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 FEBRUARY 28, 2003

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

                        Commission File Number: 000-23163


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

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

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

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


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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

As of April 15, 2003, there were 102,228,968 shares of common stock outstanding.


<PAGE>




                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                                      INDEX

<TABLE>
<CAPTION>

Part 1 - Financial Information                                                                   Page

         Item 1.  Consolidated Financial Statements (Unaudited)

                  <S>                                                                             <C>
                  Consolidated Balance Sheets at February 28, 2003, and August 31, 2002            3

                  Consolidated Statements of Earnings for the Three and Six
                  Months Ended February 28, 2003 and 2002                                          4

                  Consolidated Statements of Changes In Shareholders' Equity for the
                  Six Months Ended February 28, 2003, and Twelve Months Ended
                  August 31, 2002                                                                  5

                  Consolidated Statements of Cash Flows for the Six Months Ended
                  February 28, 2003 and 2002                                                       6

                  Notes to the Consolidated Financial Statements                                   7

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

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                      28

         Item 4.  Controls and Procedures

Part 2 - Other Information

         Item 1.  Legal Proceedings                                                               29

         Item 2.  Recent Sales of Unregistered Securities or Changes
                  in Securities and Use of Proceeds.                                              29

         Item 3.  Defaults Upon Senior Securities                                                 29

         Item 4.  Submission of Matters to a Vote of Security Holders                             29

         Item 5.  Other Information                                                               29

         Item 6.  Exhibits and Reports on Form 8-K                                                29

Signatures                                                                                        29

</TABLE>


                                       2
<PAGE>


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

<TABLE>
<CAPTION>

                                     ASSETS
                                                                           February 28,     August 31,
                                                                               2003            2002
                                                                             --------        --------


(Unaudited) (Audited)
         Current Assets:
              <S>                                                       <C>              <C>
              Cash and Cash Equivalents                                 $        1,653   $         3,421
              Accounts Receivable                                                4,167             5,028
              Inventories                                                        6,523             6,059
              Prepaid Expenses                                                     882               358
                                                                         -------------   ---------------
                  Total Current Assets                                          13,225            14,866

         Property and Equipment:
              Operating Equipment                                               37,331            34,509
              Less:  Accumulated Depreciation                                   (4,227)           (3,661)
                                                                         -------------    --------------
                  Total Property and Equipment                                  33,104            30,848

         Other Assets:
              Deferred Costs                                                       870               334
              Goodwill                                                           7,916             7,916
              Other Intangible Assets                                           80,109            79,900
              Less:  Accumulated Amortization                                   (4,278)           (4,278)
              Other Assets                                                         506               397
                                                                         -------------    --------------

                  Total Other Assets                                            85,124            84,269
                                                                         -------------    --------------

         Total Assets                                                    $     131,453    $      129,983
                                                                         =============    ==============

                                   LIABILITIES AND SHAREHOLDERS' EQUITY
         Current Liabilities:
              Accounts Payable                                           $       5,302    $        4,757
              Accrued Expenses                                                   1,419             2,873
              Notes Payable                                                      4,134             3,653
              Capital Lease Obligations                                             11                48
                                                                         -------------    --------------

                  Total Current Liabilities                                     10,866            11,331

         Long-Term Liabilities:
              Capital Lease Obligations
                (net of current maturities)                                         70                70
              Long-Term Debt                                                     1,196             1,202
                                                                         -------------    --------------

                  Total Long-Term Liabilities                                    1,266             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 February 28, 2003, and
                  August 31, 2002, 85,229,000 and 73,051,000, respectively          85                73
              Paid in Capital                                                  163,410           158,731
              Retained Earnings                                                (44,174)          (41,424)
                                                                         -------------    --------------

                  Total Shareholders' Equity                                   119,321           117,380
                                                                         -------------    --------------

         Total Liabilities and Shareholders' Equity                      $     131,453    $      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 February 28     For the Six Months ended February 28
                                                      (Unaudited)
                                                 2003               2002                 2003                 2002
                                                 ----               ----                 ----                 ----

Net sales:
<S>                                               <C>                 <C>                 <C>                  <C>
    Structured wiring                             1,040               1,892               2,600                3,592
    Broadband services                              888                 303               1,562                  566
    Products                                        151               4,746               2,195               11,213
    Other                                           984                 439               1,324                  770
                                            -------------       ------------        -------------        ------------
Total sales                                       3,063               7,380               7,681               16,141
                                            -------------       ------------        -------------        ------------
Costs of Goods Sold:
    Materials other than Cable and Wire               0                   0                   0                    1
    Direct Labor and Related Costs                  402                 703                 748                1,438
    Products and Integration Service                114               3,680               1,651                9,422
    Structured Wiring Labor and Materials           429                 375                 658                  696
    Broadband Services Costs                        254                 204                 530                  375
    Depreciation and Amortization                   114                  84                 228                  155
    Other Manufacturing Costs                        31                  19                 155                   39
                                            -------------       ------------        -------------        ------------
Total Costs of Goods Sold                         1,344               5,065               3,970               12,126
                                            -------------       ------------        -------------        ------------
Gross Profit                                      1,719               2,315                3,711               4,015
                                            -------------       ------------        -------------        ------------
Operating Expenses:
    Selling, General and Administrative:
        Salaries and Related Costs                1,355               2,192               2,863                4,349
        Advertising and Promotion                    19                 108                  56                  263
        Depreciation and Amortization               237               1,237                 390                2,484
        Other Support Costs                       1,073               1,258               2,170                2,810
        Research and Development                     27                  92                  59                  264
                                            -------------       ------------        -------------        ------------
Total Operating Expenses                          2,711               4,887               5,538               10,170
                                            -------------       ------------        -------------        ------------

Earnings/(Loss) From Operations Before
Other Revenues/(Expenses), Income Taxes            (992)             (2,572)             (1,827)              (6,155)
and Other Comprehensive Income

Other Revenues/(Expenses):
    Interest Income - net                            13                  63                  17                  275
    Other Income                                    ---                 ---                 ---                  ---
                                            -------------       ------------        -------------        ------------

       Total Other Revenues                          13                  63                  17                  275
Earnings/(Loss) Before Minority Interest
 in Affiliate, Income Taxes and Other
 Comprehensive Income                              (979)             (2,509)             (1,810)              (5,880)
                                            -------------       ------------        -------------        ------------

Provisions For Income Taxes                         ---                 ---                 ---                  ---
                                            -------------       ------------        -------------        ------------
Net Earnings/(Loss)                                (979)             (2,509)             (1,810)              (5,880)
                                            -------------       ------------        -------------        ------------
Other Comprehensive Income, Net of Tax
Unrealized Holding Gain/(Loss)                     (954)                (86)               (941)                (274)
                                            -------------       ------------        -------------        ------------
Other Comprehensive Income/(Loss)             $  (1,933)          $  (2,595)          $  (2,751)           $  (6,154)
                                            =============       ============        =============        ============
Net Earnings/(Loss) per Common Share:
Basic                                           $ (0.01)            $ (0.04)            $ (0.02)             $ (0.10)
Diluted                                         $ (0.01)            $ (0.04)            $ (0.02)             $ (0.10)
Comprehensive Income/(Loss)                     $ (0.02)            $ (0.04)            $ (0.03)             $ (0.10)

</TABLE>


See accompanying notes to consolidated financial statements.


                                       4
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                  Additional                      Total
                                        Common Stock             Preferred         Paid In       Retained      Shareholders'
                                      Shares       Value           Stock           Capital       Earnings         Equity

Total Shareholders' Equity
<S>                                  <C>             <C>              <C>            <C>           <C>           <C>
   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 Six Months
   Ended February 28, 2003               ---         ---              ---                ---       (1,810)        (1,810)
New Stock Issued to Shareholders:
   For Services and Compensation         690         ---              ---                290          ---            290
   For Property and Other Assets       3,426           4              ---                779          ---            783
   For Retirement of Debt and
    Liabilities                        8,062           8              ---              3,610          ---          3,618

   For Warrants Conversion               ---         ---              ---                ---          ---            ---
   For Employee Stock Option Plan        ---         ---              ---                ---          ---            ---
   For Licenses and Investments          ---         ---              ---                ---          ---            ---

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

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

Unrealized Holding Gain                  ---         ---              ---                ---         (941)          (941)
                                     -------     -------        ---------        -----------     ---------     ---------

Total Shareholders' Equity
As of February 28, 2003               85,229     $    85        $     ---        $   163,410    $ (44,174)     $ 119,321
                                    ========      ======         ========         ==========     =========      ========

</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 Six Months ended February 28,

                                                                              2003       2002
                                                                              ----       ----
                                                                               (Unaudited)
Cash Flows From Operating Activities
<S>                                                                         <C>      <C>
Net Earning/(Loss)                                                          $(2,751) $ (5,880)

Adjustments To Reconcile Net Earnings to Net Cash
Used By Operating Activities:
   Interest for Conversion Value                                                 91       ---
   Depreciation and Amortization                                                618     2,651
   Stock Issued for Interest Expense                                            ---        60
   Allowance for Doubtful Accounts                                              ---       138
   Stock Issued for Services Rendered                                           201       195
   (Increase)/Decrease in Accounts Receivable                                   861     1,270
   (Increase)/Decrease in Inventories                                          (406)    3,805
   (Increase)/Decrease in Prepaid Expenses                                     (524)       57
   Increase/(Decrease) in Accounts Payable                                      748      (944)
   Increase/(Decrease) in Accrued Expenses                                      (40)   (1,263)
                                                                              ------   -------
     Total Adjustment                                                         1,549     5,969

Net Cash Used by Operating Activities                                        (1,201)       89

Cash Flows From Investing Activities:
   (Purchase)/Disposal of Property and Equipment                             (2,336)   (9,642)
   (Increase)/Decrease in Acquisition Costs                                     ---         6
   (Increase)/Decrease in Deferred Costs                                       (669)      ---
   (Increase)/Decrease in Other Intangible Assets                               ---       (10)
   (Increase)/Decrease in Other Assets                                          ---    (1,713)
                                                                            -------    -------
Net Cash Used by Investing Activities                                        (3,005)  (11,359)

Cash Flows From Financing Activities:
   Increase/(Decrease) in Notes Payable & Long-Term Debt                      2,438       144
   Increase/(Decrease) in Capital Leases                                        ---       (37)
   Increase/(Decrease) in Line of Credit                                        ---      (813)
   Treasury Stock                                                               ---      (676)
                                                                             ------      -----
Net Cash Provided By Financing Activities                                     2,438    (1,382)
                                                                              -----    -------

Net Increase/(Decrease) in Cash                                              (1,768)  (12,652)

Cash At The Beginning of Period                                               3,421    23,843
                                                                              -----    ------
Cash At the End Of Period                                                   $ 1,653  $ 11,191

Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for
    Interest                                                                    153  $     54

</TABLE>

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


See accompanying notes to consolidated financial statements.


                                       6
<PAGE>



NOTE 1 - Basis of Presentation and Significant Accounting Policies:

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

A)   Consolidation

     At February 28, 2003,  the Company's  subsidiaries  are:  Atlantic  Pacific
     Communications,   Inc.   (APC);   Etoolz,   Inc.   (ETI);   Eagle  Wireless
     International,  Inc. (EWI); Eagle Broadband Services, Inc.; ClearWorks.net,
     Inc.  (.NET);  ClearWorks  Communications,  Inc.  (COMM);  ClearWorks  Home
     Systems,  Inc. (HSI);  Contact  Wireless,  Inc. (CWI);  DSS Security,  Inc.
     (DSS);  United  Computing Group,  Inc. (UCG); and Link Two  Communications,
     Inc. (LINK II). The consolidated  financial statements include the accounts
     of  the  Company  and  its  subsidiaries.   All  significant  inter-company
     transactions and balances have been eliminated in consolidation.

B)   Cash and Cash Equivalents

     The Company has  $1,653,000  and  $3,421,000  invested in interest  bearing
     accounts and  marketable  securities  (Note 9) at February  28,  2003,  and
     August 31, 2002, respectively.

C)   Property and Equipment

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

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

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

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:

                                           February 28,         August 31,
                                               2003               2002
                                           -----------         -----------

                Raw Materials              $   4,371             $ 4,515
                Work in Process                1,951               1,262
                Finished Goods                   201                 282
                                            --------              ------
                                           $   6,523             $ 6,059
                                            ========              ======


                                       7
<PAGE>



E)   Revenue Recognition

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

     Eagle Wireless International, Inc.
     Eagle   designs,   manufactures   and  markets   transmitters,   receivers,
     controllers and software, along with other equipment used in commercial and
     personal communication systems, radio and telephone systems.  Revenues from
     these products are recognized when the product is shipped. Manufacturing of
     the Eagle  Wireless  product line of wireless  infrastructure  products was
     licensed to a third party company during this reporting period.

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

     Eagle Broadband, Inc.
     Eagle Broadband engages independent agents for sales principally in foreign
     countries and certain  geographic  regions in the United States.  Under the
     terms of these one-year  agreements the 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.


                                       8
<PAGE>


     ClearWorks Home Systems, Inc.
     ClearWorks Home Systems,  Inc., sells and installs structured wiring, audio
     and visual components to homes. This subsidiary  recognizes revenue and the
     related  costs at the time the services are  performed.  Revenue is derived
     from the  billing of  structured  wiring to homes and the sale of audio and
     visual components to the homebuyers.

     Atlantic Pacific Communications, Inc.
     Atlantic  Pacific   Communications,   Inc.,   provides  project   planning,
     installation,  project  management,  testing and documentation of fiber and
     cable to commercial  and industrial  clients  throughout the United States.
     The  revenue  from  the  fiber  and  cable  installation  and  services  is
     recognized upon percentage of completion of the project.  Most projects are
     completed in less than one month,  therefore,  matching revenue and expense
     in the period incurred.  Service,  training and extended  warranty contract
     revenues are recognized as earned.

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

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

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

     DSS Security, Inc.
     DSS  Security,  Inc.,  provides  monthly  security  monitoring  services to
     residential customers.  The customers are billed three months in advance of
     service usage. The revenues are deferred at the time of billing and ratably
     recognized over the prepayment period as service is provided.

     United Computing Group, Inc.
     United Computing Group, Inc.,  provides  business-to-business  hardware and
     software network  solutions and network  monitoring  services.  The revenue
     from the hardware and software sales is recognized at the time of shipment.
     The monitoring services recognition policy is to record revenue as earned.

F)   Research and Development Costs

     For the three  months  ended  February  28,  2003,  and 2002,  the  Company
     performed research and development activities for internal projects related
     to its convergent  set-top boxes as well as its  multi-media  entertainment
     centers and Orb'Phone  Exchange.  Research and development costs of $27,000
     and $92,000 were expensed for the three months ended  February 28, 2003 and
     2002, respectively.  Research and development costs of $59,000 and $264,000
     were  expensed  for the six  months  ended  February  28,  2003  and  2002,
     respectively.

     No research and development services were performed for outside parties for
     the three and six months ended February 28, 2003 and 2002.


                                       9
<PAGE>


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:

                                                   February 28,     August 31,
                                                      2003            2002
                                                   -----------     -----------
       Weighted Average Number of Common
         Shares Outstanding Including

       Primary Common Stock Equivalents              76,692          64,004
       Fully Dilutive Common Stock Equivalents       76,846          64,158


I)   Impairment of Long Lived and Identifiable Intangible Assets

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

          1)   Quoted market prices in active markets.

          2)   Estimate based on prices of similar assets.

          3)   Estimate based on valuation techniques.

J)   Intangible Assets

     Goodwill  represents the excess of the cost of companies  acquired over the
     fair  value of their net  assets at the dates of  acquisition  and is being
     amortized  using  the  straight-line  method  over  twenty  (20)  years for
     Atlantic  Pacific  Communications,  Inc.  and  twenty-five  (25)  years for
     Bundled Digital Services  contract rights.  Other intangible assets consist
     of patents and licenses,  which are being amortized using the straight-line
     method over ten (10) years and twenty (20) years, respectively.

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 six months ended  February 28, 2003, the Company
     has expensed $56,000 where $0 in costs has been deferred.

     For the six months ended,  February 28, 2002, the Company expensed $263,000
     whereas $0 in costs has been deferred.



                                       10
<PAGE>


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 six months ended February 28,
     2003 and 2002, the Company recorded a comprehensive  loss of $941,000 and a
     loss of $274,000, respectively.

P)   Reclassification

     The Company has  reclassified  certain  assets  costs and  expenses for the
     three and six months ended  February 28, 2003 to  facilitate  comparison to
     the three and six months ended February 28, 2002.

Q)   Supporting Costs in Selling, General and Administrative Expenses

     Other  support cost for the six months  ending  February 28, 2003 and 2002,
     are as follows, in thousands:


                                                       2003          2002
                                                     -----------------------
                  Advertising/Conventions         $     ---     $     ---
                  Auto Related                           38            76
                  Bad Debt                              ---           138
                  Contract Labor                        104           192
                  Delivery/Postage                       66            44
                  Fees                                  190           104
                  Interest                              259           467
                  Office                                114            75
                  Other                                  70           166
                  Professional                          198           326
                  Rent                                  472           729
                  Repairs and Maintenance                26            50
                  Travel                                153           ---
                  Taxes                                  65            51
                  Telephone & Utilities                 415           392
                                                     -----------------------
                  Total                           $   2,170     $   2,810
                                                     =======================



                                       11
<PAGE>


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 February  28, 2003,  the Company  evaluated  its  existing  goodwill and
     intangible  assets  acquired in purchase  business  combinations  completed
     prior to July 1, 2001. The carrying amount of recognized  intangible assets
     that  meet  the  criteria  for  recognition  apart  from  goodwill  or  any
     identifiable  intangible  assets that are presented with goodwill and other
     intangible assets for financial  reporting  purposes have been reclassified
     and reported  separately  from  goodwill.  The  unamortized  balance of any
     negative  goodwill will be recognized as the cumulative  effect of a change
     in  accounting  principle.   The  Company  has  also  tested  goodwill  for
     impairment at 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  $1,999,774  for the six months ended  February 28, 2003,  and 2002,
     respectively.

NOTE 2 - Accounts Receivable:

          Accounts receivable consist of the following, in thousands:

                                                    February 28,    August 31,
                                                       2003            2002
                                                    -----------    -----------
              Accounts Receivable                 $      4,409     $    5,270
              Allowance for Doubtful Accounts             (242)          (242)
                                                    -----------    -----------
              Net Accounts Receivable             $      4,167     $    5,028
                                                    ===========    ===========



                                       12
<PAGE>


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

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

<TABLE>
<CAPTION>

                                                                    February 28,      August 31,
                                                                       2003              2002
                                                                    -----------      -----------
                  <S>                                               <C>              <C>
                  Automobile                                        $      392       $      392
                  Head-End Facility and Fiber Infrastructure            29,620           27,164
                  Furniture & Fixtures                                     636              634
                  Leasehold Improvements                                   217              216
                  Office Equipment                                       1,025            1,015
                  Property, Manufacturing & Equipment                    5,441            5,088
                                                                    -----------      -----------
                      Total Property, Plant & Equipment             $   37,331       $   34,509
                         Less: Accumulated Depreciation                 (4,227)          (3,661)
                                                                    -----------      -----------
                      Net Property, Plant & Equipment               $   33,104       $   30,848
                                                                    ===========      ===========

</TABLE>

<TABLE>
<CAPTION>

         Components of intangible assets are as follows, in thousands:

                                                                     February 28,     August 31,
                                                                        2003             2002
                                                                     -----------     ------------
                  <S>                                                <C>             <C>
                  Goodwill                                           $    7,916      $     7,916
                  Contract Rights                                        74,513           74,513
                  Licenses, Permits, Deferred Costs & Other Assets        6,973            6,118
                                                                     -----------     ------------
                      Total Intangible Assets                        $   89,402      $    88,547
                         Less: Accumulated Amortization                  (4,278)          (4,278)
                                                                     -----------     ------------
                      Net Intangible Assets                          $   85,124      $    84,269
                                                                     ===========     ============

</TABLE>


NOTE 4  - Business Combinations:

     Effective January 1, 2002, the Company acquired the assets of DSS Security,
     Inc.,  and Contact  Wireless in a business  combination  accounted for as a
     purchase. DSS Security,  Inc., provides security monitoring to business and
     residential  customers.  Contact  Wireless sells and services mobile phones
     and one- and two-way messaging  devices.  The Company paid cash of $450,000
     and issued a short-term  note payable of $130,000 for the assets of Contact
     Wireless for a total purchase price of $580,000.  Additionally, the Company
     acquired DSS Security,  Inc.,  for  $2,002,147.  In this  transaction,  the
     Company issued 2,002,147 shares of its common stock with a guaranteed value
     of $1 per share.  The  Company  allocated  $51,595 to the fair value of the
     property and equipment and $1,950,552 to intangible  assets. The intangible
     assets include,  among other things,  approximately 4,000 current customers
     being billed monthly for wireless messaging services. The allocation of the
     purchase  price is based on the fair value of the assets  acquired based on
     management's  estimates and existing  contracts.  At February 28, 2003, the
     Company has an accrual for $921,000  for the portion of the  purchase  that
     represents  the difference  between  purchase price and market value of the
     Company's common stock on the date of purchase.



                                       13
<PAGE>


NOTE 5 - Notes Payable:

     The following table lists the Company's note obligations as of February 28,
     2003, and August 31, 2002, in thousands:

<TABLE>
<CAPTION>


                                              Annual
                                             Interest                        February 28,  August 31,
                                               Rate           Due Date          2003          2002
                                          -----------------------------------------------------------
                 <S>                          <C>             <C>             <C>          <C>
                 Vehicles                     Various         Various         $      14    $      27
                 Convertible Debentures       2%-6%           Demand              4,269        4,000
                 Other                        Various         Various             1,047          828
                                                                              ---------    ---------

                 Total notes payable                                          $   5,330    $   4,855
                 Less current portion                                             4,134        3,653
                                                                              ---------    ---------
                 Total long-term debt                                         $   1,196    $   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 February 28, 2003,
     and August 31, 2002,  for each of the next five years and in the  aggregate
     are (in thousands):

<TABLE>
<CAPTION>

                                                                   February 28, 2003        August 31, 2002
                                                                   -----------------       -----------------
                  <S>                                              <C>                     <C>
                  Total minimum lease payments                     $              88       $             128
                  Less : Amount representing interest                              7                      10
                                                                   -----------------       -----------------
                  Present value of net minimum lease payments                     81                     118
                  Less: Current maturity capital lease obligation                 11                      48
                                                                   -----------------       -----------------
                    Long-term capital lease obligation                            70                      70
                                                                   =================       =================

</TABLE>

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

                 Period Ended                            Amount
                                                    -----------------
                     2004                                         41
                     2005                                         29
                                                    -----------------
                 Total                              $             70
                                                    =================

NOTE 7 - Line of Credit:

     During the  Company's  first fiscal  quarter ended  November 30, 2002,  APC
     entered into a new credit facility with SWBT to provide working capital and
     fund  ongoing  operations.  The new credit  facility is a purchase and sale
     agreement  against  accounts  receivable,  provides  for  borrowings  up to
     $1,000,000  based on  eligible  accounts  receivable  and is secured by APC
     accounts receivable and guaranteed by Eagle Broadband,  Inc. As of February
     28, 2003,  APC reduced its accounts  receivable  by $167,132 to reflect the
     gross  sale of  $196,626  to SWBT less  $29,494  of  reserves  held by SWBT
     against such purchases.


                                       14
<PAGE>


     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 February
     28, 2003,  UCG reduced its accounts  receivable  by $115,517 to reflect the
     gross  sale of  $132,844  to SWBT less  $17,328  of  reserves  held by SWBT
     against such purchases.

NOTE 8 - Convertible Debentures:

     During  October  2002,  the Company  entered into a $3,000,000  convertible
     debenture  agreement  with  Cornell  Capital  Partners,  LP  (CCP).  At the
     Company's  option,  the entire  principal  amount and all accrued  interest
     shall be either (a) paid to CCP on the third year anniversary from the date
     of the debenture or (b) converted.  The three-year debenture bears interest
     at 5% and is  repayable  in stock or  cash.  The  method  of  repayment  is
     determined by the Company. The significant conversion terms are that CCP is
     entitled,  at its option, to convert, and sell on the same day, at any time
     and from time to time subject to the terms of the agreement,  until payment
     in full of the  debenture,  all or any part of the principal  amount of the
     debenture, plus accrued interest, into shares of the Company's common stock
     at the price per share  equal to either (a) $1.00 or (b) 90% of the average
     of the four lowest  closing trade prices of the common stock,  for the five
     trading days  immediately  preceding the conversion  date. CCP shall not be
     entitled to convert the debenture for a period of 180 days from the date of
     the debenture.  After 180 days, if the conversion price is below $1.00, CCP
     shall be entitled,  at its option, to convert,  and sell on the same day up
     to $50,000 every five business  days.  After 12 months from the date of the
     debenture,  if the conversion  price is below $1.00, CCP shall be entitled,
     at its option, to convert and sell on the same day up to $75,000 every five
     business days.  Notwithstanding the foregoing, after 180 days from the date
     of the debenture, CCP shall be entitled, at its option, to convert and sell
     on the same day without restriction if the conversion price is above $1.00.
     At February 28, 2003, the Company had received  $2,225,000 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 February 28, 2003.

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

     During 2001, the Company  acquired  ClearWorks.net,  Inc., and as a result,
     ClearWorks is a wholly owned subsidiary of Eagle. Link Two  Communications,
     Inc., is a subsidiary of ClearWorks, and as a result of the acquisition, is
     now a secondary subsidiary of Eagle. Link Two entered an agreement with The
     Tail Wind Fund Ltd.,  under  which Tail Wind  purchased  from Link Two a 2%
     convertible  note in the initial  amount of $5,000,000  (the "First Note"),
     and Link Two has the ability to require  Tail Wind to  purchase  additional
     convertible  notes in the  amount of  $4,000,000  (the  "Second  Note") and
     $3,000,000  (the "Third  Note").  The conversion  terms of the  convertible
     debentures  become effective after ninety days of the initial closing date.
     The note balance will be due in fiscal 2003. Link Two may require Tail Wind
     to purchase  the Second Note if: (a) the price of Eagle's  common  stock is
     above $5.00 per share for 20 consecutive trading days during calendar 2001,
     and other various terms are met. Link Two may require Tail Wind to purchase
     the Third  Note if the price of  Eagle's  common  stock is above  $8.00 per
     share for 20 consecutive  trading days during calendar 2001, and the agreed
     upon covenants are met. In conjunction with the issuance of the First Note,
     Link Two issued  Tail Wind a warrant,  and if Link Two chooses to issue the
     Second and Third Notes, it will issue Tail Wind additional warrants.


                                       15
<PAGE>


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

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

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

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


                                       16
<PAGE>


NOTE 9 - Marketable Securities:

     As discussed in Note 1, the Company adopted the provisions of SFAS No. 115,
     "Accounting for Certain Investments in Debt and Equity Securities" and SFAS
     No. 130,  "Accounting for Other Comprehensive  Income." At 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 February  28,  2003,  the  securities  had an  original  basis of $5,576
     determined by multiplying  the number of shares acquired by the fair market
     value of those  shares.  At the February 28, 2003 balance  sheet date,  the
     fair market value of these securities was $6,128; 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."

               Security Name           Shares          Cost           Current
                                                      Basis             FMV
                                                   -----------    -----------
         FHLMC                           42             4,180          4,408
         FNMA                            17             1,396          1,720
                                                   -----------    -----------
         Totals                                    $    5,576     $    6,128
                                                   ===========    ===========

     Other marketable  securities,  Urbana and Burst.com,  with an adjusted cost
     basis of $750,000  and fair market  value of $317,500  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:

                                                    February 28,     August 31,
                                                         2003          2002
                                                         ----          ----
                                                          %             %
            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
                                                           =            ==


                                       17
<PAGE>


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

                                                  February 28,      August 31,
                                                     2003              2002
                                                   ---------         ---------
            Computed expected tax benefit         $     (333)       $  (12,508)
            Increase in valuation allowance              333            12,508
                                                   ---------         ---------
                                                  $      ---        $      ---
                                                   =========         =========

     The tax  effects of  temporary  differences  that give rise to  significant
     portions  of the  deferred  tax  assets and  deferred  tax  liabilities  at
     February 28, 2003, and August 31, 2002, are presented  below, in thousands,
     and include the balances of the acquired company ClearWorks.Net.

                                                     February 28,  August 31,
                                                       2003          2002
                                                     ---------     ---------
            Deferred tax assets:
            Accounts receivable, principally due
            to allowance for doubtful accounts      $      ---     $     ---

            Net operating loss carry-forwards           24,663        24,047
            Less valuation allowance                   (24,663)      (24,047)
                                                     ---------     ---------
            Net deferred tax assets                        ---           ---

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

     The valuation  allowance for deferred tax assets of February 28, 2003,  and
     August 31, 2002, was $24,663,000 and $24,047,000, respectively. At February
     28, 2003, the Company has net operating loss carry-forwards of $36,403,000,
     which are available to offset future federal taxable  income,  if any, with
     expirations from 2020 to 2021.

NOTE 11 - Issuance of Common Stock:

     For the six months ended  February 28, 2003,  the Company  issued shares of
     common stock.  The following  table  summarizes  the shares of common stock
     issued, in thousands.

          Shares Outstanding August 31, 2002                             73,051
                                                                      ---------
          Shares issued for Retirement of Debt and Liabilities            8,062
          Shares  issued for  Services,  Compensation,  Property and      4,116
          Other Assets
                                                                      ---------
          Shares Outstanding February 28, 2003                           85,229
                                                                      =========



                                       18
<PAGE>


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 February 28,
     2003, options to purchase 416,474 are outstanding and 983,526 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
     February 28, 2003:

          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 February  28,  2003,  none of these  options have been
          exercised

          50,000  stock  purchase  warrants  issued to Weed & Co. L.P.  expiring
          December  10,  2002.  The  warrants  are to  purchase  fully  paid and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $1.55 per share.  The shares of common  stock
          underlying the warrants were  registered for resale on August 3, 2000,
          under the  Securities  Act of 1933.  As of February 28,  2003,  25,000
          warrants have been exercised resulting in cash proceeds of $38,750 and
          the balance of the warrants expired unexercised.

          20,000 stock purchase warrants issued to Kason, Inc., expiring October
          7, 2002.  The warrants are to purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $1.75 per share.  The shares of common stock underlying these
          warrants were  registered  for resale on November 30, 2000,  under the
          Securities  Act of 1933. As of February 28, 2003,  6,234 warrants have
          been  exercised  resulting cash proceeds of $10,910 and the balance of
          warrants expired unexercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          January  1,  2004.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $2.00 per share.  The shares of common  stock
          underlying  these have not been  registered  as of November  30, 2002,
          under the  Securities  Act of 1933.  As of February 28, 2003,  none of
          these warrants have been exercised.

          41,667 stock purchase warrants issued to Peter Miles expiring July 20,
          2004.  The  warrants  are to  purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $2.00 per share.  The shares of common stock underlying these
          have not been registered as of November 30, 2002, under the Securities
          Act of 1933. As of February 28, 2003, none of these warrants have been
          exercised.

          41,667 stock purchase warrants issued to Peter Miles expiring July 20,
          2004.  The  warrants  are to  purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $2.25 per share.  The shares of common stock underlying these
          warrants have not been registered or issued,  under the Securities Act
          of 1933.  As of February 28, 2003,  none of these  warrants  have been
          exercised.


                                       19
<PAGE>


          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 February 28, 2003,  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 February 28, 2003,  all of these  warrants
          have expired unexercised.

          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 February 28, 2003,  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 of February 28, 2003,  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 of February 28, 2003,  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 February 28, 2003,  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 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 February 28, 2003,  none of these  warrants  have been
          registered, issued or exercised and have expired unexercised.

          25,000 stock  purchase  warrants  issued to Synchton,  Inc.,  expiring
          October  1,  2003.  The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $4.50 per share.  The shares of common  stock
          underlying  these  warrants  were  registered  for resale on August 3,
          2000,  under the Securities Act of 1933. As of February 28, 2003, none
          of these warrants have been exercised.


                                       20
<PAGE>


          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 February
          28,  2003,  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 February 28, 2003, the
          underlying  shares of common  stock have not yet been  registered  for
          resale under the Securities Act of 1933.

          25,000 stock purchase warrants issued to Synchton, Inc., expiring July
          1, 2003.  The warrants are to purchase  fully paid and  non-assessable
          shares of the common  stock,  par value  $.001 per share at a purchase
          price of $7.50 per share.  The shares of common stock underlying these
          warrants  were  registered  for  resale on August 3,  2000,  under the
          Securities  Act of 1933. As February 28, 2003,  none of these warrants
          have been exercised.

          192,000 stock purchase warrants issued to Tech Technologies  Services,
          LLC,  expiring April 24, 2008. The warrants are to purchase fully paid
          and  non-assessable  shares of the common  stock,  par value $.001 per
          share at a  purchase  price of $7.50 per  share.  The shares of common
          stock  underlying  these warrants have not been  registered or issued,
          under the  Securities  Act of 1933.  As of February 28, 2003,  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  February  28,  2003,  none of these
          warrants have been registered, issued or exercised.

          168,000 stock purchase  warrants issued to Michael T. McClere expiring
          April  24,  2008.   The  warrants  are  to  purchase  fully  paid  and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $7.50 per share.  The shares of common  stock
          underlying  these warrants have not been  registered or issued,  under
          the  Securities  Act of 1933.  As  February  28,  2003,  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 February 28, 2003,  none of these
          warrants have been registered, issued or exercised.

          160,000  stock  purchase  warrants  issued  to  McClere  Family  Trust
          expiring  April 24, 2008.  The warrants are to purchase fully paid and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a  purchase  price of $7.50 per share.  The shares of common  stock
          underlying  these warrants have not been  registered or issued,  under
          the  Securities  Act of 1933.  As  February  28,  2003,  none of these
          warrants have been registered, issued or exercised.


                                       21
<PAGE>


          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  February  28,  2003,  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 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 February 28, 2003, all
          of these warrants have expired unexercised.

          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
          February 28, 2003, the underlying  shares of common stock have not yet
          been  registered  for resale under the  Securities  Act of 1933. As of
          February 28, 2003, none of these warrants have been exercised.

          250,000 stock purchase  warrants issued to  Hampton-Porter  Investment
          Bankers LLC expiring June 27, 2003. The warrants are to purchase fully
          paid and  non-assessable  shares of the common stock,  par value $.001
          per share at a  purchase  price of $12.00  per  share.  The  shares of
          common stock  underlying  these warrants were registered for resale on
          August 3, 2000,  under the  Securities Act of 1933. As of February 28,
          2003, none of these warrants have been exercised.

          350,000 stock purchase  warrants  issued to Sands Brothers & Co., LTD.
          expiring  July 13, 2003.  The warrants are to purchase  fully paid and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a purchase price of $14.00 per share. These warrants,  however, are
          not exercisable until and unless the closing price of the Common Stock
          at any time during the exercise period reaches $14.00 per share. As of
          November 30, 2002, the underlying  shares of common stock have not yet
          been  registered  for resale under the  Securities  Act of 1933. As of
          February 28, 2003, none of these warrants have been exercised.

          250,000 stock purchase  warrants issued to  Hampton-Porter  Investment
          Bankers LLC expiring June 27, 2003. The warrants are to purchase fully
          paid and  non-assessable  shares of the common stock,  par value $.001
          per share at a  purchase  price of $18.00  per  share.  The  shares of
          common stock  underlying  these warrants were registered for resale on
          August 3, 2000,  under the  Securities Act of 1933. As of February 28,
          2003, none of these warrants have been exercised.

          150,000 stock purchase  warrants  issued to Sands Brothers & Co., LTD.
          expiring  July 13, 2003.  The warrants are to purchase  fully paid and
          non-assessable  shares of the common stock,  par value $.001 per share
          at a purchase price of $25.00 per share. These warrants,  however, are
          not exercisable until and unless the closing price of the Common Stock
          at any time during the exercise period reaches $25.00 per share. As of
          February 28, 2003, the underlying  shares of common stock have not yet
          been  registered  for resale under the Securities Act of 1933. . As of
          February 28, 2003, none of these warrants have been exercised.


                                       22
<PAGE>

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

<TABLE>
<CAPTION>



                Warrants Issued          Warrants Exercisable                Warrants
Class of          February 28,                February 28,              Non-         Non-
Warrants       2003          2002        2003              2002      Exercisable  Registered
--------      --------------------      ------------------------    --------------------------
<C>             <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            -             -
1.75             -          20,000             -          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            -             -
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       112,000         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     3,816,837       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 February 28,
2003 and 2002, respectively.



                                       23
<PAGE>


NOTE 13 - Capitalization Activities:

     The Company is currently  offering up to $10,000,000 in "Units",  each Unit
     consisting of a $25,000,  12% five-year  bond ("Bonds") to a limited number
     of Accredited Investors. The Bonds are due and payable upon maturity at the
     end of the five-year  period.  Interest on the Bonds is payable at the rate
     of 12% per annum, and is payable  semiannually.  The Bondholder may require
     Eagle to convert the Bond  (including  any unpaid  interest) into shares of
     the  Company's  common  stock at any time  during  the  first  year but not
     thereafter. Eagle may redeem the Bonds at any time after the first year but
     not before.  The issuance of the Bonds, or any share of the common stock to
     be issued in payment of the Bonds,  has not been  registered or approved by
     the  Securities  and Exchange  Commission  ("SEC") or any state  securities
     commission nor has the SEC or any state securities commission passed on the
     accuracy of the Confidential Private Placement Memorandum under which these
     Bonds  are being  offered.  Furthermore,  the  Bonds  may not be  assigned,
     transferred,  sold, or otherwise  hypothecated.  Any  representation to the
     contrary  is  a  criminal  offense.   The  Confidential  Private  Placement
     Memorandum  does not constitute any offer in any  jurisdiction  in which an
     offer is not  authorized.  The Bonds,  and any share of common  stock to be
     issued in payment of the Bonds, are "restricted securities" as that term is
     defined in Rule 144 of the  Securities  Act of 1933, and may not be sold or
     otherwise   disposed  of  except  in  transactions  that  are  subsequently
     registered  under  applicable  federal  and state  securities  laws,  or in
     transactions  exempt  from such  registration  Eagle  received  $43,750  in
     proceeds  from this private  placement of  securities  in the quarter ended
     February 28, 2003.

NOTE 14 - Risk Factors:

     For the six months ended February 28, 2003 and 2002,  substantially  all of
     the Company's  business  activities  have remained within the United States
     and have been  extended  to the  wireless  infrastructure,  fiber,  cabling
     computer  services  and  broadband  industry.  Approximately,   seventy-six
     percent of the Company's  revenues and receivables have been created solely
     in the state of Texas,  zero percent have been created in the international
     market, and the approximate twenty-four percent remainder have been created
     relatively  evenly over the rest of the nation  during the six months ended
     February 28, 2003.  Whereas  approximately  eighty percent of the Company's
     revenues and  receivables  have been created  solely in the state of Texas,
     zero  percent  have  been  created  in the  international  market,  and the
     approximate  twenty percent  remainder has been created  relatively  evenly
     over the rest of the nation for the three months  ended  February 28, 2002.
     Through  the normal  course of  business,  the Company  generally  does not
     require its customers to post any collateral.

     Although  the  Company  had  previously  concentrated  its  efforts  in the
     wireless  infrastructure  industry and has since  expanded  into the fiber,
     cable and broadband  markets for the six months ended February 28, 2003 and
     2002, it is  management's  belief that the Company's  diversification  into
     other products and services  reduces its credit and economic risk exposures
     in the technology and manufacturing sectors.

NOTE 15 - Foreign Operations:

     Although the Company is based in the United States,  its product is sold on
     the   international   market.   Presently,    international   sales   total
     approximately 0% and 0% at February 28, 2003 and 2002, respectively.


                                       24
<PAGE>


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 six months ending  February 28, 2003 and 2002,  rental  expenses of
     approximately $472,000 and $729,000 respectively, were incurred.

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

     The Company's  wholly owned  subsidiary,  Atlantic  Pacific,  leases office
     space in Houston,  Texas,  with  Houston  Industrial  Partners,  Ltd.  This
     non-cancelable lease expires December 2005. The monthly payments are $6,345
     per month.

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

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

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

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

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

     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.


                                       25
<PAGE>


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

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

     Future obligations under the non-cancelable lease terms are:

                              Period Ending             Amount
                               August 31,
                                  2003              $   980,454
                                  2004                  570,888
                                  2005                  146,021
                                  2006                   36,000
                                                    ------------
                                  Total             $ 1,733,363

     Legal Proceedings

     ClearWorks is a defendant in State Of Florida  Department Of  Environmental
     Protection Vs. Reco Tricote, Inc. And Southeast Tire Recycling, Inc., A/K/A
     ClearWorks.net, Inc.; In The Circuit Court Of The Tenth Judicial Circuit In
     And For Polk County,  Florida.  On December 13, 2000,  Florida EPA sued the
     Company presenting claims for recovery costs and penalties for a waste tire
     processing  facility.  The suit seeks  recovery of costs and penalties in a
     sum in excess of $1,000,000, attorneys' fees and cost of court. The Company
     immediately  filed a Motion to Strike  Portions of the  Complaint/or  for a
     More  Definite  Statement  and a Motion to  Dismiss.  The  Florida  EPA has
     amended  the  petition.   ClearWorks  denies  the  claims  and  intends  to
     vigorously   contest   all  claims  in  this  case  and  to   enforce   its
     indemnification  rights against the principals of Southeast Tire Recycling.
     No discovery has been conducted in this lawsuit.

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

     ClearWorks is a defendant in Kaufman Bros.,  LLP v.  ClearWorks.net,  Inc.,
     and Eagle Wireless,  Inc., (Index No.  600939/01),  which is pending in the
     Supreme Court of the State of New York, County of New York. In this action,
     plaintiff   alleges  that   defendants  have  breached  an  agreement  with
     ClearWorks  to pay  plaintiff  a fee  for  financial  advice  and  services
     allegedly rendered by plaintiff.  The complaint seeks compensatory  damages
     of $4,000,000,  plus attorneys' fees and costs.  This suit is scheduled for
     trial on September 16, 2003.  The  defendants  deny the  allegations of the
     complaint.

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

     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.


                                       26
<PAGE>


     Other Commitments

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

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 six months ended February 28, 2003
                                                   ------------------------------------------
                                                      Income         Shares       Per-Share
                                                    (Numerator)   (Denominator)    Amount
        <S>                                          <C>           <C>             <C>
         Net Loss                                    $(1,810)

         Basic EPS:
          Income available to
          common stockholders                        $(1,810)        76,692        $(0.02)

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

         Diluted EPS:
           Income available to
           common stockholders
             and assumed conversions.               $(1,810)         76,846        $(0.02)
                                                     ========    ==========         ======

                                                   For the three months ended February 28, 2002
                                                   --------------------------------------------
                                                      Income         Shares       Per-Share
                                                    (Numerator)   (Denominator)    Amount
         Net Income                                 $ (5,880)

         Basic EPS:
          Income available to
          common stockholders                         (5,880)         60,707        $(0.10)

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

         Diluted EPS:
           Income available to
           common stockholders
           and assumed conversions.                 $ (5,880)         60,707        $(0.10)
                                                     ========         ======         ======

</TABLE>

     For  the six  months  ended  February  28,  2003  and  2002,  anti-dilutive
     securities existed (see Note 12).


                                       27
<PAGE>


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 February 28, 2003 and 2002,  416,474 and 416,474  warrants
     have been issued to various employees. Of these outstanding warrants, 0 and
     0 were  exercised  for  the  months  ended  November  30,  2002  and  2001,
     respectively. Additionally, 10,350 warrants have expired as of February 28,
     2003.

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

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

NOTE 19 - Retirement Plans:

     During October 1997, the Company initiated a 401(k) plan for its employees,
     which is funded through the  contributions of its  participants.  This plan
     maintains  that  the  Company  will  match  up to 3% of each  participant's
     contribution.  The Company  temporarily  suspended all activity  associated
     with its 401(k) plan in February 2003.

NOTE 20 - Major Customer:

     The Company had gross  revenues of  $7,681,000and  $16,141,000  for the six
     months  ended  February  28,  2003 and 2002,  respectively.  The  following
     parties  individually  represent  a  greater  than  ten  percent  of  these
     revenues.

                              February 28, 2003           February 28, 2002
            Customer         Amount   Percentage       Amount      Percentage
            --------         ------   ----------       ------      ----------
            Customer A       $           0.00%           $            0.00%
            Customer B       $           0.00%           $            0.00%
            Customer C       $           0.00%           $            0.00%

     During the six months ended February 28, 2002, the Company had  outstanding
     accounts  receivable with Enron Corporation and many of its'  subsidiaries.
     The exposure from the bankruptcy totals approximately  $205,000,  which has
     been  accounted  for  through  allowance  of  doubtful  accounts  in  these
     financials.


                                       28
<PAGE>


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.

     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.


                                       29
<PAGE>

<TABLE>
<CAPTION>

                For the six month period ending February 28, 2003

(in thousands)            Eagle       APC      EBS       UCG     Link II    .Net    Contact    DSS       Elim.     Consol.
                        ---------- --------- -------- --------- --------- -------- --------- -------- ---------- ----------
<S>                         <C>       <C>     <C>        <C>      <C>     <C>         <C>      <C>    <C>         <C>
Revenue                     1,394     2,767   1,084      1,734       ---      ---      225      477        ---      7,681
Segment Profit/(Loss)     (1,620)     (108)   (332)      (637)     (106)      ---     (92)      264        ---    (2,751)
Total Assets              166,837     9,587  33,870      1,010    32,091   54,369      480      829   (167,620)   131,453
Capital Expenditures          ---        11   2,810        ---       ---      ---      ---        1        ---      2,822
Dep. And Amort.                78       112     289         62       ---      ---       53       19        ---        618

                For the six month period ending February 28, 2002

(in thousands)            Eagle      APC       EBS       UCG     Link II    .Net    Contact    DSS       Elim.     Consol.
                        ---------- --------- -------- --------- --------- -------- --------- -------- ---------- ----------
Revenue                       254     3,940     987     10,758        24      ---       71      107        ---     16,141
Segment Profit/(Loss)     (4,044)     (168)   (310)      (414)   (1,204)    (105)       46       45        ---    (6,154)
Total Assets              167,222    10,257  26,537      3,161    42,920   64,941      659      412   (152,561)   163,548
Capital Expenditures          147        41   8,654         26       ---      ---      ---      ---        ---      8,868
Dep. And Amort.             1,651        98     222          8       615       45      ---      ---        ---      2,639

</TABLE>

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

Note 22 - Subsequent Events.

     None.

Item 2.  Management's Discussion and Analysis.

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

Overview

     For the quarter and six month  period  ended  February  28,  2003,  Eagle's
     business  operations  reflected Eagle's business objective of moving toward
     profitability  through  further  expansion into the broadband  products and
     services that generate  recurring  revenues  while  migration away from the
     lower gross  margin  product  fulfillment  line of  business.  In addition,
     during the first six months of fiscal 2003, the Company conducted extensive
     cost  reduction  activities.  We  believe  that the  effects  of these cost
     reduction  measures  will  significantly  reduce  our fiscal  2003  ongoing
     expenses as evidenced by a $4,632,000 or 46% decline in operating  expenses
     in the first six months ended  February  28, 2003,  as compared to the same
     six month period in 2002. The Company's  consolidated  operations generated
     revenues of $3,063,000 and $7,681,000 while achieving  corresponding  gross
     profits of $1,719,000 or 56% and  $3,711,000 or 48%;  respectively  for the
     quarter and  six-month  period  ended  February  28,  2003.  The decline in
     revenues in the second fiscal quarter and six-month  period ending February
     28,2003 is primarily  attributable to the discontinuance of direct sales of
     low-margin  computer products in the Company's  subsidiary United Computing
     Group,  Inc.  consistent  with  their  previously   announced  strategy  of
     concentrating UCG's  going-forward  efforts as a Service Provider including
     but not  limited to  configuration  solutions,  network  services,  network
     application services, repair and warranty services and professional support
     services including Client Help Desk, Deskside Support, and Professional and
     Managed   Services  versus  its  historical   emphasis  on  direct  product
     fulfillment.



                                       30
<PAGE>


     During the quarter ended February 28, 2003, we continued the implementation
     of cost reductions in various operating  segments that were not expected to
     provide significant long-term revenues and profitability.  These reductions
     will impact the expense categories of salaries and benefits, rents, travel,
     research and development and other support expenses on a run-rate basis. We
     anticipate that  additional  cost reduction  efforts will continue into the
     third  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 six month period ended February 28, 2003, we began  shipments of
     our set-top box product line for  installation  in  hospitality  properties
     under our ongoing  relationship  with  General  Dynamics.  We expect  these
     shipments to continue throughout the remaining 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. Manufacturing of
     the Eagle  Wireless  product line of wireless  infrastructure  products was
     licensed to a third part company during this reporting period.

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

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

     ClearWorks Communications, Inc.
     ClearWorks  Communications,  Inc.,  provides  Bundled  Digital  Services to
     business and residential customers,  primarily in the Texas market. Revenue
     is derived from fees charged for the delivery of Bundled Digital  Services,
     which includes telephone, long distance,  internet, security monitoring and
     cable services. This subsidiary recognizes revenue and the related costs at
     the time the services are rendered.


                                       31
<PAGE>


     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.


                                       32
<PAGE>


Receivables

     For the six months  ended  February 28, 2003,  Eagle  accounts  receivables
     decreased to $4,167,000 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 February 28, 2003,
     Eagle's  inventory  total of $6,523,000 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

For the Three Months and Six Months Ended February 28, 2003 and 2002

     Net  Sales.  For the  three  months  ended  February  28,  2003,  net sales
     decreased to  $3,063,000  from  $7,380,000  as compared to the three months
     ended  February 28, 2002.  For the six months ended  February 28, 2003, net
     sales  decreased  to  $7,681,000  from  $16,141,000  as compared to the six
     months ended February 28, 2002. The corresponding  declines in revenues for
     these periods is primarily  attributable to a decrease in sales of computer
     products  in  the  Company's   subsidiary   United  Computing  Group,  Inc.
     consistent with their  previously  announced  strategy of  concentrating on
     service  offerings,  a  decrease  in  sales  of  structured  wiring  in the
     Company's Atlantic Pacific Communications subsidiary with partial offset by
     continued increase in the Company's broadband services.

     Cost Of Goods Sold. For the three months ended  February 28, 2003,  cost of
     goods sold decreased to $1,344,000 from $5,065,000 for the comparable three
     months ended February 28, 2002. For the six months ended February 28, 2003,
     cost of goods sold  decreased to $3,970,000  from  $12,126,000  for the six
     months ended February 28, 2002.  These  declines were primarily  associated
     with the decrease in lower gross margin  product  fulfillment  sales.  As a
     result of the  Company's  shift in  strategy  away from such  lower  margin
     product fulfillment, the Company's gross profit percentage increased to 56%
     and 48%,  respectively for the three and six months ended February 28, 2003
     from 31% and 25%,  respectively  during  the  three  and six  months  ended
     February 28, 2002.

     Operating Expenses. For the three months ended February 28, 2003, operating
     expenses  decreased to $2,711,000  from $4,887,000 as compared to the three
     months ended February 28, 2002. For the six months ended February 28, 2003,
     operating  expenses decreased to $5,538,000 from $10,170,000 as compared to
     the six months  ended  February  28,  2002.  The  primary  portions  of the
     increase are discussed below:


                                       33
<PAGE>


     An  $837,000  and  $1,486,000  decrease  in  salaries,  as a result  of the
     personnel  reductions  completed  as a  component  of  the  extensive  cost
     reduction  activities  for the three and six months ended February 28, 2003
     and 2002, respectively.

     An  $89,000  and  $207,000  decrease  in  advertising  and  promotion,  due
     primarily  to  decreases  in  product  introductions  for the three and six
     months ended February 28, 2003 and 2002, respectively.

     A $1,000,000 and $2,094,000  decrease in depreciation  and amortization for
     the three and six months ended  February  28, 2003 and 2002,  respectively,
     due to the non-cash  impairment  charge  against FCC licenses and equipment
     taken in the fourth fiscal quarter of fiscal 2002.

     A $185,000 and $640,000  decrease in other  support costs for the three and
     six months ended February 28, 2003 and 2002, respectively, due to decreases
     in contract labor, interest, professional fees, rents and bad debt costs.

     A $65,000 and $205,000  decrease in research and  development  expenses for
     the three and six months ended  February  28, 2003 and 2002,  respectively,
     due to the  timing  of  previously  released  products  and  projects  with
     capitalization activities.

     Net Earnings. For the three and six months ended February 28, 2003, Eagle's
     net loss was $979,000 and $1,810,000,  respectively, compared to a net loss
     of $2,509,000  and  $5,880,000  for the three and six months ended February
     28,2002.

     Changes  In Cash  Flow.  Eagle's  operating  activities  used  net  cash of
     $1,201,000 in the six months ended  February 28, 2003,  compared to $89,000
     of cash provided in the six months ended February 28, 2002. The increase in
     net cash used by  operating  activities  was  primarily  attributable  to a
     significant  decline in net loss,  an increase in  inventory  and  accounts
     payable,  offset by reductions in account receivable,  and depreciation and
     amortization.  Eagle's investing  activities used net cash of $3,005,000 in
     the six months ended February 28, 2003,  compared to $11,359,000 in the six
     months ended February 28, 2002. The decrease was due primarily attributable
     to decreases of purchase of equipment for building out the bundled  digital
     services  infrastructure.  Eagle's  financing  activities  provided cash of
     $2,438,000,  in the six months ended  February  28, 2003,  compared to cash
     used of $1,382,000 in the six months ended  February 28, 2002. The increase
     in  cash  flows  from  financing   activities  at  February  28,  2003,  is
     attributable to cash raised from convertible  debenture funding  agreements
     with an investment bank for general  working capital  purposes and proceeds
     from borrowings  against  short-term  notes as compared to a pay off of the
     Atlantic  Pacific's line of credit,  pay down on United  Computing  Group's
     line of credit and  continued  repurchase  of shares in the open market for
     retirement in the quarter ended February 28, 2002.

Liquidity And Capital Resources.

     Current assets for the period ended February 28, 2003, totaled  $13,225,000
     (includes  cash  and  cash   equivalents  of  $1,653,000)  as  compared  to
     $14,866,000  (including cash and cash  equivalents of $3,421,000)  reported
     for the year ended  August 31,  2002.  During the first  fiscal  quarter of
     2003, Eagle entered into a debt funding arrangement with an investment bank
     to provide up to $3,000,000 in working capital.  This debt is unsecured and
     bears  interest  at 5% per  annum  maturing  in one year  from the  initial
     funding and is fully repayable in stock at Eagle's  option.  Eagle received
     $1,500,000  in cash during the first  quarter  ended  November 30, 2002 and
     $725,000 in the second  quarter  ended  February  28,  2003,  against  this
     funding  arrangement.  Additionally,  Eagle  received  $300,000 in proceeds
     against a short-term note in February 2003. Lastly,  Eagle received $43,750
     in proceeds from a private placement of securities structured as a Q-Series
     Five-year  Bond  discussed  in detail in Note 13 herein.  Eagle  engaged an
     investment-banking  firm to provide a  $20,000,000  equity  line of credit.
     This line of credit  can be  activated  upon  Eagle  filing a  registration
     statement  that  complies with the terms and  conditions of the  agreement.
     Additionally,  Eagle  has a  commitment  to fund up to  $2,000,000  for its
     operations  through  a  corporation  that  provides  long-term  funding  of
     security  contracts.  The funding is subject to  verification  and audit of
     Eagle's 6,000 security-monitoring contracts.


                                       34
<PAGE>


     Working capital for the period ended February 28, 2003,  totaled $2,359,000
     as compared to $3,535,000 reported for the year ended August 31,2003. Eagle
     believes  that its working  capital of  $2,359,000 as of February 28, 2003,
     plus additional  funds  anticipated  from  commitments in various stages of
     negotiations  as of the date of this report  should be  sufficient  to fund
     operations  through  the end of August 31,  2003.  Historically,  Eagle has
     financed its operations through the sale of debt and equity securities.  As
     of  February  28,  2002,  Eagle  has a  limited  amount  of cash  and  cash
     equivalents.  As such,  if its  current  cash is  insufficient  to fund its
     operating  and  long-term   capital  needs,   Eagle  will  rely  on  future
     bests-efforts  financing  for  capital.  The  Company  will  need to  raise
     additional  capital to fund ongoing operations and long-term capital needs.
     The Company is currently in final negotiations with three different sources
     of long term  financing  that could provide a minimum of  $9,000,000  and a
     maximum of $20,000,000  if successful.  If the company is not successful in
     raising  additional  capital,  it may have to  curtail  or  suspend or sell
     certain  operations.  As more fully  described  in Note 7 to the  financial
     statements,  Eagle's  subsidiaries  Atlantic  Pacific and United  Computing
     Group maintain an aggregate of up to $4,000,000 in credit facilities with a
     bank to provide  working  capital  based on eligible  accounts  receivable.
     Refer to Note 7 for  descriptions  of lines of credit  and other  immediate
     forms of funding the Company has available

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate and Equity Market Risks

     The Company is exposed both to market risk from  changes in interest  rates
     on funded debt and changes in equity values on common stock  investments it
     holds in publicly  traded  companies.  The Company also has  exposure  that
     relates to the Company's  revolving credit  facility.  Borrowings under the
     credit  facility  bear  interest at variable  rates based on the bank prime
     rate. The extent of this risk with respect to interest rates on funded debt
     is  not  quantifiable  or  predictable  due to the  variability  of  future
     interest  rates;  however,  the Company  does not believe a change in these
     rates  would  have a material  adverse  effect on the  Company's  operating
     results, financial condition, and cash flows.

     The Company's cash and cash  equivalents are invested in mortgage and asset
     backed  securities,  mutual funds,  money market accounts and common stock.
     Accordingly,  the  Company is subject  to both  changes in market  interest
     rates and the equity  market  fluctuations  and risk.  There is an inherent
     roll over risk on these  funds as they accrue  interest  at current  market
     rates.  The extent of this risk is not  quantifiable  or predictable due to
     the variability of future  interest  rates.  The Company does not believe a
     change in these rates would have a material adverse effect on the Company's
     operating  results,  financial  condition,  and cash flows with  respect to
     invested  funds in mortgage and asset backed  securities,  mutual funds and
     money market accounts, however; the company does have both significant cash
     and  liquidity  risks   associated   with  its  common  stock   investments
     aggregating $317,500 in market value as of February 28, 2003.

Credit Risks

     The  Company   monitors  its  exposure  for  credit  losses  and  maintains
     allowances for  anticipated  losses,  but does not require  collateral from
     these  parties.  The company did not have any  customers  that  represented
     greater  than 10% of its revenues  during the first fiscal  quarter of 2003
     and, as such,  does not believe  that the credit risk posed by any specific
     customer would have a material adverse affect on its financial condition.


                                       35
<PAGE>


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.

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

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



                                       36
<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: April 18, 2003


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



                                       37
<PAGE>



                                 CERTIFICATIONS

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

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

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

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

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

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

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

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

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

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

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

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

Date: April 18, 2003


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


                                       38