               11,589
            Structured Wiring Labor and Materials           326                 691                 984                1,387
            Broadband Services Costs                        152                 266                 682                  641
            Depreciation and Amortization                   114                 124                 342                  279
            Other Manufacturing Costs                                           102                 155                  141
                                                    -------------       ------------        -------------        ------------
        Total Costs of Goods Sold                         1,442               4,020               5,412               16,146
                                                    -------------       ------------        -------------        ------------
        Gross Profit                                        405               2,465                4,116               6,480
                                                    -------------       ------------        -------------        ------------
        Operating Expenses:
            Selling, General and Administrative:
                Salaries and Related Costs                  413               2,442               3,276                6,791
                Advertising and Promotion                    21                 118                  77                  381
                Depreciation and Amortization               213               1,243                 603                3,727
                Other Support Costs                       2,606               1,194               4,776                4,004
                Research and Development                    125                  85                 184                  349
                                                    -------------       ------------        -------------        ------------
        Total Operating Expenses                          3,378               5,082               8,916               15,252
                                                    -------------       ------------        -------------        ------------

        Earnings/(Loss) From Operations Before
        Other Revenues/(Expenses), Income Taxes          (2,973)             (2,617)             (4,800)              (8,772)
        and Other Comprehensive Income

        Other Revenues/(Expenses):
            Interest Income - net                            52                  49                  69                  324
            Other Income                                    ---                 ---                 ---                  ---
                                                    -------------      ------------        -------------        ------------

               Total Other Revenues                          52                  49                  69                  324
        Earnings/(Loss) Before Minority Interest
        in                                               (2,921)             (2,568)             (4,731)              (8,448)
        Affiliate, Income Taxes and Other
        Comprehensive Income
                                                    -------------       ------------        -------------        ------------

        Provisions For Income Taxes                         ---                 ---                 ---                  ---
                                                    -------------       ------------        -------------        ------------
        Net Earnings/(Loss)                              (2,921)             (2,568)             (4,731)              (8,448)
                                                    -------------       ------------        -------------        ------------
        Other Comprehensive Income, Net of Tax
        Unrealized Holding Gain/(Loss)                      346                 208                (595)                 (66)
                                                    -------------       ------------        -------------        ------------
        Other Comprehensive Income/(Loss)             $  (2,575)          $  (2,360)          $  (5,326)           $  (8,514)
                                                    =============       ============        =============        ============
        Net Earnings/(Loss) per Common Share:
        Basic                                            $ (0.04)            $ (0.04)            $ (0.06)            $ (0.13)
        Diluted                                          $ (0.04)            $ (0.04)            $ (0.06)            $ (0.13)
        Comprehensive Income/(Loss)                      $ (0.04)            $ (0.04)            $ (0.06)            $ (0.13)

        See accompanying notes to consolidated
        financial statements.

</TABLE>



                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                                  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, 2001              60,264          60                 ---         153,426       (4,358)       149,128
                                    --------     -------        ------------       ---------     ---------     ---------

Net Loss for Twelve Months
   Ended August 31, 2002                 ---         ---              ---                ---      (36,787)       (36,787)
New Stock Issued to Shareholders:
   For Services and Compensation       1,648          2               ---                880          ---            882
   For Property and Other Assets       2,867          2               ---                591          ---            593
   For Retirement of
    Debt and Liabilities               7,846          9               ---              3,577          ---          3,586
   For Acquisitions                    2,002          2               ---              1,079          ---          1,081
   For Licenses and Investments          ---         ---              ---                100          ---            100


Treasury Stock                       (1,576)         (2)              ---              (922)          ---          (924)

Unrealized Holding Gain                  ---         ---              ---                ---         (279)         (279)
                                     -------     -------        ---------        -----------     --------        --------

Total Shareholders' Equity
   As of August 31, 2002              73,051     $    73        $     ---        $   158,731    $ (41,424)     $ 117,380
                                    ========      ======         ========         ==========     =========      ========

Net Loss for Nine Months
   Ended May 31, 2003                    ---         ---              ---                ---       (4,731)       (4,731)
New Stock Issued to Shareholders:
   For Services and Compensation       6,258           6              ---              1,409          ---          1,415
   For Property and Other Assets      14,938          16              ---              3,032          ---          3,048
   For Retirement of
    Debt and Liabilities              15,838          15               ---             4,903          ---          4,918

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

Unrealized Holding Gain                  ---         ---              ---                ---         (595)         (595)
                                     -------     -------        ---------         ----------     --------       --------

Total Shareholders' Equity
As of May 31, 2003                   110,085     $   110        $     ---       $   167,707     $ (46,750)     $ 121,067
                                    ========      ======         ========        ==========     ==========      ========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       5
<PAGE>
<TABLE>
<CAPTION>


                                                                     For the Nine Months ended May 31,

                                                                              2003       2002
                                                                              ----       ----
                                                                                (Unaudited)
<S>                                                                          <C>         <C>
Cash Flows From Operating Activities
Net Earning/(Loss)                                                         $ (5,326)$   (8,514)

Adjustments to Reconcile Net Earnings to Net Cash
Used By Operating Activities:
   Interest for Conversion Value                                                 91       ---
   Depreciation and Amortization                                                945     4,006
   Stock Issued for Interest Expense                                            266        92
   Allowance for Doubtful Accounts                                              102       138
   Stock Issued for Services Rendered                                         1,060       243
   (Increase)/Decrease in Accounts Receivable                                 1,432     1,411
   (Increase)/Decrease in Inventories                                        (1,124)    2,785
   (Increase)/Decrease in Prepaid Expenses                                     (777)       51
   Increase/(Decrease) in Accounts Payable                                    1,284      (506)
   Increase/(Decrease) in Accrued Expenses                                    1,456    (1,575)
                                                                              -----    -------
     Total Adjustment                                                         4,735     6,645

Net Cash Used by Operating Activities                                          (591)   (1,869)

Cash Flows From Investing Activities:
   (Purchase)/Disposal of Property and Equipment                             (3,486)  (13,633)
   (Increase)/Decrease in Acquisition Costs                                     ---         6
   (Increase)/Decrease in Deferred Costs                                        (52)      ---
   (Increase)/Decrease in Syndication Costs                                    (368)       (9)
   (Increase)/Decrease in Other Assets                                          ---      (234)
                                                                            -------      -----
Net Cash Used by Investing Activities                                        (3,906)  (13,870)

Cash Flows From Financing Activities:
   Increase/(Decrease) in Notes Payable & Long-Term Debt, net                 3,360       552
   Increase/(Decrease) in Capital Leases                                        ---       (56)
   Increase/(Decrease) in Line of Credit                                        ---      (834)
   Treasury Stock                                                               ---      (783)
                                                                            -------      -----
Net Cash Provided By Financing Activities                                     3,360    (1,121)
                                                                              -----    -------

Net Increase/(Decrease) in Cash                                              (1,137)  (16,860)

Cash At The Beginning Of Period                                               3,421    23,843
                                                                              -----    ------
Cash At The End Of Period                                                    $2,284   $ 6,983
                                                                             ======   =======

Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for Interest                                 $    286  $     96


Supplemental non-cash investing activities (See Note 4) and changes in
shareholder's equity:
</TABLE>


See accompanying notes to consolidated financial statements.



                                       6
<PAGE>




NOTE 1 - Basis of Presentation and Significant Accounting Policies:

          Eagle Broadband, Inc., (the Company or Eagle) incorporated as a Texas
          corporation on May 24, 1993, and commenced business in April of 1996.
          The Company is a worldwide 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. Manufacturing of the Eagle Wireless product line of wireless
          infrastructure products was licensed to a third party company during
          this reporting period.

A)        Consolidation

          At May 31, 2003, the Company's subsidiaries are: Atlantic Pacific
          Communications, Inc. (APC); Etoolz, Inc. (ETI); Eagle Wireless
          International, Inc. (EWI); Eagle Broadband Services, Inc.;
          ClearWorks.net, Inc. (.NET); ClearWorks Communications, Inc. (COMM);
          ClearWorks Home Systems, Inc. (HSI); Contact Wireless, Inc. (CWI); DSS
          Security, Inc. (DSS); United Computing Group, Inc. (UCG); and Link Two
          Communications, Inc. (LINK II). 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 $2,284,000 and $3,421,000 invested in interest bearing
          accounts and marketable securities (Note 9) at May 31, 2003, and
          August 31, 2002, respectively.

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:
<TABLE>
<CAPTION>

                                                                        Years
                           <S>                                              <C>
                           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
</TABLE>

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

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:
<TABLE>
<CAPTION>

                                                       May 31,                   August 31,
                                                        2003                       2002
                                                      ---------                  ----------
                        <S>                              <C>                     <C>
                           Raw Materials              $   4,620                  $ 4,515
                           Work in Process                2,359                    1,262
                           Finished Goods                   204                      282
                                                       --------                   ------
                                                      $   7,183                  $ 6,059
                                                       ========                   ======
</TABLE>


                                       7
<PAGE>

E)        Revenue Recognition

          The Company designs, manufactures, markets and services its products
          and services under the Eagle Broadband, Inc.; Eagle Broadband
          Services, 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 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. Manufacturing of the Eagle Wireless product line of
          wireless infrastructure products was licensed to a third party company
          during this reporting period.

          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 the Company recognizes the revenue.

          Eagle Broadband, Inc.
          Eagle Broadband 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 distributors or sales
          agents provide the companies with manufacturing business sales leads.
          The transactions from these distributors and agents are subject to the
          Company'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.

          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.

          Eagle Broadband Services, Inc.
          Eagle Broadband Services, Inc. assumed the operations of ClearWorks
          Communications, Inc. as of September 1, 2002, and 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.

          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.

          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 earned.

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

          Link Two Communications, Inc.
          Link Two Communications, Inc., provides customers with one- and
          two-way messaging systems. The revenue from these services is
          recognized as it is earned from the customer.

          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.



                                       8
<PAGE>

          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.

          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 as earned.

F)        Research and Development Costs

          For the three months ended May 31, 2003, and 2002, the Company
          performed research and development activities for internal projects
          related to its convergent set-top boxes as well as its multi-media
          entertainment centers and Orb'Phone Exchange. Research and development
          costs of $125,000 and $85,000 were expensed for the three months ended
          May 31, 2003 and 2002, respectively. Research and development costs of
          $184,000 and $349,000 were expensed for the nine months ended May 31,
          2003 and 2002, respectively.

          No research and development services were performed for outside
          parties for the three and nine months ended May 31, 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:
<TABLE>
<CAPTION>
                                                                       May 31,       August 31,
                                                                       2003          2002
                                                                    -----------     -----------
                <S>                                                   <C>             <C>
                  Weighted Average Number of Common
                    Shares Outstanding Including

                  Primary Common Stock Equivalents                      83,117          64,004
                  Fully Dilutive Common Stock Equivalents               83,271          64,158
</TABLE>


I)       Impairment of Long Lived and Identifiable Intangible Assets

         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.

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 is
         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 contract rights. Other intangible assets
         consist of patents and licenses, which are being amortized using the
         straight-line method over ten (10) years and twenty (20) years,
         respectively.


                                       9
<PAGE>

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 nine months ended May 31, 2003, the Company
         has expensed $77,000 where $0 in costs has been deferred.

         For the nine months ended, May 31, 2002, the Company expensed $381,000
         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 nine months ended May 31,
         2003 and 2002, the Company recorded an unrealized loss of $595,000 and
         $66,000, respectively.

P)       Reclassification

         The Company has reclassified certain assets costs and expenses for the
         three and nine months ended May 31, 2003 to facilitate comparison to
         the three and six months ended May 31, 2002.

Q)       Supporting Costs in Selling, General and Administrative Expenses

         Other support costs for the nine months ending May 31, 2003 and 2002,
         are as follows, in thousands:


                                       10
<PAGE>
<TABLE>
<CAPTION>

                                                       2003          2002
                                                     ---------     --------
                <S>                                 <C>               <C>

                  Advertising/Conventions         $     ---     $      ---
                  Auto Related                           43            119
                  Bad Debt                              101            138
                  Contract Labor                      1,312            257
                  Delivery/Postage                       80             67
                  Fees                                  278             91
                  Interest                              552            598
                  Office & Insurance                    127            214
                  Other                                 158            196
                  Professional                          424            453
                  Rent                                  709          1,099
                  Repairs and Maintenance                46             82
                  Travel                                217            ---
                  Taxes                                  72             87
                  Telephone & Utilities                 657            603
                                                     ------       --------
                  Total                             $ 4,776        $ 4,004
                                                     ======       ========
</TABLE>


R)       Recent Pronouncements

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
         SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and
         Other Intangible Assets, which is effective for the Company in the
         first quarter of fiscal year 2003 and for purchase business
         combinations consummated after June 30, 2001. These standards change
         the accounting for business combinations by, among other things,
         eliminating pooling-of-interests accounting and requiring a change in
         the method of expensing goodwill and certain intangible assets with an
         indefinite useful life. Goodwill and intangible assets deemed to have
         an indefinite useful life will be subject to an annual review for
         impairment rather than periodic amortization. Finite lived intangibles
         will continue to be amortized over their useful lives.

         At May 31, 2003, the Company evaluated its existing goodwill and
         intangible assets acquired in purchase business combinations completed
         prior to July 1, 2001. The carrying amount of recognized intangible
         assets that meet the criteria for recognition apart from goodwill or
         any identifiable intangible assets that are presented with goodwill and
         other intangible assets for financial reporting purposes have been
         reclassified and reported separately from goodwill. The unamortized
         balance of any negative goodwill will be recognized as the cumulative
         effect of a change in accounting principle. The Company has also tested
         goodwill for impairment at May 31, 2003, using the two-step process
         prescribed in SFAS No. 142. The first step is a screen for potential
         impairment, while the second step measures the amount of impairment, if
         any.

         In October 2001, the FASB issued SFAS No. 144, Impairment of Long-Lived
         Assets, SFAS No. 144 supersedes SFAS No. 121, Accounting for the
         Impairment of Long-Lived Assets and for Long-Lived Assets to be
         Disposed Of. SFAS No. 144 retains the requirements of SFAS No. 121 to
         (a) recognize an impairment loss only if the carrying amount of a
         long-lived asset is not recoverable from its undiscounted cash flow and
         (b) measure an impairment loss as the difference between the carrying
         amount and the fair value of the asset. SFAS No. 144 removes goodwill
         from its scope. SFAS No. 144 is applicable to financial statements
         issued for fiscal years beginning after December 15, 2001. The adoption
         of SFAS No. 144 had a material impact on the financial position of the
         Company.

         Amortization expense related to goodwill and intangibles was
         approximately $0 and $3,008,000 for the nine months ended May 31, 2003,
         and 2002, respectively.

NOTE 2 - Accounts Receivable:
         --------------------
<TABLE>
<CAPTION>

                  Accounts receivable consist of the following, in thousands:

                                                                             May 31,         August 31,
                                                                             2003            2002
                                                                           -----------      ------------
                    <S>                                                        <C>             <C>
                  Accounts Receivable                                 $         3,778  $        5,270
                  Allowance for Doubtful Accounts                                (284)           (242)
                                                                           -----------      ------------
                  Net Accounts Receivable                             $         3,494  $        5,028
                                                                           ===========      ============
</TABLE>

                                       11
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                              May 31,          August 31,
                                                                              2003             2002
                                                                           -----------      ------------
                <S>                                                             <C>              <C>
                  Automobile                                          $           392  $            392
                  Head-End Facility and Fiber Infrastructure                   30,353            27,164
                  Furniture & Fixtures                                            578               634
                  Leasehold Improvements                                          272               216
                  Office Equipment                                              1,028             1,015
                  Property, Manufacturing & Equipment                           8,182             5,088
                                                                           -----------      ------------
                      Total Property, Plant & Equipment               $        40,805  $         34,509
                         Less: Accumulated Depreciation                        (4,554)           (3,661)
                                                                           -----------      ------------
                      Net Property, Plant & Equipment                 $        36,251  $         30,848
                                                                           ===========      ============

         Components of intangible assets are as follows, in thousands:

                                                                              May 31,        August 31,
                                                                              2003           2002
                                                                           -----------       -----------
                  Goodwill                                            $         7,916  $          7,916
                  Contract Rights                                              74,513            74,513
                  Licenses, Permits, Deferred Costs & Other Assets              6,354             6,118
                                                                           -----------      ------------
                      Total Intangible Assets                         $        88,783  $         88,547
                         Less: Accumulated Amortization                       (4,278)           (4,278)
                                                                           -----------      ------------
                      Net Intangible Assets                           $        84,505  $         84,269
                                                                           ===========      ============
</TABLE>

NOTE 4  - Business Combinations:
          ----------------------

         Effective January 1, 2002, the Company acquired the assets of 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 to intangible assets. The intangible
         assets include, among other things, approximately 4,000 current
         customers being billed monthly for wireless messaging services. 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 May 31, 2003, the Company has 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 May 31,
2003, and August 31, 2002, in thousands:
<TABLE>
<CAPTION>

                                                         Annual
                                                        Interest                         May 31,      August 31,
                                                          Rate           Due Date        2003         2002
                                                    ---------------- ---------------     --------     ---------
                <S>                                        <C>            <C>               <C>        <C>
                 Vehicles                                Various         Various         $    21      $      27
                 Convertible Debentures                  2%-6%           Demand            4,226          4,000
                 Other                                   Various         Various             686            828
                                                                                         --------     ---------

                 Total notes payable                                                     $ 4,933      $   4,855
                 Less current portion                                                      4,933          3,653
                                                                                         --------     ---------
                 Total long-term debt                                                    $    -       $   1,202
                                                                                         ========     =========
</TABLE>

NOTE 6 - Capital Lease Obligations:
         -------------------------

         The Company leases equipment from various companies under capital
         leases with varying expiration dates. The assets and liabilities under
         the capital lease are recorded at the lower of the present value of the
         minimum lease payments or the fair value of the asset. The assets are
         depreciated over the estimated useful life with the value and
         depreciation being included as a component of Property and Equipment
         under operating equipment.


                                       12
<PAGE>

         Minimum future lease payment under capital lease as of May 31, 2003,
         and August 31, 2002, for each of the next five years and in the
         aggregate are (in thousands):
<TABLE>
<CAPTION>

                                                                    May 31, 2003             August 31, 2002
                                                                   -------------             --------------
                <S>                                                        <C>                     <C>
                  Total minimum lease payments                      $        101               $      128
                  Less : Amount representing interest                         10                       10
                                                                   -------------               ----------
                  Present value of net minimum lease payments                 91                      118

                  Less:   Current  maturity  capital  lease                   80                       48
                  obligation
                                                                   -------------               ----------
                    Long-term capital lease obligation                        11                       70
                                                                   =============               ==========

         Future obligations under the lease terms are as follows (in thousands):

                 Period Ended                                            Amount
                                                                       ---------
                     2004                                                     89
                     2005                                                     12
                                                                       ---------
                 Total                                                 $     101
                                                                       =========
</TABLE>

NOTE 7 - Line of Credit:
         ---------------

          During the Company's first fiscal quarter ended November 30, 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
         May 31, 2003, APC reflected as a note payable $320,469 to reflect the
         gross sale of $377,022 in accounts receivable to SWBT less $56,553 of
         reserves held by SWBT against such purchases.

         The Company, through its subsidiary United Computing Group, Inc. (UCG),
         entered into a credit facility in July 2002 with Southwest Bank of
         Texas (SWBT) to provide working capital, repay the prior 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
         May 31, 2003, UCG reflected as a note payable $129,955 to reflect the
         gross sale of $152,888 in accounts receivable to SWBT less $22,933 of
         reserves held by SWBT against such purchases.

NOTE 8 - Convertible Debentures:
--------------------------------

During October 2002, the Company entered into a $3,000,000 convertible debenture
agreement with Cornell Capital Partners, LP (CCP). At the Company's option, the
entire principal amount and all accrued interest shall be either (a) paid to CCP
on the third year anniversary from the date of the debenture or (b) converted.
The three-year debenture bears interest at 5% and is repayable in stock or cash.
The method of repayment is determined by the Company. The significant conversion
terms are that CCP is entitled, at its option, to convert, and sell on the same
day, at any time and from time to time subject to the terms of the agreement,
until payment in full of the debenture, all or any part of the principal amount
of the debenture, plus accrued interest, into shares of the Company's common
stock at the price per share equal to either (a) $1.00 or (b) 90% of the average
of the four lowest closing trade prices of the common stock, for the five
trading days immediately preceding the conversion date. CCP shall not be
entitled to convert the debenture for a period of 180 days from the date of the
debenture. After 180 days, if the conversion price is below $1.00, CCP shall be
entitled, at its option, to convert, and sell on the same day up to $50,000
every five business days. After 12 months from the date of the debenture, if the
conversion price is below $1.00, CCP shall be entitled, at its option, to
convert and sell on the same day up to $75,000 every five business days.
Notwithstanding the foregoing, after 180 days from the date of the debenture,
CCP shall be entitled, at its option, to convert and sell on the same day
without restriction if the conversion price is above $1.00. Under the terms of
this agreement Eagle received $2,500,000 in cash and a $500,000 secured
convertible debenture from Celerity Systems, Inc.(CCI) bearing interest at ten
percent due September 19, 2007. Eagle is entitled, at its option, to convert,
and sell on the same day, at any time, until payment in full of this debenture,
all or any part of the principal amount of the debenture, plus accrued interest,
into CCI shares. The conversion price is equal to either $.06 or eighty-seven
and one-half percent (87.5%) of the lowest bid price of the common stock for the
preceding five trading days. At May 31, 2003, Eagle has converted $75,000 of the
bond into 65,598,524 shares of CCI. Eagle intends to liquidate the bond into
cash through the conversion process and immediate sale of CCI shares. This
investment is recorded at a cost of $500,000 until the debenture or converted
shares are sold. At May 31, 2003, the underlying value of this debenture is
approximately $850,000. Subsequent to May 31, 2003, Eagle has submitted
additional bond conversion notices of $75,000 which will convert into 80,486,740
shares of CCI common stock. Eagle is in discussions with CCP to amend certain
provisions of the debenture as it relates to shares currently issued and stock
payments for accrued interest.


                                       13
<PAGE>


         At August 31, 2002, $2,000,000 in principal plus $600,000 of accrued
         interest and fees was outstanding to Candlelight Investors, LLC. In
         November 2002, the Company issued 3,000,000 shares of stock to settle
         this debt.

         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, and as a result of
         the acquisition, is now a secondary subsidiary of Eagle. 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 (the "First Note"), and Link Two has the ability
         to require Tail Wind to purchase additional convertible notes in the
         amount of $4,000,000 (the "Second Note") and $3,000,000 (the "Third
         Note"). The conversion terms of the convertible debentures become
         effective after ninety days of the initial closing date. The note
         balance will be due in fiscal 2003. Link Two may require Tail Wind to
         purchase the Second Note if: (a) the price of Eagle's common stock is
         above $5.00 per share for 20 consecutive trading days during calendar
         2001, and other various terms are met. Link Two may require Tail Wind
         to purchase the Third Note if the price of Eagle's common stock is
         above $8.00 per share for 20 consecutive trading days during calendar
         2001, and the agreed upon covenants are met. In conjunction with the
         issuance of the First Note, Link Two issued Tail Wind a warrant, and if
         Link Two chooses to issue the Second and Third Notes, it will issue
         Tail Wind additional warrants.

         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 at a rate
         of $1.79 per share. The agreement also permits Tail Wind to convert the
         Link Two warrant into Eagle warrants to purchase shares of our common
         stock. Tail Wind would have a warrant to purchase 1,396,648 shares of
         our common stock at an exercise price of $1.83 per share, exercisable
         between August 2002 and September 2006. If Link Two requires Tail Wind
         to purchase the Second and Third Note, the additional warrants it
         issues will also be convertible into shares of our common stock. The
         number of shares that the additional warrants may be converted into
         will depend on the price of our common stock, and cannot be determined
         at this time. However, the exercise price of the additional warrants
         may not be less than $1.83 per share.

         The Company has agreed to pre-pay the notes at the rate of a minimum of
         $250,000 per month and a maximum of $500,000 per month. The pre-payment
         may be in cash or in shares of our common stock at the rate of 90% of
         the average of the two lowest market prices of our common stock for the
         applicable month. However, the Company may not issue shares of our
         common stock for pre-payment purposes if the total number of shares
         exceeds the aggregate trading volume of our common stock for the twelve
         trading days preceding the date of payment, in which case we must pay
         the difference in cash. As the number of shares to be issued for
         pre-payment purposes is dependent on the price and trading volume of
         our common stock, there is no way to determine the number of shares
         that may be issued at this time. Eagle has filed a registration
         statement for the potential conversion shares for the note and warrants
         exercise. As of May 31, 2002, the Company has paid to Tail Wind
         $2,000,000 towards the reduction of debt. The current financial
         statements have recorded as current maturity for this debt, $2,000,000.

         As part of the above agreements, the Company entered into a
         registration rights agreement with Tail Wind, and the Company filed a
         registration statement, in order to permit Tail Wind to resell to the
         public the shares of common stock that it may acquire upon any
         conversion of the First Note and exercise of the warrant associated
         with the First Note. The Company have registered for resale 5,000,000
         shares of common stock, which represents 122% of the shares to be
         issued upon conversion of the First Note at $1.79 per share and 100% of
         the exercise of the warrant associated with the First Note at $1.83 per
         share. The additional shares registered is to account for the shares
         that may be issued for pre-payment as described in the above paragraph,
         or upon the exercise of the anti-dilution rights provided for in the
         following paragraph. If Link Two chooses to require Tail Wind to
         purchase the Second and Third Notes, we will file another registration
         statement covering the resale of the shares that may be issued on
         conversion of the Second and Third Notes and upon the exercise of the
         warrants associated with the Second and Third Notes.

         In our agreement with Tail Wind, the Company granted Tail Wind
         anti-dilution rights. If the Company sells common stock or securities
         exercisable for or convertible into shares of our common stock for less
         than $1.79 per share, the Company must reduce the conversion price of
         the notes and the exercise price of the warrants to the price the
         Company sold the common stock or the exercise or conversion price the
         Company issued the convertible securities. The Company has agreed to
         register for resale any additional shares that will be issued pursuant
         to these anti-dilution rights on a future registration statement,
         unless such additional shares are available in the current registration
         statement. In addition, under the terms of the agreement, without Tail
         Wind's approval, the Company may not issue Tail Wind shares of common
         stock such that Tail Wind would ever be considered to beneficially own
         greater than 4.99% of the outstanding common stock. In connection with
         this transaction, Link Two Communications, Inc., has paid Ladenburg
         Thalman and Co. a fee of 5% of the purchase price of the notes.
         Additionally, the Company has valued the conversion feature of the
         convertible debenture and warrants at $1,648,045 and $1,270,995,
         respectively; the amounts were determined by using the Black-Scholes
         calculation. These amounts have been capitalized as part of the cost of
         developing the wireless infrastructure. At August 31, 2002, Eagle and
         Tail Wind were renegotiating the terms of this note. During the
         renegotiation period, the Company has agreed to pay interest until all
         new terms and conditions have been resolved.

                                       14
<PAGE>

NOTE 9 - Marketable Securities:
         ----------------------

         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 May
         31, 2003 and August 31, 2001, all of the Company's marketable equity
         securities are classified as available-for-sale; with the intent to
         dispose of them within the next year.

         At May 31, 2003, the securities had an original basis of $1,250,000
         determined by multiplying the number of shares acquired by the fair
         market value of those shares. At the May 31, 2003 balance sheet date,
         the fair market value of these securities was $1,163,000; determined by
         multiplying the number of shares held by the fair market value of those
         shares at the balance sheet date. The difference between the cost and
         fair market value represents an unrealized holding gain (loss) and is
         included below current earnings in "Other Comprehensive Income."

NOTE 10 - 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:
<TABLE>
<CAPTION>

                                                                             May 31,             August 31,
                                                                                2003             2002
                                                                                ----             ----
                                                                                 %               %
                   <S>                                                           <C>             <C>
                  U.S. Federal Statutory Tax Rate                                34               34
                  U.S. Valuation Difference                                     (34)             (34)
                                                                               ----              ----
                  Effective U.S. Tax Rate                                         0                0
                  Foreign Tax Valuation                                           0                0
                                                                                  -                -
                  Effective Tax Rate                                              0                0
                                                                                  =                ==
</TABLE>

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

                                                              May 28,           August 31,
                                                                2003                2002
                                                              ---------           ---------
                   <S>                                 <C>    <C>      <C>      <C>
                  Computed expected tax benefit         $        (333)  $         (12,508)
                  Increase in valuation allowance                 333              12,508
                                                              ---------           ---------
                                                        $       ---     $           ---
                                                              =========           =========
</TABLE>

         The tax effects of temporary differences that give rise to significant
         portions of the deferred tax assets and deferred tax liabilities at May
         31, 2003, and August 31, 2002, are presented below, in thousands, and
         include the balances of the acquired company ClearWorks.Net.

<TABLE>
<CAPTION>
                                                                   May 31,          August 31,
                                                                   2003             2002
                                                                 ---------          ---------
                <S>                                                <C>              <C>
                  Deferred tax assets:
                  Accounts receivable, principally due
                  to allowance for doubtful accounts             $   ---           $    ---

                  Net operating loss carry-forwards               25,656             24,047
                  Less valuation allowance                       (25,656)           (24,047)
                                                                 ---------          ---------
                  Net deferred tax assets                             ---             ---

                  Deferred tax liabilities:
                  Differences in depreciation                         ---                ---
                                                                 ---------          ---------
                  Net deferred tax liabilities                   $    ---           $    ---
                                                                 =========          =========
</TABLE>

         The valuation allowance for deferred tax assets of May 31, 2003, and
         August 31, 2002, was $24,663,000 and $24,047,000, respectively. At May
         31, 2003, the Company has net operating loss carry-forwards of
         $36,403,000, which are available to offset future federal taxable
         income, if any, with expirations from 2020 to 2021.


                                       15
<PAGE>

NOTE 11 - Issuance of Common Stock:
          -------------------------

         For the nine months ended May 31, 2003, the Company issued shares of
         common stock. The following table summarizes the shares of common stock
         issued, in thousands.
<TABLE>
<CAPTION>
                 <S>                                                                <C>
                  Shares Outstanding August 31, 2002                                   73,051
                                                                              ----------------
                  Shares issued for Retirement of Debt and Liabilities                 15,838
                  Shares  issued for  Services,  Compensation,  Property and           21,196
                  Other Assets
                                                                              ----------------
                  Shares Outstanding May 31, 2003                                     110,085
                                                                              ================
</TABLE>

NOTE 12 - 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 May 31, 2003, options to purchase 447,264 are outstanding and
         952,736 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 May 31, 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 May 31, 2003, none of these
                  options have been exercised

                  50,000 stock purchase warrants issued to Weed & Co. L.P.
                  expiring December 10, 2002. 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 $1.55 per share. The
                  shares of common stock underlying the warrants were registered
                  for resale on August 3, 2000, under the Securities Act of
                  1933. As of May 31, 2003, 25,000 warrants have been exercised
                  resulting in cash proceeds of $38,750 and the balance of the
                  warrants expired unexercised.

                  20,000 stock purchase warrants issued to Kason, Inc., expiring
                  October 7, 2002. 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 $1.75 per share. The shares of
                  common stock underlying these warrants were registered for
                  resale on November 30, 2000, under the Securities Act of 1933.
                  As of May 31, 2003, 6,234 warrants have been exercised
                  resulting cash proceeds of $10,910 and the balance of warrants
                  expired unexercised.

                  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. The
                  shares of common stock underlying these have not been
                  registered as of November 30, 2002, under the Securities Act
                  of 1933. As of May 31, 2003, none of these warrants have been
                  exercised.

                  41,667 stock purchase warrants issued to Peter Miles expiring
                  July 20, 2004. The warrants are to purchase fully paid and
                  non-assessable shares of the common stock, par value $.001 per
                  share at a purchase price of $2.00 per share. The shares of
                  common stock underlying these have not been registered as of
                  November 30, 2002, under the Securities Act of 1933. As of May
                  31, 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
                  May 31, 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 May 31, 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
                  May 31, 2003, none of these warrants have been exercised.


                                       16
<PAGE>

                  50,000 stock purchase warrants issued to Weed & Co. L.P.
                  expiring June 10, 2002. 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 were
                  registered for resale on August 3, 2000, under the Securities
                  Act of 1933. As May 31, 2003, all of these warrants have
                  expired unexercised.

                  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 May 31, 2003, none of these warrants have been exercised.

                  40,000 stock purchase warrants issued to Rachel McClere 1998
                  Trust expiring April 24, 2003. 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 $3.75 per share.
                  The shares of common stock underlying these warrants have not
                  been registered or issued, under the Securities Act of 1933.
                  As May 31, 2003, all of these warrants have expired
                  unexercised.


                  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
                  May 31, 2003, none of these warrants have been exercised.

                  160,000 stock purchase warrants issued to McClere Family Trust
                  expiring April 24, 2003. 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 $3.75 per share. The
                  shares of common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As May
                  31, 2003, all of these warrants have expired unexercised.

                  232,000 stock purchase warrants issued to Shannon D. McLeroy
                  expiring April 24, 2003. 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 $3.75 per share. The
                  shares of common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As May
                  31, 2003, all of these warrants have expired unexercised.

                  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
                  May 31, 2003, none of these warrants have been exercised.


                  176,000 stock purchase warrants issued to Tech Technologies
                  Services, LLC expiring April 24, 2003. 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 $3.75
                  per share. The shares of common stock underlying these
                  warrants have not been registered or issued, under the
                  Securities Act of 1933. As May 31, 2003, all of these warrants
                  have expired unexercised.

                  328,000 stock purchase warrants issued to Candlelight
                  Investors, LLC. Expiration of warrants is as follows: 104,000
                  on December 31, 2002, 112,000 on February 15, 2003 and the
                  remaining 112,000 on April 19, 2003. 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 $3.95
                  per share. The shares of common stock underlying these
                  warrants have not been registered or issued, under the
                  Securities Act of 1933. As May 31, 2003, all of these warrants
                  have expired unexercised.

                  25,000 stock purchase warrants issued to Synchton, Inc.,
                  expiring October 1, 2003. The warrants are to purchase fully
                  paid and non-assessable shares of the common stock, par value
                  $.001 per share at a purchase price of $4.50 per share. The
                  shares of common stock underlying these warrants were
                  registered for resale on August 3, 2000, under the Securities
                  Act of 1933. As of May 31, 2003, none of these warrants have
                  been exercised.

                  100,000 stock purchase warrants issued to National Financial
                  Communications Corp. expiring June 2003. 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 $7.00
                  per share. As of May 31, 2003, the underlying shares of common
                  stock have not yet been registered for resale under the
                  Securities Act of 1933.

                  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
                  May 31, 2003, none of these warrants have been exercised.


                                       17
<PAGE>

                  250,000 stock purchase warrants issued to Sands Brothers &
                  Co., LTD. expiring July 13, 2003. 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 $7.49 per share.
                  As of May 31, 2003, the underlying shares of common stock have
                  not yet been registered for resale under the Securities Act of
                  1933.

                  25,000 stock purchase warrants issued to Synchton, Inc.,
                  expiring July 1, 2003. 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 were registered for
                  resale on August 3, 2000, under the Securities Act of 1933. As
                  May 31, 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 May 31, 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 May 31,
                  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 May
                  31, 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 May
                  31, 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
                  May 31, 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 May 31, 2003, none of these warrants have been
                  registered, issued or exercised.

                  160,000 stock purchase warrants issued to McClere Family Trust
                  expiring April 24, 2008. The warrants are to purchase fully
                  paid and non-assessable shares of the common stock, par value
                  $.001 per share at a purchase price of $7.50 per share. The
                  shares of common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As May
                  31, 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
                  May 31, 2003, none of these warrants have been exercised.

                  50,000 stock purchase warrants issued to Weed & Co. L.P.
                  expiring June 10, 2003. 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 $9.68 per share. The
                  shares of common stock underlying these warrants were
                  registered for resale on August 3, 2000, under the Securities
                  Act of 1933. As of May 31, 2003, none of these warrants have
                  been exercised.

                  250,000 stock purchase warrants issued to Sands Brothers &
                  Co., LTD. expiring July 13, 2003. 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 $10.00 per share.
                  These warrants are not exercisable until and unless the
                  closing price of Common Stock at any time during the exercise
                  period reaches $10.00 per share. As of May 31, 2003, the
                  underlying shares of common stock have not yet been registered
                  for resale under the Securities Act of 1933. As of May 31,
                  2003, none of these warrants have been exercised.

                                       18
<PAGE>

                  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
                  May 31, 2003, none of these warrants have been exercised.

                  250,000 stock purchase warrants issued to Hampton-Porter
                  Investment Bankers LLC expiring June 27, 2003. 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
                  $12.00 per share. The shares of common stock underlying these
                  warrants were registered for resale on August 3, 2000, under
                  the Securities Act of 1933. As of May 31, 2003, none of these
                  warrants have been exercised.

                  1,230,000 stock purchase warrants issued to Eagle Broadband
                  employees under incentive clauses of employment contracts
                  expiring September 1, 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 $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
                  May 31, 2003, none of these warrants have been exercised.

                  350,000 stock purchase warrants issued to Sands Brothers &
                  Co., LTD. expiring July 13, 2003. 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 $14.00 per share.
                  These warrants, however, are not exercisable until and unless
                  the closing price of the Common Stock at any time during the
                  exercise period reaches $14.00 per share. As of May 31, 2003,
                  the underlying shares of common stock have not yet been
                  registered for resale under the Securities Act of 1933. As of
                  May 31, 2003, none of these warrants have been exercised.

                  250,000 stock purchase warrants issued to Hampton-Porter
                  Investment Bankers LLC expiring June 27, 2003. 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
                  $18.00 per share. The shares of common stock underlying these
                  warrants were registered for resale on August 3, 2000, under
                  the Securities Act of 1933. As of May 31, 2003, none of these
                  warrants have been exercised.

                  150,000 stock purchase warrants issued to Sands Brothers &
                  Co., LTD. expiring July 13, 2003. 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 $25.00 per share.
                  These warrants, however, are not exercisable until and unless
                  the closing price of the Common Stock at any time during the
                  exercise period reaches $25.00 per share. As of May 31, 2003,
                  the underlying shares of common stock have not yet been
                  registered for resale under the Securities Act of 1933. . As
                  of May 31, 2003, none of these warrants have been exercised.

                  1,000,000 stock purchase warrants issued to MJK., expiring
                  February 27, 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 $0.18 per share. The shares of
                  common stock underlying these warrants have been registered
                  for resale under the Securities Act of 1933. As of May 31,
                  2003, none of these warrants have been exercised.


         The warrants outstanding are segregated into four categories
         (exercisable, non-exercisable, non-registered, and expired).


                                       19
<PAGE>
<TABLE>
<CAPTION>
                         Warrants Issued          Warrants Exercisable    Warrants
    Class of                 May 31,                    May 31,           Non-          Non-
    Warrants            2003         2002         2003          2002      Exercisable   Registered
-----------------------------------------------  --------------------------------------------------
        <S>            <C>                <C>    <C>              <C>          <C>         <C>
      0.18           1,000,000            -    1,000,000           -            -             -
      0.26              25,000            -            -           -            -        25,000
      0.28              25,000            -            -           -            -        25,000
      0.35              25,000       25,000       25,000           -            -        25,000
      0.38              25,000       25,000       25,000           -            -        25,000
      0.39              25,000       25,000       25,000           -            -        25,000
      0.41           1,230,000            -    1,230,000           -            -     1,230,000
      0.61              25,000       25,000       25,000           -            -        25,000
      0.69              25,000       25,000       25,000           -            -        25,000
      1.04              50,000       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            -             -
      1.55            Cancelled      50,000            -      25,000            -             -
      1.75              45,000       45,000            -      13,766            -             -
      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            Cancelled      50,000            -      50,000            -             -
      3.00              58,333       58,333       58,333      58,333            -             -
      3.75            Cancelled      40,000            -      40,000            -             -
      3.75            Cancelled     160,000            -     160,000            -             -
      3.75            Cancelled     232,000            -     232,000            -             -
      3.75            Cancelled     176,000            -     176,000            -             -
      3.95            Cancelled     328,000            -     328,000            -             -
      4.50              25,000       25,000       25,000           -            -             -
      7.00             100,000      100,000      100,000           -            -       100,000
      7.49             250,000      250,000      250,000           -            -       250,000
      7.50              25,000       25,000       25,000      25,000            -             -
      7.50             192,000      192,000      192,000     192,000            -       192,000
      7.50             240,000      240,000      240,000     240,000            -       240,000
      7.50             168,000      168,000      168,000     168,000            -       168,000
      7.50             200,000      200,000      200,000     200,000            -       200,000
      9.68            Cancelled      50,000            -      50,000            -             -
     10.00             250,000      275,000      250,000      25,000            -       250,000
     12.00             250,000      250,000      250,000     250,000            -             -
     14.00             350,000      350,000      350,000           -            -       350,000
     18.00             250,000      250,000      250,000     250,000            -             -
     25.00             150,000      150,000      150,000     250,000            -       150,000

      2.00                   -       Expired *         -           -            -             -
ESOP                   447,264  *   437,264  *   437,264     322,125            -             -
ESOP                         -            -            -           -            -             -
           --------------------  -----------  --------------------------------------------------

                     5,613,931    4,434,931    5,508,931   3,213,558       50,000     3,355,000
           =================================  ==================================================
</TABLE>

An asterisk (*) denotes warrants which would have an anti-dilutive effect if
currently used to calculate earnings per share for the months ended February
28, 2003 and 2002, respectively.


NOTE 13 - Capitalization Activities:
          --------------------------

         The Company is currently offering up to $10,000,000 in "Units", each
         Unit consisting of a $25,000, 12% five-year Q-series bond ("Bonds") to
         a limited number of Accredited Investors. 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 Eagle 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. Eagle may redeem the Bonds at
         any time after the first year but not before. The issuance of the
         Bonds, or any share of the common stock to be issued in payment of the
         Bonds, has not been registered or approved by the Securities and
         Exchange Commission ("SEC") or any state securities commission nor has
         the SEC or any state securities commission passed on the accuracy of
         the Confidential Private Placement Memorandum under which these Bonds
         are being offered. Furthermore, the Bonds may not be assigned,
         transferred, sold, or otherwise hypothecated. Any representation to the
         contrary is a criminal offense. The Confidential Private Placement
         Memorandum does not constitute any offer in any jurisdiction in which
         an offer is not authorized. The Bonds, and any share of common stock to
         be issued in payment of the Bonds, are "restricted securities" as that
         term is defined in Rule 144 of the Securities Act of 1933, and may not
         be sold or otherwise disposed of except in transactions that are
         subsequently registered under applicable federal and state securities
         laws, or in transactions exempt from such registration.


                                       20
<PAGE>

NOTE 14 - Risk Factors:
          -------------

         For the nine months ended May 31, 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,
         seventy-six 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-four percent
         remainder have been created relatively evenly over the rest of the
         nation during the nine months ended May 31, 2003. Whereas approximately
         seventy-six percent of the Company's revenues and receivables have been
         created solely in the state of Texas, one percent have been created in
         the international market, and the approximate twenty-three percent
         remainder has been created relatively evenly over the rest of the
         nation for the nine months ended May 31, 2002. Through the normal
         course of business, the Company generally does not require its
         customers to post any collateral.

         Although the Company had previously concentrated its efforts in the
         wireless infrastructure industry and has since expanded into the fiber,
         cable and broadband markets for the nine months ended May 31, 2003 and
         2002, it is management's belief that the Company's diversification into
         other products and services reduces its credit and economic risk
         exposures in the technology and manufacturing sectors.

NOTE 15 - 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 1% at May 31, 2003 and 2002, respectively.

NOTE 16 - 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 nine months ending May 31, 2003 and 2002, rental expenses of
         approximately $709,000 and $1,099,000 respectively, were incurred.

         The Company also leases 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
         $6,345 per month.

         Atlantic Pacific also leases office space in Chicago, Illinois with
         Lasalle Bank National Association. This twenty-nine month lease
         commenced on October 1, 2000,and expires 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 W L
         and Deborah Miller in the amount of $4,500 per month. This
         non-cancelable lease expired September 2002 and maintained a five-year
         renewal option. The renewal option was waived in September 2002.

         The Company's subsidiary, ClearWorks.net, Inc., leases office space in
         Houston, Texas, with 2000 North Loop. This non-cancelable lease expires
         on April 30, 2003. The monthly payments will increase 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., leases office space in Phoenix, Arizona
         with Airpark Holdings. This non-cancelable lease expires on July 31,
         2003. The monthly payments are variable.

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


                                       21
<PAGE>

         The Company's subsidiary, United Computing Group, leases office space
         in Houston, Texas, with Eastgroup Properties, L.P. This non-cancelable
         lease expires on August 31, 2003. The current monthly payments are
         $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.

         The Company's subsidiary, United Computing Group, leases 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 are:


                                     Period Ending            (000's)
                                     August 31,                Amount
                                     -------------       --------------
                                        2003                    $ 850
                                        2004                      571
                                        2005                      146
                                        2006                       36
                                                         --------------
                                        Total                  $1,603

         Legal Proceedings

         ClearWorks is a defendant in State Of Florida Department Of
         Environmental Protection Vs. Reco Tricote, Inc. And Southeast Tire
         Recycling, Inc., A/K/A ClearWorks.net, Inc.; In The Circuit Court Of
         The Tenth Judicial Circuit In And For Polk County, Florida. On December
         13, 2000, Florida EPA sued the Company 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. The Company immediately filed a
         Motion to Strike Portions of the Complaint/or for a More Definite
         Statement and a Motion to Dismiss. The Florida EPA has amended the
         petition. 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. No discovery
         has been conducted in this lawsuit.

         ClearWorks was a defendant in Candlelight Investors LLC v.
         ClearWorks.net, Inc., Eagle Wireless International, Inc., and H. Dean
         Cubley. Subsequent to August 31, 2002, Eagle settled the lawsuit with
         Candlelight Investors LLC for $2,600,000.

         ClearWorks is a defendant in Kaufman Bros., LLP v. ClearWorks.net,
         Inc., and Eagle Wireless, Inc., (Index No. 600939/01), which is
         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. This suit is scheduled for trial on September 16, 2003. The
         defendants deny the allegations of the complaint.

         On December 17, 2001, Kevan Casey and Tommy Allen sued ClearWorks.net,
         Inc., ClearWorks Integration, Inc., and Eagle Wireless International,
         Inc., (the petition was later amended to include the following
         defendants: Michael T. McClere, H. Dean Cubley, Link Two
         Communications, Inc., A. L. Clifford, Jim Futer and McManus & Company,
         P.C. d/b/a E. McManus & Co., P.L.L.C.) for breach of contract and
         other related matters in Cause No. 2001-64056; In the 281st Judicial
         District Court of Harris County, Texas. The suit seeks recovery of
         damages in excess of $10,000,000 plus attorney's fees and court costs.
         The court granted ClearWorks a temporary restraining order, wherein
         the Court enforced a covenant against competition provision found in
         the individual's employment contracts with the Company. Such order
         restrains these individuals from competing against ClearWorks for a
         period of six months. This lawsuit is currently in the discovery
         phase. The defendants deny the allegations of the complaint. This
         lawsuit is scheduled for the two week trial docket beginning December
         1, 2003.

         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.

         Other Commitments

         On July 13, 2000, the Company entered into an agreement with Sands
         Brothers & Co., LTD. (Sands) whereby Sands will perform financial
         advisory services and assist the Company with mergers and acquisitions,
         corporate finances and other related matters for a period of two years.
         As compensation for these services, the Company will immediately pay
         Sands $50,000 and issue them 10,000 shares of the Company's common
         stock. As an additional inducement, the Company has issued Sands
         1,000,000 stock purchase warrants to be exercisable for a three-year
         period expiring July 13, 2003. These warrants shall vest and be
         exercisable as follows: 25% of such warrants shall vest upon execution
         of this agreement and shall have an exercise price per share of $7.49;
         an additional 25% shall vest when and if the closing price of the
         common stock at any time during the exercise period reaches $10.00 per
         share and shall be exercisable at $10.00 per share; an additional 35%
         shall vest when and if the closing price of the common stock at any
         time during the exercise period reaches $14.00 per share and shall be
         exercisable at $14.00 per share; an additional 15% shall vest at any
         time during the exercise period when the closing price of the common
         stock at any time reaches $25.00 per share and shall be exercisable at
         $25.00 per share. Additionally, Sands shall receive further
         compensation for other activities such as fund raising based upon a
         percent of all monies raised. This agreement expired July 13, 2002.


                                       22
<PAGE>

NOTE 17 - 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 nine months ended May 31, 2003
                                                                   --------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                    -----------      -------------      ------------
       <S>                                         <C>                 <C>                <C>
         Net Loss                                     $(4,731)
         Basic EPS:
          Income available to
          common stockholders                        $(4,731)           83,117            $(0.06)

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

         Diluted EPS:
           Income available to
           common stockholders
             and assumed conversions.               $(4,731)            83,271            $(0.06)
                                                     ========    =============             ======

                                                                   For the nine months ended May 31, 2002
                                                                   --------------------------------------

                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                     ----------       -----------       ------------
         Net Income                                  $ (8,448)

         Basic EPS:
          Income available to
          common stockholders                         (8,448)             63,455            $(0.13)

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

         Diluted EPS:
           Income available to
           common stockholders
           and assumed conversions.                 $  (8,448)        63,609               $(0.13)
                                                     =========        ======                ======
</TABLE>

     For the nine months ended May 31, 2003 and 2002, anti-dilutive securities
existed (see Note 12).

NOTE 18 - 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 May 31, 2003 and 2002, 416,474 and 416,474
         warrants have been issued to various employees. Of these outstanding
         warrants, 0 and 0 were exercised for the months ended May 31, 2003 and
         2002, respectively. Additionally, 10,350 warrants have expired as of
         May 31, 2003.

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

                                       23
<PAGE>

                                                         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

NOTE 19 - 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. The Company temporarily suspended
         all activity associated with its 401(k) plan in February 2003. The
         Company resumed employee contributions and loan repayments for
         applicable participants in July 2003 and has elected not to match
         participant's contributions at this time.

NOTE 20 - Major Customer:
          ---------------

         The Company had gross revenues of $1,847,000 and $6,485,000 for the
         three months ended May 31, 2003 and 2002, respectively. The following
         parties individually represent a greater than ten percent of these
         revenues.

                                        May 31, 2003            May 31, 2002
              Customer              Amount     Percentage    Amount   Percentage
                                    ------     ----------    ------   ----------
              Customer A            $             0.00%      $            0.00%
              Customer B            $             0.00%      $            0.00%
              Customer C            $             0.00%      $ 713,000   11.00%

         During the nine months ended May 31, 2002, the Company had outstanding
         accounts receivable with Enron Corporation and many of its'
         subsidiaries. The exposure from the bankruptcy totals approximately
         $205,000, which has been accounted for through allowance of doubtful
         accounts in these financials.

NOTE 21 - 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 two 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 worldwide 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. As of
         September 1, 2002, Atlantic Pacific Communications, Inc. has assumed
         the operations of ClearWorks Home Systems, Inc. and for purposes of
         segment reporting previously reported segment HSI has been combined
         with APC for comparative purposes.

         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.

         Eagle Broadband Services, Inc.
         Eagle Broadband Services, Inc., initiated its delivery of Bundled
         Digital Services to business and residential customers as of September
         1, 2002. 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.

         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. As of
         September 1, 2002, Atlantic Pacific Communications, Inc. has assumed
         the operations of ClearWorks Home Systems, Inc. and for purposes of
         segment reporting previously reported segment HSI has been combined
         with APC for comparative purposes.


                                       24
<PAGE>

         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 nine month period ending May 31, 2003

(in thousands)            Eagle      APC      EBS       UCG     Link II    .Net    Contact    DSS      Elim.     Consol.
                        ---------- --------- -------- --------- --------- -------- --------- -------- ---------- ----------
<S>                         <C>        <C>     <C>        <C>      <C>     <C>        <C>     <C>        <C>      <C>
Revenue                     1,612     3,456   1,502      1,938       ---      ---      303      717        ---      9,528
Segment Profit/(Loss)     (3,168)     (882)   (538)      (821)     (116)      ---    (164)      363        ---    (5,326)
Total Assets              162,536    11,950  35,472        310    17,725   54,403      926      858   (149,326)   134,854
Capital Expenditures          ---        11   6,070          1        86      ---       72       56        ---      6,296
Dep. And Amort.               166       169     431         62       ---      ---       86       31        ---        945

                  For the nine month period ending May 31, 2002

(in thousands)            Eagle      APC      EBS       UCG     Link II    .Net    Contact    DSS      Elim.     Consol.
                        ---------- --------- -------- --------- --------- -------- --------- -------- ---------- ----------
Revenue                       478     6,277   1,811     13,582        39      ---      288      226       (75)     22,626
Segment Profit/(Loss)     (5,522)     (425)   (277)      (744)   (1,644)    (130)      150       90       (12)    (8,514)
Total Assets              166,169    11,012  29,283      2,847    42,026   64,950      735      412   (155,993)   161,441
Capital Expenditures          152        75  12,647         40         1      ---      ---      309       (11)     13,213
Dep. And Amort.             2,474       153     393          8       918       60      ---      ---        ---      4,006
</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 22 - Subsequent Events.
           -----------------
         None.

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; and
         consummation of the merger and asset purchase transactions. Any
         forward-looking statements should be considered in light of these
         factors.

Overview

         For the quarter and nine month period ended May 31, 2003, Eagle's
         business operations reflected Eagle's business objective of moving
         toward profitability through further expansion into the broadband
         products and services that generate recurring revenues while migration
         away from the lower gross margin product fulfillment line of business.
         In addition, during the first nine months of fiscal 2003, the Company
         conducted extensive cost reduction activities. We believe that the
         effects of these cost reduction measures will significantly reduce our
         fiscal 2003 ongoing expenses as evidenced by a $6,336,000 or 42%
         decline in operating expenses in the first nine months ended May 31,
         2003, as compared to the same nine month period in 2002. The Company's
         consolidated operations generated revenues of $1,847,000 and $9,528,000
         while achieving corresponding gross profits of $405,000 or 22% and
         $4,116,000 or 43%; respectively for the quarter and nine-month period
         ended May 31, 2003. The decline in revenues in the third fiscal quarter
         and nine-month period ending May 31, 2003 is primarily attributable to
         the discontinuance of direct sales of low-margin computer products in
         the Company's subsidiary United Computing Group, Inc. consistent with
         their previously announced strategy of concentrating UCG's
         going-forward efforts as a Service Provider including but not limited
         to configuration solutions, network services, network application
         services, repair and warranty services and professional support
         services including Client Help Desk, Deskside Support, and Professional
         and Managed Services versus its historical emphasis on direct product
         fulfillment. Additionally, a decline in the sale of commercial and home
         cabling occurred as a result of a deferral of implementation of
         national contracts and a discontinuance of home cabling projects in
         Arizona and Austin, Texas. Also, during this quarter additional
         expenses were incurred to reorganize the management and on-going
         operations of Atlantic Pacific Communications, Inc. and United
         Computing Group, Inc.


                                       25
<PAGE>

         During the quarter ended May 31, 2003, we continued the implementation
         of cost reductions in various operating segments that were not expected
         to provide significant long-term revenues and profitability. These
         reductions will impact the expense categories of salaries and benefits,
         rents, travel, research and development and other support expenses on a
         run-rate basis. We anticipate that additional cost reduction efforts
         will continue into the fourth fiscal quarter of 2003. Also, the company
         is continuing the development of the "technology center" 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; and 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
         negotiating and preparing to enter into business relationships with
         financial and technology companies to provide bundled digital services
         (digital content) to cities and municipalities that currently have
         constructed 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.

         During the nine month period ended May 31, 2003, we began shipments of
         our set-top box product line for installation in hospitality properties
         under our ongoing relationship with General Dynamics. We expect these
         shipments to continue throughout the remaining quarter of 2003.

Revenue Recognition

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

         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. Manufacturing of the Eagle Wireless product line of wireless
         infrastructure products was licensed to a third party company during
         this reporting period.

         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 the Company recognizes the revenue.

         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 the Company'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.

         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.

         Eagle Broadband Services, Inc.
         Eagle Broadband Services, Inc. assumed the operations of ClearWorks
         Communications, Inc. as of September 1, 2002, and 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.


                                       26
<PAGE>

         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.

         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 earned.

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

         Link Two Communications, Inc.
         Link Two Communications, Inc., provides customers with one- and
         two-way messaging systems. The revenue from these services is
         recognized as it is earned from the customer.

         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.

         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.

         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 as earned.

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

Receivables

         For the nine months ended May 31, 2003, Eagle accounts receivables
         decreased to $3,494,000 from $5,028,000 at August 31, 2002. The
         majority of this decrease is due to the corresponding revenue decrease
         of lower margin product fulfillment sales, decreases in commercial
         cabling projects, and the shift to more "recurring revenue" type of
         business.

Marketable Securities

         Eagle has adopted the provisions of SFA No. 115, as amended by SFAS No.
         130, which provides that all marketable equity securities be classified
         as available-for-sale or trading securities, and be carried on the
         balance sheet at fair market value. Any unrealized holding gains or
         losses affiliated to these securities are carried below net income
         under the caption "Other Comprehensive Income," net of tax.

Inventory

         Inventories are valued at the lower of cost or market. The cost is
         determined by using the first-in first-out method. At May 31, 2003,
         Eagle's inventory total of $7,183,000 as compared to $6,059,000 at
         August 31, 2002. The additional inventory is primarily attributable to
         the purchase of components for increased demand of the Company's
         digital set-top boxes.


                                       27
<PAGE>

Results Of Operations

For the Three Months and Nine Months Ended May 31, 2003 and 2002

         Net Sales. For the three months ended May 31, 2003, net sales decreased
         to $1,847,000 from $6,485,000 as compared to the three months ended May
         31, 2002. For the nine months ended May 31, 2003, net sales decreased
         to $9,520,000 from $22,626,000 as compared to the nine months ended May
         31, 2002. The corresponding declines in revenues for these periods is
         primarily attributable to a decrease in sales of computer products in
         the Company's subsidiary United Computing Group, Inc. consistent with
         their previously announced strategy of concentrating on service
         offerings, a decrease in sales of structured wiring in the Company's
         Atlantic Pacific Communications subsidiary with partial offset by
         continued increase in the Company's broadband services.

         Cost Of Goods Sold. For the three months ended May 31, 2003, cost of
         goods sold decreased to $1,442,000 from $4,020,000 for the comparable
         three months ended May 31, 2002. For the nine months ended May 31,
         2003, cost of goods sold decreased to $5,412,000 from $16,146,000 for
         the nine months ended May 31, 2002. These declines were primarily
         associated with the decrease in lower gross margin product fulfillment
         sales. As a result of the Company's shift in strategy away from such
         lower margin product fulfillment, the Company's gross profit percentage
         were 22% and 43%, respectively for the three and nine months ended May
         31, 2003 from 38% and 29%, respectively during the three and nine
         months ended May 31, 2002.

         Operating Expenses. For the three months ended May 31, 2003, operating
         expenses decreased to $3,378,000 from $5,082,000 as compared to the
         three months ended May 31, 2002. For the nine months ended May 31,
         2003, operating expenses decreased to $8,916,000 from $15,252,000 as
         compared to the nine months ended May 31, 2002. The primary portions of
         the increase are discussed below:

         A $2,029,000 and $3,515,000 decrease in salaries, as a result of the
         personnel reductions completed as a component of the extensive cost
         reduction activities for the three and nine months ended May 31, 2003.

         A $97,000 and $304,000 decrease in advertising
         and promotion, due primarily to decreases in product introductions for
         the three and nine months ended May 31, 2003 and 2002, respectively.

         A $1,030,000 and $3,124,000 decrease in depreciation and amortization
         for the three and nine months ended May 31, 2003 and 2002,
         respectively, due to the non-cash impairment charge against FCC
         licenses and equipment taken in the fourth fiscal quarter of fiscal
         2002.
         A $1,412,000 and $772,000 increase in other support costs for the three
         and nine months ended May 31, 2003 and 2002, respectively, due to
         increases in contract labor, interest, professional fees, rents and bad
         debt costs.

         Net Earnings. For the three and nine months ended May 31, 2003, Eagle's
         net loss was $2,921,000 and $4,731,000, respectively, compared to a net
         loss of $2,568,000 and $8,448,000 for the three and nine months ended
         May 31,2002.

         Changes In Cash Flow. Eagle's operating activities used net cash of
         $591,000 in the nine months ended May 31, 2003, compared to $1,869,000
         of cash used in the nine months ended May 31, 2002. The decrease in net
         cash used by operating activities was primarily attributable to a
         significant decline in net loss, an increase in inventory and accounts
         payable, offset by reductions in account receivable, and depreciation
         and amortization. Eagle's investing activities used net cash of
         $3,906,000 in the nine months ended May 31, 2003, compared to
         $13,870,000 in the nine months ended May 31, 2002. The decrease was due
         primarily attributable to decreases of purchase of equipment for
         building out the bundled digital services infrastructure. Eagle's
         financing activities provided net cash of $3,360,000, in the nine
         months ended May 31, 2003, compared to cash used of $1,121,000 in the
         nine months ended May 31, 2002. The increase in cash flows from
         financing activities at May 31, 2003, is attributable to cash raised
         from convertible debenture funding agreements with an investment bank
         for general working capital purposes and proceeds from borrowings
         against short-term notes as compared to a pay off of the Atlantic
         Pacific's line of credit, pay down on United Computing Group's line of
         credit and continued repurchase of shares in the open market for
         retirement in the quarter ended May 31, 2002.

Liquidity And Capital Resources.

         Current assets for the period ended May 31, 2003, totaled $14,098,000
         (includes cash and cash equivalents of $2,284,000) as compared to
         $14,866,000 (including cash and cash equivalents of $3,421,000)
         reported for the year ended August 31, 2002. During the first fiscal
         quarter of 2003, Eagle entered into a debt funding arrangement with an
         investment bank to provide up to $3,000,000 in working capital. This
         debt is unsecured and bears interest at 5% per annum maturing in one
         year from the initial funding and is fully repayable in stock at
         Eagle's option. Eagle received $2,500,000 in cash and a $500,000
         secured debenture in this transaction. Eagle has repaid $1,800,000 on
         this debenture through May 31, 2003. Eagle is continuing the sale of Q
         Series Five Year Bonds. Through July 15, 2003, Eagle has sold
         $2,922,000. Eagle engaged an investment-banking firm to provide a
         $20,000,000 equity line of credit. This line of credit can be activated
         upon Eagle filing a registration statement that complies with the terms
         and conditions of the agreement.

                                       28
<PAGE>

         Working capital for the period ended May 31, 2003, totaled $322,000 as
         compared to $3,535,000 reported for the year ended August 31,2003.
         Eagle believes that its working capital of $322,000 as of May 31, 2003,
         plus additional funds from bank lines of credit, exercise of warrants,
         sale of Q Series bonds and the anticipated closing of funding
         transactions that are in various stages of negotiations as of the date
         of this report should be sufficient to fund operations through the end
         of August 31, 2003. Historically, Eagle has financed its operations
         through the sale of debt and equity securities. As of May 31, 2002,
         Eagle has a limited amount of cash and cash equivalents. As such, if
         its current cash is insufficient to fund its operating and long-term
         capital needs, Eagle will rely on future bests-efforts financing for
         capital. The Company will need to raise additional capital to fund
         ongoing operations and long-term capital needs. The Company is
         currently in final negotiations with a corporation to provide a minimum
         of $10,000,000 in financing. If the company is not successful in
         raising additional capital, it may have to curtail or suspend or sell
         certain operations. As more fully described in Note 7 to the financial
         statements, Eagle's subsidiaries Atlantic Pacific and United Computing
         Group maintain an aggregate of up to $4,000,000 in credit facilities
         with a bank to provide working capital based on eligible accounts
         receivable. Refer to Note 7 for descriptions of lines of credit and
         other immediate forms of funding the Company has available

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 has
         exposure that relates to the Company's revolving credit facility.
         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 significant cash and liquidity risks associated
         with its common stock investments aggregating $1,163,000 in market
         value as of May 31, 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
         2003 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

         Based on the Company's most recent evaluation, which was completed
         within 90 days of the filing of the Company's Form 10-K, the Company's
         Chief Executive Officer and Chief Financial Officer have concluded that
         the Company's disclosure controls and procedures (as defined in Rules
         13a-14 and 15d-14 under the Securities Exchange Act of 1934, as
         amended) are effective. There have been no significant changes in
         internal controls or in other factors that could significantly affect
         these controls, including any corrective actions with regard to
         significant deficiencies and material weaknesses.


                                       29
<PAGE>




Part 2. - Other Information

Item 1 - Legal Proceedings

         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 a
         material adverse effect on the Company's financial condition or results
         of operations (Note 16).

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

         The Company held its annual shareholders meeting at 2500 South Shore
         Blvd., League City, Texas 77573, at 10:00 a.m., May 8, 2003, for the
         following purposes with the corresponding results of voting:

1.            Approval of a Classified Board of Directors. To approve an
              amendment to Eagle's Articles of Incorporation to provide for the
              classification of the Board of Directors into three classes of
              directors with staggered three-year terms of office
                  - Not Passed
2.            Election of Directors. To elect six (6) directors to the Board of
              Directors to serve for terms of one to three years, respectively,
              or until their successors are elected and qualified if Proposal
              No. 1 is approved, or to elect the same persons as directors for a
              term of one year if Proposal No. 1 is not approved.
                  - All Directors Elected
3.            Approval of Amendment of Voting Percentages. To approve an
              addition to Eagle's Articles of Incorporation to permit
              shareholder approval of future amendments to the Articles of
              Incorporation to be accomplished through the vote of 51% of the
              shares entitled to vote, as opposed to 66 2/3% of the shares
              entitled to vote.
                  - Not Passed
4.            Approval of Amendment of Special Meeting Rules. To approve an
              amendment to Eagle's Articles of Incorporation to provide that
              special meetings of the shareholders may only be called by a
              majority of the Board of Directors, the Chairman of the Board, the
              Chief Executive Officer, or the holders of at least 50% of the
              outstanding shares of common stock of the company.
                  - Not Passed
5.            Approval of Temporary Empowerment of Board. To approve an
              amendment to Eagle's Articles of Incorporation to empower the
              Board of Directors to take any and all actions necessary without
              further vote to enable the company to (a) comply with all current
              as well as any newly enacted SEC regulations that may be enacted
              prior to the next annual meetings; (b) comply with all current as
              well as any new American Stock Exchange requirements that may
              become effective prior to the next annual meeting; (c) maintain
              its common stock valuation in a range that will insure the
              continued listing of its common stock on a national exchange and
              protect the common interests of all of its stockholders
                  - Passed
6.            Ratification of Auditors. To ratify the selection of McManus &
              Co., P.C., as auditors for Eagle for the fiscal year ending August
              31, 2003.
                  - Passed

         Shareholders of record at the close of business on March 27, 2003, were
entitled to notice of, and to vote at, this meeting.


Item 5 - Other Information
         None



                                       30
<PAGE>

Item 6 - Exhibits and Reports on Form 8-K

         (a) Exhibit
             99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.

         (b) Reports on Form 8-K
             (i)   The Company filed a Current Report on Form 8-K on April 28,
                   2003, reporting under item 5 that Mr. Manny Carter's status
                   had changed from employee to contract consultant for personal
                   reasons.
             (ii)  The Company filed a Current Report on Form 8-K on May 12,
                   2003, reporting under item 9 the actions taken and material
                   presented at the annual meeting of shareholders held May 8,
                   2003.
             (iii) The Company filed a Current Report on Form 8-K on June 30,
                   2003, reporting under item 5 that it had entered into a
                   Letter of Intent with Aggregate Networks, LLC, to provide an
                   investment into Eagle Broadband of ten million dollars for
                   general operational purposes.


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: July 18, 2003                By:      /s/ H. Dean Cubley
                                                     --------------------------
                                                     Dr. H. Dean Cubley
                                                     Chief Executive Officer

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



                                       31
<PAGE>


                                 CERTIFICATIONS

I, H. Dean Cubley, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eagle Broadband, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the annual
report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

      a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: July 18, 2003


/S/ H. Dean Cubley
---------------------------------
H. Dean Cubley,
Chief Executive Officer



                                       32
<PAGE>




                                 CERTIFICATIONS

I, Richard R. Royall, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eagle Broadband, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the annual
report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

      a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: July 18, 2003


/S/Richard R. Royall
-----------------------------
Richard R. Royall,
Chief Financial Officer