<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   -----------

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

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2002

[ ]      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 January 15, 2003, there were 78,844,678 shares of common stock
outstanding.


<PAGE>





                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                                      INDEX


<TABLE>
<CAPTION>
PART 1 -- FINANCIAL INFORMATION                                                                  PAGE

<S>                                                                                              <C>
         Item 1. Consolidated Financial Statements (Unaudited)

                  Consolidated Balance Sheets at November 30, 2002, and August 31, 2002            3

                  Consolidated Statements of Earnings for the Three
                  Months Ended November 30, 2002 and 2001                                          4

                  Consolidated Statements of Changes In Shareholders' Equity for the
                  Three Months Ended November 30, 2002, and Twelve Months Ended
                  August 31, 2001                                                                  5

                  Consolidated Statements of Cash Flows for the Three Months Ended
                  November 30, 2002 and 2001                                                       6

                  Notes to the Consolidated Financial Statements                                   7

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                             26

         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                                                                                        30
</TABLE>




<PAGE>


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






<TABLE>
<CAPTION>
                                     ASSETS
                                                                           November 30,       August 31,
                                                                               2002              2002
                                                                               ----              ----
                                                                          (Unaudited)         (Audited)
<S>                                                                     <C>              <C>
CURRENT ASSETS:
     Cash and Cash Equivalents                                          $        2,795   $         3,421
     Accounts Receivable                                                         4,412             5,028
     Inventories                                                                 6,545             6,059
     Prepaid Expenses                                                              371               358
                                                                         -------------   ---------------
         TOTAL CURRENT ASSETS                                                   14,123            14,866

PROPERTY AND EQUIPMENT:
     Operating Equipment                                                        35,980            34,509
     Less:  Accumulated Depreciation                                           (3,927)           (3,661)
                                                                         -------------    --------------
         TOTAL PROPERTY AND EQUIPMENT                                           32,053            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                                                                  385               397
                                                                         -------------    --------------

         TOTAL OTHER ASSETS                                                     84,466            84,269
                                                                         -------------    --------------

TOTAL ASSETS                                                             $     130,642    $      129,983
                                                                         =============    ==============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts Payable                                                    $       4,208    $        4,757
     Accrued Expenses                                                            2,059             2,873
     Notes Payable                                                               3,251             3,653
     Capital Lease Obligations                                                      32                48
                                                                         -------------    --------------

         TOTAL CURRENT LIABILITIES                                               9,550            11,331

LONG-TERM LIABILITIES:
     Capital Lease Obligations
       (net of current maturities)                                                  70                70
     Long-Term Debt                                                              1,199             1,202
                                                                         -------------    --------------

         TOTAL LONG-TERM LIABILITIES                                             1,269             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 November 30, 2002, and
         August 31, 2002, 77,666,000 and 73,051,000, respectively                   78                73
     Paid in Capital                                                           161,987           158,731
     Retained Earnings                                                        (42,242)          (41,424)
                                                                         -------------    --------------

         TOTAL SHAREHOLDERS' EQUITY                                            119,823           117,380
                                                                         -------------    --------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                               $     130,642    $      129,983
                                                                         =============    ==============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       3

<PAGE>



                     EAGLE BROADBAND, INC., AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                       For the Three Months ended November 30,
                                                                                     (Unaudited)
                                                                               2002                2001
                                                                               ----                ----


<S>                                                                           <C>                   <C>
NET SALES:
    Structured wiring                                                         1,560                 1,700
    Broadband services                                                          674                   263
    Products                                                                  2,044                 6,467
    Other                                                                       340                   331
                                                                        ------------------     -----------------
TOTAL SALES                                                                   4,618                  8,761
                                                                        ------------------     -----------------
COSTS OF GOODS SOLD:
    Materials other than Cable and Wire                                         ---                      1
    Direct Labor and Related Costs                                              346                    735
    Products and Integration Service                                          1,537                  5,742
    Structured Wiring Labor and Materials                                       229                    321
    Broadband Services Costs                                                    276                    171
    Depreciation and Amortization                                               114                     71
    Other Manufacturing Costs                                                   124                     20
                                                                        ------------------     -----------------
TOTAL COSTS OF GOODS SOLD                                                     2,626                  7,061
                                                                        ------------------     -----------------
GROSS PROFIT                                                                  1,992                  1,700
                                                                        ------------------     -----------------
OPERATING EXPENSES:
    Selling, General and Administrative:
        Salaries and Related Costs                                            1,508                  2,157
        Advertising and Promotion                                                37                    155
        Depreciation and Amortization                                           153                  1,247
        Other Support Costs                                                   1,097                  1,552
        Research and Development                                                 32                    172
                                                                        ------------------     -----------------
TOTAL OPERATING EXPENSES                                                      2,827                  5,283
                                                                        ------------------     -----------------

EARNINGS/(LOSS) FROM OPERATIONS BEFORE OTHER REVENUES/(EXPENSES),
INCOME TAXES AND OTHER COMPREHENSIVE INCOME                                    (835)                (3,583)

OTHER REVENUES/(EXPENSES):
    Interest Income - net                                                         4                    212
    Other Income                                                                ---                    ---
                                                                        ------------------     -----------------
       TOTAL OTHER REVENUES                                                       4                    212
EARNINGS/(LOSS) BEFORE MINORITY INTEREST IN
AFFILIATE, INCOME TAXES & OTHER COMPREHENSIVE INCOME                           (831)                (3,371)
                                                                        ------------------     -----------------

Provisions For Income Taxes                                                     ---                    ---
                                                                        ------------------     -----------------

NET EARNINGS/(LOSS)                                                            (831)                (3,371)
                                                                        ------------------     -----------------
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gain/(Loss)                                                   13                   (188)
                                                                        ------------------     -----------------

OTHER COMPREHENSIVE INCOME/(LOSS)                                            $  (818)          $    (3,559)
                                                                        ==================     =================
NET EARNINGS/(LOSS) PER COMMON SHARE:
Basic                                                                        $ (0.01)                $  (0.06)
Diluted                                                                      $ (0.01)                $  (0.06)
Comprehensive Income/(Loss)                                                  $ (0.01)                $  (0.06)
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4

<PAGE>


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


<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 Warrants Conversion                    ---            ---             ---            ---            ---            ---
   For Employee Stock Option Plan             ---            ---             ---            ---            ---            ---
   For Acquisitions                           2,002              2           ---            1,079          ---            1,081
   For Licenses and Investments               ---            ---             ---              100          ---              100

Syndication Costs                             ---            ---             ---            ---            ---            ---

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 Three Months
   Ended November 30, 2002                    ---            ---             ---            ---             (831)          (831)
New Stock Issued to Shareholders:
   For Services and Compensation                163          ---             ---              145          ---              145
   For Property and Other Assets                600              1           ---              243          ---              243
   For Retirement of Debt and Liabilities     3,852              4           ---            2,868          ---            2,868
   For Warrants Conversion                    ---            ---             ---            ---            ---            ---
   For Employee Stock Option Plan             ---            ---             ---            ---            ---            ---
   For Licenses and Investments               ---            ---             ---            ---            ---            ---

Syndication Costs                             ---            ---             ---            ---            ---            ---

Treasury Stock                                ---            ---             ---            ---            ---            ---

Unrealized Holding Gain                       ---            ---             ---            ---               13             13
                                            -------      ---------     ---------      -----------    -----------      ---------
TOTAL SHAREHOLDERS' EQUITY
AS OF NOVEMBER 30, 2002                      77,666      $      78     $     ---      $   161,987    $   (42,242)     $ 119,823
                                            =======      =========     =========      ===========    ===========      =========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       5

<PAGE>
                    EAGLE BROADBAND, INC., AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)





<TABLE>
<CAPTION>
                                                                 For the Three Months ended November 30,

                                                                               2002      2001
                                                                               ----      ----
                                                                                (Unaudited)
<S>                                                                           <C>     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earning/(Loss)                                                            $(818)  $ (3,371)

Adjustments To Reconcile Net Earnings to Net Cash
Used By Operating Activities:
   Interest for Conversion Value                                                 91       ---
   Depreciation and Amortization                                                266     1,318
   Stock Issued for Interest Expense                                            ---        12
   Allowance for Doubtful Accounts                                              ---       138
   Stock Issued for Services Rendered                                            54        38
   Unrealized Holding Gain/(Loss) on Marketable Securities                      ---      (188)
   (Increase)/Decrease in Accounts Receivable                                   619     1,103
   (Increase)/Decrease in Inventories                                          (428)   (1,397)
   (Increase)/Decrease in Prepaid Expenses                                      (13)       32
   Increase/(Decrease) in Accounts Payable                                     (345)      415
   Increase/(Decrease) in Accrued Expenses                                     (146)   (1,079)
   Increase/(Decrease) in Federal Income Taxes Payables                         ---       ---
   Increase/(Decrease) in Franchise Taxes Payables                              ---       ---
                                                                             ----------------
     Total Adjustment                                                            98       392

Net Cash Used by Operating Activities                                          (720)   (2,979)

CASH FLOWS FROM INVESTING ACTIVITIES:
   (Purchase)/Disposal of Property and Equipment                             (1,471)   (2,384)
   (Increase)/Decrease in Notes Receivable Clearworks.net                       ---       ---
   (Increase)/Decrease in Security Deposits                                     ---       (31)
   (Increase)/Decrease in Deferred Advertising Costs                            ---       ---
   (Increase)/Decrease in Deferred Costs                                        (12)      ---
   (Increase)/Decrease in Other Intangible Assets                               ---         2
   (Increase)/Decrease in Other Assets                                          ---      (331)
                                                                            ------------------
Net Cash Used by Investing Activities                                        (1,483)   (2,744)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase/(Decrease) in Notes Payable & Long-Term Debt                      1,577      (274)
   Increase/(Decrease) in Capital Leases                                        ---       (13)
   Increase/(Decrease) in Line of Credit                                        ---    (1,077)
   Proceeds From Sale of Common Stock, Net                                      ---       ---
   Treasury Stock                                                               ---      (476)
                                                                             -----------------
Net Cash Provided By Financing Activities                                     1,577    (1,840)
                                                                              ----------------

Net Increase/(Decrease) in Cash                                                (626)   (7,563)

CASH AT THE BEGINNING OF PERIOD                                               3,421    23,843
                                                                              ---------------
CASH AT THE END OF PERIOD                                                   $ 2,795   $16,280

Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for
    Interest                                                               $     72   $    54
    Income Taxes                                                                ---        ---

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


See accompanying notes to consolidated financial statements.


                                       6
<PAGE>


                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


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.

A)       Consolidation

         At November 30, 2002, 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 $2,795,000 and $3,421,000 invested in interest bearing
         accounts and marketable securities (Note 9) at November 30, 2002, 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>

                                              November 30,              August 31,
                                                 2002                      2002
                                             ------------              ------------

<S>                                          <C>                        <C>
                  Raw Materials              $     4,721                $   4,515
                  Work in Process                  1,596                    1,262
                  Finished Goods                     228                      282
                                             ------------              ------------
                                             $     6,545                $   6,059
                                             ============              ============
</TABLE>


                                       7

<PAGE>


                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002



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.

         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 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.

         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>


                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002



         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 November 30, 2002, and 2001, 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. Research and development costs of $32,000 and
         $172,000 were expensed for the three months ended November 30, 2002 and
         2001, respectively.

         No research and development services were performed for outside parties
         for the three months ended November 30, 2002 and 2001.

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>
                                                                    November 30,      August 31,
                                                                         2002            2002
                                                                    ------------     ------------
<S>                                                                   <C>             <C>
                  Weighted Average Number of Common
                    Shares Outstanding Including

                  Primary Common Stock Equivalents                      74,493          64,004
                  Fully Dilutive Common Stock Equivalents               74,647          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.

         As of November 30, 2002, no impairment existed.


                                       9

<PAGE>


                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002



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.

K)       Advertising Costs

         Advertising costs have been capitalized and amortized on the basis of
         contractual agreements entered into by the Company. These contracts are
         amortized over the life of the individual contracts or expensed in the
         period incurred. For the three months ended November 30, 2002, the
         Company has expensed $37,000 where $0 in costs has been deferred.

         For the three months ended, November 30, 2001, the Company has expensed
         $155,000 whereas $0 in costs has been deferred.

L)       Deferred Syndication Costs

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

M)       Use of Estimates

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

N)       Marketable Securities

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

O)       Other Comprehensive Income

         In 1997, the Financial Accounting Standards Board issued Statement of
         Financial Accounting Standards No. 130, "Other Comprehensive Income,"
         effective for fiscal years beginning after December 15, 1997. This
         statement considers the presentation of unrealized holding gains and
         losses attributable to debt and equity securities classified as
         available-for-sale. As stated, any unrealized holding gains or losses
         affiliated to these securities are carried below net income under the
         caption "Other Comprehensive Income." For the three months ended
         November 30, 2002 and 2001, the Company recorded a comprehensive gain
         of $12,000 and a loss of $188,000, respectively.

P)       Reclassification

         The Company has reclassified certain assets costs and expenses for the
         three months ended November 30, 2001 to facilitate comparison to the
         three months ended November 30, 2002.

Q)       Supporting Costs in Selling, General and Administrative Expenses

         Other support cost for the three months ending November 30, 2002 and
         2001, are as follows, in thousands:


                                       10

<PAGE>



                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


<TABLE>
<CAPTION>
                                                        2002              2001
                                                     ---------        ---------

<S>                                                   <C>              <C>
                  Auto Related                              11               53
                  Bad Debt                                 ---              138
                  Contract Labor                            24              130
                  Delivery/Postage                          61               26
                  Fees                                     108               43
                  Insurance                                  5               10
                  Interest                                 163              291
                  Office Supplies                           63               38
                  Other                                     18               35
                  Professional                              84              218
                  Rent                                     228              305
                  Repairs & Maintenance                     11               30
                  Travel                                    75              ---
                  Taxes                                     17               31
                  Utilities                                229              204
                                                     ---------        ---------
                  Total                              $   1,097        $   1,552
                                                     =========        =========
</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 November 30, 2002, 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 November 30, 2002, 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 $1,008,000 for the three months ended November 30,
         2002, and November 30, 2001.

NOTE 2 - ACCOUNTS RECEIVABLE:

                  Accounts receivable consist of the following, in thousands:

<TABLE>
<CAPTION>
                                                                        November 30,    August 31,
                                                                           2002           2002
                                                                      -----------     -----------
<S>                                                                   <C>             <C>
                  Accounts Receivable                                 $     4,654     $     5,270
                  Allowance for Doubtful Accounts                            (242)           (242)
                                                                      -----------     -----------
                  Net Accounts Receivable                             $     4,412     $     5,028
                                                                      ===========     ===========
</TABLE>


                                       11

<PAGE>




                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002




NOTE 3 - PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS:

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

<TABLE>
<CAPTION>
                                                                        November 30,      August 31,
                                                                           2002              2002
                                                                      ------------       ------------
<S>                                                                   <C>                <C>
                  Automobile                                          $        392       $        392
                  Head-End Facility and Fiber Infrastructure                28,573             27,164
                  Furniture & Fixtures                                         636                634
                  Leasehold Improvements                                       217                216
                  Office Equipment                                           1,023              1,015
                  Property, Manufacturing & Equipment                        5,139              5,088
                                                                      ------------       ------------
                      Total Property, Plant & Equipment               $     35,980       $     34,509
                         Less: Accumulated Depreciation                    (3,927)            (3,661)
                                                                      ------------       ------------
                      Net Property, Plant & Equipment                 $     32,053       $     30,848
                                                                      ============       ============
</TABLE>


         Components of intangible assets are as follows, in thousands:


<TABLE>
<CAPTION>
                                                                        November 30,      August 31,
                                                                           2002             2002
                                                                      ------------       ------------
<S>                                                                   <C>                <C>
                  Goodwill                                            $     7,916        $     7,916
                  Contract Rights                                          74,513             74,513
                  Licenses & Permits                                        6,315              6,118
                                                                      ------------       ------------
                      Total Intangible Assets                         $    88,744        $    88,547
                         Less: Accumulated Amortization                   (4,278)            (4,278)
                                                                      ------------       ------------
                      Net Intangible Assets                           $    84,466        $    84,269
                                                                      ============       ============
</TABLE>


NOTE 4 - BUSINESS COMBINATIONS:

         On February 1, 2001, the Company completed the purchase of
         ClearWorks.net, Inc., and its subsidiaries, ClearWorks Communication,
         Inc., ClearWorks Structured Wiring Services, Inc., ClearWorks
         Integration Services, Inc., United Computing Group, Link Two
         Communications, Inc., and LD Connect, Inc., (collectively, ClearWorks)
         by acquiring all the outstanding common stock for a total purchase
         price of approximately $99.8 million. The acquisition was accounted for
         using the purchase method of accounting. ClearWorks is a communications
         carrier providing broadband data, video and voice communication
         services to residential and commercial customers, currently within
         Houston, Texas. These services are provided over fiber-optic networks
         ("Fiber-To-The-Home" or "FTTH"), which the Company designs, constructs,
         owns and operates inside large residential master-planned communities
         and office complexes. ClearWorks also provides information technology
         staffing personnel, network engineering, vendor evaluation of network
         hardware, implementation of network hardware and support of private and
         enterprise networks, as well as, developing residential, commercial and
         education accounts for deployment of structured wiring solutions. The
         results of operation for ClearWorks are included in the accompanying
         financial statements since the date of acquisition. The Company
         acquired the net assets of ClearWorks for $99,797,000 through the
         issuance of 29,410,000 shares of its common stock valued at $91,172,000
         and a cash total of $8,625,000. Prior to the acquisition, the Company
         provided to ClearWorks, working capital and materials totaling
         $8,625,000. During February 2001, ClearWorks repaid these advances
         through the issuance of 7,346,000 shares of its common stock, which
         converted into 5,877,000 Eagle Wireless International, Inc., common
         stock shares. These shares were converted to Treasury shares at this
         date. The Company allocated (in thousands) the acquisition costs to
         current assets of $11,708, property, plant and equipment of $6,570,
         intangible assets of $96,920 (which consist of $74,513 in contract
         rights and $22,407 in licenses), other assets of $79 and assumed
         liabilities of accounts payable and accrued expenses of $10,784, banks
         lines of credit and notes of $4,696 for a total acquisition of $99,797.
         The allocation of the purchase price is based on the fair value of
         assets and liabilities assumed as determined either by independent
         third parties or management's estimates, based on existing contracts,
         recent purchases of assets and underlying loan documents.

         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

                                       12

<PAGE>


                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


         November 30, 2002, 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 November
         30, 2002, and August 31, 2002, in thousands:

<TABLE>
<CAPTION>
                                                         Annual
                                                        Interest                        November 30,   August 31,
                                                          Rate           Due Date          2002          2002
                                                     ------------------------------------------------------------
<S>                                                     <C>              <C>         <C>            <C>
                 Vehicles                                Various         Various     $      17      $     27
                 6% Convertible Debenture (Note 8)       6.0%            Demand          1,725         2,000
                 Tail Wind Convertible Debenture         2.0%            May 2003        2,005         2,000
                 Other                                   Various         Various           908           828
                                                                                     ---------      --------

                 Total notes payable                                                 $   4,450      $  4,855
                 Less current portion                                                    3,251         3,653
                                                                                     ---------      --------
                 Total long-term debt                                                $   1,199      $  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.

         Minimum future lease payment under capital lease as of November 30,
         2002, and August 31, 2002, for each of the next five years and in the
         aggregate are (in thousands):

<TABLE>
<CAPTION>
                                                                               November 30, 2002          August 31, 2002
                                                                               -----------------          ---------------
<S>                                                                            <C>                        <C>
                  Total minimum lease payments                                    $     111                  $   128
                  Less : Amount representing interest                                     9                       10
                                                                               -----------------          ---------------
                  Present value of net minimum lease payments                           102                      118
                  Less: Current maturity capital lease obligation                        32                       48
                                                                               -----------------          ---------------
                    Long-term capital lease obligation                                   70                       70
                                                                               =================          ===============
</TABLE>


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

<TABLE>
<CAPTION>
                 Period Ended                                           Amount
                                                                   -----------------
<S>                                                                 <C>
                     2004                                                        41
                     2005                                                        29
                                                                   -----------------
                 Total                                             $             70
                                                                   =================
</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.

         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
         November 30, 2002, UCG reduced its accounts receivable by $245,562 to
         reflect the gross sale of $288,896 to SWBT less $43,334 of reserves
         held by SWBT against such purchases.

                                       13


<PAGE>



                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


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. At November 30, 2002, the Company had
         received $1,725,000 for the issuance of the debenture. Additionally,
         the Company recorded a $91,000 charge to interest expense and paid in
         capital the value assigned to the conversion feature through November
         30, 2002.

         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 merger, 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


                                       14

<PAGE>

                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


         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.

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

         At November 30, 2002, the securities had an original basis of $6,980
         determined by multiplying the number of shares acquired by the fair
         market value of those shares. At the November 30, 2002 balance sheet
         date, the fair market value of these securities was $7,566; 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."

<TABLE>
<CAPTION>
                    Security Name                    Shares         Cost Basis      Current
                                                                                      FMV
                                                                    ----------     -----------

<S>                                                   <C>             <C>            <C>
         FHLMC                                          48              4,684          4,878
         FNMA                                           27              2,296          2,688
                                                                    ----------     -----------
         Totals                                                      $  6,980      $   7,566
                                                                    ==========     ===========
</TABLE>


         Other marketable securities, Urbana and Burst.com, with an adjusted
         cost basis of $750,000 and fair market value of $1,270,000 are included
         in cash and cash equivalents category and are held for resale.

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>
                                                                            November 30,       August 31,
                                                                                2002             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>


                                       15

<PAGE>

                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


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

<TABLE>
<CAPTION>
                                                            November 30,      August 31,
                                                               2002             2002
                                                          ------------     -------------
<S>                                                     <C>              <C>
                  Computed expected tax benefit         $     (283)      $     (12,508)
                  Increase in valuation allowance              283              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
         November 30, 2002, and August 31, 2002, are presented below, in
         thousands, and include the balances of the acquired company
         ClearWorks.Net.

<TABLE>
<CAPTION>
                                                            November 30,        August 31,
                                                               2002               2002
                                                          ------------      -------------
<S>                                                         <C>              <C>
                  DEFERRED TAX ASSETS:
                  Accounts receivable, principally due    $      ---       $      ---
                  to allowance for doubtful accounts

                  Net operating loss carry-forwards           24,330           24,047
                  Less valuation allowance                    (24,330)        (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 November 31, 2002,
         and August 31, 2002, was $24,330,000 and $24,047,000, respectively. At
         November 30, 2002, the Company has net operating loss carry-forwards of
         $36,070,000, which are available to offset future federal taxable
         income, if any, with expirations from 2020 to 2021.

NOTE 11 - ISSUANCE OF COMMON STOCK:

         For the three months ended November 30, 2002, 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                  3,852
                  Shares issued for Services, Compensation, Property and                  763
                  Other Assets
                                                                                   ------------
                  SHARES OUTSTANDING NOVEMBER 30, 2002                                 77,666
                                                                                   ============
</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 November 30, 2002, options to purchase 355,170 are outstanding
         and 602,331 are available to be issued.

         The Company has issued (or has acquired through its acquisitions) and
         has outstanding the following warrants which have not yet been
         exercised at November 30, 2002:

                  50,000 stock purchase options issued to L.A. Delmonico
                  Consulting, Inc. The warrants are to purchase fully paid and
                  non-assessable shares of the common stock, par value $.001 per
                  share at a purchase price of $1.04 per share. The shares of
                  common stock underlying these warrants were registered for
                  resale on August 9, 2002, under the Securities Act of 1933. As
                  of November 30, 2002, 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

                                       16

<PAGE>

                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002




                  $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 November 30, 2002, 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 November 30, 2002, 6,234 warrants have been exercised
                  resulting cash proceeds of $10,910.

                  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 November 30, 2002, none of these warrants have
                  been exercised.

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

                  41,667 stock purchase warrants issued to Peter Miles expiring
                  July 20, 2004. The warrants are to purchase fully paid and
                  non-assessable shares of the common stock, par value $.001 per
                  share at a purchase price of $2.25 per share. The shares of
                  common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As of
                  November 30, 2002, none of these warrants have been exercised.

                  58,333 stock purchase warrants issued to Peter Miles expiring
                  July 20, 2004. The warrants are to purchase fully paid and
                  non-assessable shares of the common stock, par value $.001 per
                  share at a purchase price of $3.00 per share. The shares of
                  common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As of
                  November 30, 2002, none of these warrants have been exercised.

                  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 November 30, 2002, 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 of November 30, 2002, none of these warrants have been
                  registered, issued or 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
                  November 30, 2002, none of these warrants have been
                  registered, issued or exercised.

                  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
                  November 30, 2002, none of these warrants have been
                  registered, issued or 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 of November 30, 2002, none of these
                  warrants have been registered, issued or exercised.

                  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



                                       17

<PAGE>

                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


                  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 of November 30, 2002,
                  none of these warrants have been registered, issued or
                  exercised.

                  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 November 30, 2002, 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 November 30, 2002, the underlying shares of
                  common stock have not yet been registered for resale under the
                  Securities Act of 1933.

                  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 November 30, 2002, 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
                  November 30, 2002, none of these warrants have been exercised.

                  192,000 stock purchase warrants issued to Tech Technologies
                  Services, LLC, expiring April 24, 2008. The warrants are to
                  purchase fully paid and non-assessable shares of the common
                  stock, par value $.001 per share at a purchase price of $7.50
                  per share. The shares of common stock underlying these
                  warrants have not been registered or issued, under the
                  Securities Act of 1933. As of November 30, 2002, none of these
                  warrants have been registered, issued or exercised.

                  240,000 stock purchase warrants issued to Shannon D. McLeroy
                  expiring April 24, 2008. The warrants are to purchase fully
                  paid and non-assessable shares of the common stock, par value
                  $.001 per share at a purchase price of $7.50 per share. The
                  shares of common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As
                  November 30, 2002, none of these warrants have been
                  registered, issued or exercised.

                  168,000 stock purchase warrants issued to Michael T. McClere
                  expiring April 24, 2008. The warrants are to purchase fully
                  paid and non-assessable shares of the common stock, par value
                  $.001 per share at a purchase price of $7.50 per share. The
                  shares of common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As
                  November 30, 2002, none of these warrants have been
                  registered, issued or exercised.

                  40,000 stock purchase warrants issued to Rachel McClere 1998
                  Trust expiring April 24, 2008. The warrants are to purchase
                  fully paid and non-assessable shares of the common stock, par
                  value $.001 per share at a purchase price of $7.50 per share.
                  The shares of common stock underlying these warrants have not
                  been registered or issued, under the Securities Act of 1933.
                  As of November 30, 2002, none of these warrants have been
                  registered, issued or exercised.

                  160,000 stock purchase warrants issued to McClere Family Trust
                  expiring April 24, 2008. The warrants are to purchase fully
                  paid and non-assessable shares of the common stock, par value
                  $.001 per share at a purchase price of $7.50 per share. The
                  shares of common stock underlying these warrants have not been
                  registered or issued, under the Securities Act of 1933. As
                  November 30, 2002, none of these warrants have been
                  registered, issued or 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 November 30, 2002, none of these warrants
                  have been exercised.

                  25,000 stock purchase warrants issued to Synchton, Inc.,
                  expiring April 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 $10.00 per

                                       18

<PAGE>

                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                NOVEMBER 30, 2002


                  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 November 30, 2002, 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 November 30, 2002, the
                  underlying shares of common stock have not yet been registered
                  for resale under the Securities Act of 1933. As of November
                  30, 2002, 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 November 30, 2002, 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 November 30,
                  2002, the underlying shares of common stock have not yet been
                  registered for resale under the Securities Act of 1933. As of
                  November 30, 2002, 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 November 30, 2002, 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 November 30,
                  2002, the underlying shares of common stock have not yet been
                  registered for resale under the Securities Act of 1933. . As
                  of November 30, 2002, none of these warrants have been
                  exercised.

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

                                       19


<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2002

<TABLE>
<CAPTION>
               Warrants Issued           Warrants Exercisable   Warrants
Class of         November 30,                 November 30,        Non-          Non-
Warrants     2002            2001         2002         2001    Exercisable   Registered
--------     --------------------         -----------------    ------------------------


<S>           <C>         <C>            <C>         <C>          <C>          <C>
1.04          -             50,000       50,000         -         50,000        50,000
1.50          -            600,000         -            -           -             -
1.55          -             50,000       25,000       25,000        -             -
1.75          -             20,000       13,766       13,766        -             -
2.00          -             25,000       25,000       25,000        -             -
2.00          -             41,667       41,667       41,667        -             -
2.25          -             41,667       41,667       41,667
3.00          -             50,000       50,000       50,000        -             -
3.00          -             58,333       58,333       58,333        -             -
3.75          -             40,000       40,000       40,000        -           40,000
3.75          -            160,000      160,000      160,000        -          160,000
3.75          -            232,000      232,000      232,000        -          232,000
3.75          -            176,000      176,000      176,000        -          176,000
3.95          -            328,000      328,000      328,000        -          328,000
4.50          -             25,000       25,000         -           -             -
7.00          -            100,000      100,000         -           -          100,000
7.49          -            250,000      250,000         -           -          250,000
7.50          -             25,000       25,000       25,000        -             -
7.50          -            192,000      192,000      192,000        -          192,000
7.50          -            240,000      240,000      240,000        -          240,000
7.50          -            168,000      168,000      168,000        -          168,000
7.50          -             40,000       40,000       40,000        -           40,000
7.50          -            160,000      160,000      160,000        -          160,000
9.68          -             50,000       50,000       50,000        -             -
10.00         -             25,000       25,000       25,000        -             -
10.00         -            250,000      250,000        -            -          250,000
12.00         -            250,000      250,000      250,000        -             -
14.00         -            350,000      350,000        -            -          350,000
18.00         -            250,000      250,000      250,000        -             -
25.00         -            150,000      150,000      250,000        -          150,000

2.00          -            Expired *      -            -            -             -
ESOP          -       *    416,474 *    355,170      322,125        -             -
ESOP          -              -            -            -            -             -
             ---------------------    -----------------------  ------------------------
              -          4,814,141    4,121,603    3,163,558      50,000     2,886,000
             =====================    =======================  ========================
</TABLE>

An asterisk (*) denotes warrants which would have an anti-dilutive effect if
currently used to calculate earnings per share for the months ended November 30,
2002 and 2001, respectively.

NOTE 13 - CAPITALIZATION ACTIVITIES:

         On July 10, 2000, Atlantic Pacific Communications, Inc., (a wholly
         owned subsidiary) initiated a stock offering in accordance with
         Regulation D promulgated under the Securities Act of 1933. Atlantic
         Pacific is offering units at $25,000 per unit. Each unit consists of
         10,000 shares of common stock and 10,000 Class A warrants to purchase
         Atlantic Pacific common stock at a price of $6.00 per share with one
         warrant being issued as a unit with each common share sold. Atlantic
         Pacific will sell up to 4,000,000 shares of common stock and up to
         4,000,000 Class A warrants; 400 units. As of August 31, 2001, 13.25
         units were sold totaling 132,500 shares and resulting in proceeds of
         $331,250

NOTE 14 - RISK FACTORS:

         For the three months ended November 30, 2002 and 2001, 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,
         eighty percent of the Company's revenues and receivables have been
         created solely in the state of Texas, zero percent have been created in
         the international market, and the approximate twenty percent remainder
         have been created relatively evenly over the rest of the nation during
         the three months ended November 30, 2002. Whereas approximately
         seventy-two percent of the Company's revenues and receivables have been
         created solely in the state of Texas, two percent have been created in
         the international market, and the approximate twenty-six percent
         remainder has been created relatively evenly over the rest of the
         nation for the three months ended November 30, 2001. Through the normal
         course of business, the Company generally does not require its
         customers to post any collateral.


                                       20
<PAGE>


                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2002



         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 three months ended November 30,
         2002 and 2001, 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 2% at November 30, 2002 and 2001, 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 quarters ending November 30, 2002 and 2001, rental expenses of
         approximately $228,000 and $305,000 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 WL
         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.

         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.

                                       21


<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2002


         Future obligations under the non-cancelable lease terms are:

<TABLE>
<CAPTION>
                                   Period Ending
                                     August 31,               Amount
<S>                                                       <C>
                                        2003              $   980,454
                                        2004                  570,888
                                        2005                  146,021
                                        2006                   36,000
                                                         -------------
                                        Total             $ 1,733,363
</TABLE>


         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 currently in the discovery phase. 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.

         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.

                                       22


<PAGE>



                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2002




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 three months ended November 30, 2002
                                                      --------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                    -----------      -------------     -------------

<S>                                                  <C>               <C>               <C>
         Net Loss                                     $(831)
         Basic EPS:
          Income available to
          common stockholders                         $(831)            74,493            $(0.01)

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

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

<CAPTION>


                                                      For the three months ended November 30, 2001
                                                      --------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                    -----------      -------------     -------------
<S>                                                 <C>               <C>               <C>
         Net Income                                  $ (3,371)

         Basic EPS:
          Income available to
          common stockholders                          (3,371)            61,093            $(0.06)

         Effect of Dilutive Securities
         Warrants                                                           154
                                                    -----------      -------------
         Diluted EPS:
           Income available to
           common stockholders
           and assumed conversions.                 $  (3,371)           61,247             $(0.06)
                                                    ===========      =============     =============
</TABLE>


         For the three months ended November 30, 2002 and 2001, 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 November 30, 2002 and 2001, 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 November 30, 2002
         and 2001, respectively. Additionally, 10,350 warrants have expired as
         of November 30, 2002.

         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>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2002

<TABLE>
<CAPTION>
                                                         2002           2001
                                                       --------       --------
<S>                                                     <C>           <C>
                          Dividend Yield                 0.00%         0.00%
                          Volatility                     0.91          0.91
                          Risk-free Interest Rate        7.00%         7.00%
                          Expected Life                    5             5
</TABLE>

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. For the three months ended November
         30, 2002 and 2001, employee contributions were approximately $71,351
         and $34,505, respectively. The Company matched approximately $25,858
         and $12,038, respectively for those same periods.

NOTE 20 - MAJOR CUSTOMER:

         The Company had gross revenues of $8,761,000 and $8,761,000 for the
         three months ended November 30, 2002 and 2001, respectively. The
         following parties individually represent a greater than ten percent of
         these revenues.

<TABLE>
<CAPTION>
                                    November 30, 2002              November 30, 2001
              Customer           Amount       Percentage        Amount      Percentage
              --------           ------       ----------        ------      ----------
<S>                              <C>          <C>               <C>         <C>
              Customer A         $             $0.00%           $1,463,000   16.70%
              Customer B         $             $0.00%           $     ---     0.00
              Customer C         $             $0.00%           $     ---     0.00
</TABLE>

         Subsequent to the three months ended November 30, 2001, 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>




                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                                November 30, 2002



         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 YEAR ENDING NOVEMBER 30, 2002


(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                       768      1,652      426      1,395       ---       ---      129      248        ---      4,618
Segment Profit/(Loss)        (589)       320     (232)      (344)      (79)      ---     (24)      130        ---       (818)
Total Assets              157,230     12,319   31,240        886     4,311    64,950      875      595   (141,764)   130,642
Capital Expenditures           42          8    1,419          2       ---       ---      ---      ---        ---      1,471
Dep. And Amort.                 3         56      144         31       ---       ---       20       12        ---        266


<CAPTION>


                                            FOR THE THREE MONTHS ENDING NOVEMBER 30, 2001


(in thousands)              Eagle      APC       EBS         UCG     Link II    .Net     Elim.      Consol.
                         -------------------------------------------------------------------------------------
<S>                       <C>         <C>      <C>          <C>     <C>        <C>     <C>         <C>
Revenue                       101      1,780      514      6,360         6       ---      ---        8,761
Segment Profit / (Loss)    (2,296)      (248)    (140)      (268)     (577)      (30)     ---       (3,559)
Total Assets              154,096      4,552   15,788      4,287    30,125     1,257  (45,451)     164,654
Capital Expenditures          106          9    2,267          2       ---       ---      ---        2,384
Dep. And Amort.               818         55      127          6       312       ---      ---        1,318
</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.

         During the first fiscal quarter ended November 30, 2002, UCG entered
         into an Exclusive Strategic Alliance Agreement with a major competitor
         and designated them as its Exclusive Product Fulfillment Partner. The
         agreement, among other things, entitles UCG to a fee structure on all
         product fulfillment referrals and further designates UCG as the
         exclusive Service Provider and designee with respect to Services
         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, Professional and Managed Services for all customer
         relationships provided by UCG. The agreement further designates UCG as
         a Service Partner within the competitors' customer base and exclusively
         appoints UCG as its Service Partner within the competitor's customer
         base for all of UCG's RemoteManage247 offerings.

         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 repayable in
         common stock. Eagle received $1,500,000 in cash during the quarter
         ended November 30, 2002, against this funding arrangement.

                                       25


<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

         The following discussion and analysis should be read in conjunction
         with the Financial Statements and Notes thereto appearing elsewhere in
         this Form 10-Q. Information included herein relating to projected
         growth and future results and events constitutes forward-looking
         statements. Actual results in future periods may differ materially from
         the forward-looking statements due to a number of risks and
         uncertainties, including but not limited to fluctuations in the
         construction, technology, communication and industrial sectors; the
         success of the Company's restructuring and cost reduction plans; the
         success of the Company's competitive pricing; the Company's
         relationship with its suppliers; relations with the Company's
         employees; the Company's ability to manage its operating costs; the
         continued availability of financing; governmental regulations; risks
         associated with regional, national, and world economies; 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 ended November 30, 2002, Eagle's business operations
         reflected 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 previously conducted
         through its subsidiary United Computing Group, Inc. In addition, during
         fiscal 2002 and continuing into the first quarter 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 $2,456,000 or 46%
         decline in operating expenses in the quarter ended November 30, 2002,
         as compared to the same quarter in 2001. The Company's consolidated
         operations generated revenues of $4,618,000 with a corresponding gross
         profit of $1,992,000 or 43% for the first fiscal quarter ended November
         30, 2002. The decline in revenues in the first fiscal quarter of 2003
         is a result of decreased sales of low-margin computer products in the
         Company's subsidiary United Computing Group, Inc. consistent with their
         previously announced strategy of partnering with a major competitor for
         provisioning of lower margin product fulfillment to its clients while
         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.

         During the quarter ended November 30, 2002, 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 second 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 quarter ended November 30, 2002, we have begun 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 quarters 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.

         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.


                                       26

<PAGE>




         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.

         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.


                                       27

<PAGE>


Receivables

         For the three months ended November 30, 2002, Eagle accounts
         receivables decreased to $4,412,000 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 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 November 30,
         2002, Eagle's inventory total of $6,545,000 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.

RESULTS OF OPERATIONS

THREE MONTHS ENDED NOVEMBER 30, 2002, COMPARED TO THREE MONTHS ENDED NOVEMBER
30, 2001

         NET SALES. For the three months ended November 30, 2002, net sales
         decreased to $4,618,000 from $8,761,000 during the three months ended
         November 30, 2001. The decline in revenues is a result of decreased
         sales of computer products in the Company's subsidiary United Computing
         Group, Inc. consistent with their previously announced strategy of
         partnering with a major competitor for provisioning of lower margin
         product fulfillment to its clients while 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.

         COST OF GOODS SOLD. For the three months ended November 30, 2002, cost
         of goods sold decreased to $2,626,000 from $7,061,000 during the three
         months ended November 30, 2001. This decline was 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 increased to
         43% for the three months ended November 30, 2002, from 19% during the
         three months ended November 30, 2001.

         OPERATING EXPENSES. For the three months ended November 30, 2002,
         operating expenses decreased to $2,826,000 from $5,283,000 during the
         three months ended November 30, 2001. The primary portions of the
         increase are discussed below:

         A $649,000 decrease in salaries, as a result of the personnel
         reductions completed as a component of the extensive cost reduction
         activities.

         A $118,000 decrease in advertising and promotion, due primarily to
         decreases in product introductions during the fist fiscal quarter of
         2003 as compared to the same period last year.

         A $1,094,000 decrease in depreciation and amortization, due to the
         non-cash impairment charge against FCC licenses and equipment taken in
         the fourth fiscal quarter of fiscal 2002.

         A $455,000 decrease in other support costs, due to decreases in
         contract labor, interest, professional fees, rents and bad debt costs.

         A $140,000 decrease in research and development expenses due to timing
         of previously released products.

         NET EARNINGS. For the three months ended November 30, 2002, Eagle's net
         loss was $831,000, compared to net loss of $3,371,000 during the three
         months ended November 30,2001.

         CHANGES IN CASH FLOW. Eagle's operating activities used net cash of
         $720,000 in the three months ended November 30, 2002, compared to
         $2,979,000 in the three months ended November 30, 2001. The decrease in
         net cash used by operating activities was primarily attributable to a
         significant decline in net loss, an increase in inventory, offset by
         reductions in account receivable, depreciation and amortization and
         accounts payable. Eagle's investing activities used net cash of
         $1,483,000 in the three months ended November 30, 2002, compared to
         $2,744,000 in the three months ended November 30, 2001. 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 cash of $1,577,000, in the three months
         ended November 30,

                                       28
<PAGE>




         2002, compared to cash used of $1,840,000 in the three months ended
         November 30, 2001. The increase at November 30, 2002, is attributable
         to cash raised from funding agreements with an investment bank for
         general working capital purposes 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 November 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES.

         Current assets for the period ended November 30, 2002, totaled
         $14,123,000 (includes cash and cash equivalents of $2,795,000) as
         compared to $14,866,000 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 has received $1,500,000 in
         cash during the quarter ended November 30, 2002, against this funding
         arrangement. In addition, Eagle engaged an investment-banking firm to
         provide a $20,000,000 equity line of credit. This line of credit will
         be activated upon Eagle filing a registration statement that complies
         with the terms and conditions of the agreement. In addition, Eagle has
         entered into negotiations with a financial institution to provide 10
         million in conventional debt financing.

         Eagle believes that its working capital of $4,573,000 as of November
         30, 2002, plus the additional funds raised and committed during the
         first fiscal quarter of 2003 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
         November 30, 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. 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 cash and liquidity risks associated with its
         common stock investments aggregating $1,270,200 in market value as of
         November 30, 2002.

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
         None

ITEM 5 - OTHER INFORMATION
         None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibit
              99.1 CEO Certification
              99.2 CFO Certification

         (b)  Reports on Form 8-K
              None

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 WIRELESS INTERNATIONAL, INC.


         Date: January 17, 2003                 By:    /s/ H. Dean Cubley
                                                       -----------------------
                                                       Dr. H. Dean Cubley
                                                       Chief Executive Officer

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


<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: January 16, 2003


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


                                       31

<PAGE>





                                 CERTIFICATIONS

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

1. I have reviewed this annual 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: January 16, 2003


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


                                       32

<PAGE>
                                 EXHIBIT INDEX


Exhibit                            Description
-------                            -----------

99.1                            CEO Certification

99.2                            CEO Certification








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