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

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

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

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

                        Commission File Number: 000-23163


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

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

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

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


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

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

As of January 9, 2004, there were 189,044,593 shares of common stock
outstanding.


<PAGE>


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

                                Table of Contents
<TABLE>
<CAPTION>


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

         Item 1.  Consolidated Financial Statements (Unaudited)

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

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

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

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

                  Notes to the Consolidated Financial Statements                                   7

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

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                      30

         Item 4.  Controls and Procedures                                                         31

Part 2 - Other Information

         Item 1.  Legal Proceedings                                                               31

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

         Item 3.  Defaults Upon Senior Securities                                                 31

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

         Item 5.  Other Information                                                               31

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

Signatures                                                                                        33
</TABLE>


<PAGE>


                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
<TABLE>
<CAPTION>

                                     ASSETS
                                                                           November 30,       August 31,
                                                                               2003             2003
                                                                               ----             ----
                                                                          (Unaudited)         (Audited)
Current Assets:
<S>                                                                     <C>              <C>
     Cash and Cash Equivalents                                          $        7,550   $         2,538
     Accounts Receivable, net                                                    2,402             1,704
     Inventories                                                                 3,855             3,199
     Prepaid Expenses                                                              651               668
                                                                         -------------   ---------------
         Total Current Assets                                                   14,458             8,109

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

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

         Total Other Assets                                                     82,176            82,164
                                                                         -------------    --------------

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

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

         Total Current Liabilities                                              17,800            19,030

                                Commitments and Contingent Liabilities

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

         Total Shareholders' Equity                                            109,107           101,976
                                                                         -------------    --------------

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

See accompanying notes to consolidated financial statements.
</TABLE>

                                       3
<PAGE>
                     EAGLE BROADBAND, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)

<TABLE>
<CAPTION>


                                                          For the Three Months ended November 30,
                                                                     (Unaudited)
                                                           ----------------    ----------------
                                                                2003                2002
                                                           ----------------    ----------------
<S>                                                                <C>              <C>
Net Sales:
   Structured wiring                                               $ 392            $  1,560
   Broadband services                                              1,564                 674
   Products                                                          361               2,044
   Other                                                              80                 340
                                                           ----------------    ----------------
Total Sales                                                        2,397               4,618
                                                           ----------------    ----------------

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

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

Loss from Operations                                             (1,737)               (672)

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

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

Other Comprehensive Loss:

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

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

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


See accompanying notes to consolidated financial statements.
</TABLE>

                                       4
<PAGE>

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


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

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

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

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

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

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

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


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

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

Syndication Costs                                                       ---                             ---

Treasury Stock                                                          ---                             ---

Unrealized Holding Loss                                                 ---                             309                309

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


See accompanying notes to consolidated financial statements.

</TABLE>


                                       5
<PAGE>

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


                                                                 For the Three Months ended November 30,

                                                                             2003        2002
                                                                             ----        ----
                                                                                (Unaudited)
<S>                                                                         <C>      <C>
Cash Flows From Operating Activities
Net Loss                                                                    $(8,461) $   (831)

Adjustments To Reconcile Net Loss to Net Cash
Used By Operating Activities:
   Interest for Beneficial Conversion Value                                   6,912        91
   Depreciation and Amortization                                                614       266
   Stock Issued for Services Rendered                                         2,304        54
    (Increase)/Decrease in Accounts Receivable                                 (390)      632
   (Increase)/Decrease in Inventories                                          (656)     (428)
   (Increase)/Decrease in Prepaid Expenses                                       17       (13)
   Increase/(Decrease) in Accounts Payable                                      279      (345)
   Increase/(Decrease) in Accrued Expenses                                   (1,109)     (146)
                                                                             -------     -----
     Total Adjustment                                                         7,971       111
                                                                             -------     ----

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

Cash Flows From Investing Activities:
   (Purchase)/Disposal of Property and Equipment                                (94)   (1,471)
    (Increase)/Decrease in Deferred Costs                                       ---       (12)
    (Increase)/Decrease in Other Assets                                         (12)      ---
                                                                             -------   -------
Net Cash Used by Investing Activities                                          (106)   (1,483)
                                                                             -------   -------

Cash Flows From Financing Activities:
   Increase/(Decrease) in Notes Payable & Long-Term Debt                      5,608     1,577

Net Cash Provided By Financing Activities                                     5,608     1,577
                                                                             ------     -----

Net Increase/(Decrease) in Cash                                               5,012      (626)
                                                                             ------    ------

Cash At The Beginning of Period                                               2,538     3,421
                                                                             ------    ------
Cash At the End Of Period                                                    $7,550    $2,795
                                                                             ======    ======

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


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


See accompanying notes to consolidated financial statements.
</TABLE>

                                       6
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003


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

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

A) Consolidation

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

B)       Cash and Cash Equivalents

         The Company has $7,550,000 and $2,538,000 invested in interest bearing
         accounts and marketable securities (Note 9) at November 30, 2003, and
         August 31, 2003, 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:

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

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

                                       7
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003


E)       Revenue Recognition

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

         Eagle Wireless International, Inc.
         Eagle designs, manufactures and markets transmitters, receivers,
         controllers and software, along with other equipment used in commercial
         and personal communication systems, radio and telephone systems.
         Revenues from these products are recognized when the product is
         shipped.

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

         Eagle Broadband, Inc.
         Eagle Broadband, 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.

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

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

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

         Eagle Messaging Services - dba 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.

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

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

                                       8
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

F)       Research and Development Costs

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

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

G)       Income Taxes

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

H)       Net Earnings Per Common Share

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


                                                                    November 30,      August 31,
                                                                       2003            2003
                                                                    -----------     -----------
<S>                                                                    <C>              <C>
                  Weighted Average Number of Common
                    Shares Outstanding Including

                  Primary Common Stock Equivalents                     159,696          95,465
                  Fully Dilutive Common Stock Equivalents              159,696          95,465
</TABLE>


I)       Impairment of Long-Lived Assets and Goodwill

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

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

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

                                       9
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

         recorded value would be reduced to fair market value. In determining
         the amount of the charge to be recorded, the following methods would be
         utilized to determine fair market value:

               1) Quoted market prices in active markets.
               2) Estimate based on prices of similar assets
               3) Estimate based on valuation techniques

         As of November 30, 2003, no impairment existed.

J)       Intangible Assets

         Goodwill represents the excess of the cost of companies acquired over
         the fair value of their net assets at the dates of acquisition and were
         being amortized using the straight-line method over twenty (20) years
         for Atlantic Pacific Communications, Inc., and twenty-five (25) years
         for Bundled Digital Services through June 30, 2001. Other intangible
         assets consist of patents and licenses, which are being amortized using
         the straight-line method over their estimated useful life of ten (10)
         years and twenty (20) years, respectively.

         Goodwill and other intangible assets are carried at cost less
         accumulated amortization. Intangible assets were amortized on a
         straight-line basis over the economic lives of the respective assets,
         generally ten to twenty-five years. Prior to July 1, 2001, goodwill and
         certain purchased intangible assets (i.e., licenses) were amortized
         over 10 to 25 years. The Company's adoption of SFAS 142 eliminated the
         requirement to amortize goodwill and licenses subsequent to the fiscal
         year ending August 31, 2001. Under the provisions of SFAS 142, the
         Company is required to periodically assess the carrying value of
         goodwill and licenses associated with each of its distinct business
         units that comprise its business segments of the Company to determine
         if impairment in value has occurred. Impairment tests completed as of
         August 31, 2002 and August 31, 2001 concluded that the carrying amount
         of goodwill and licenses for each acquired business unit did not exceed
         its net realizable value based on the Company's estimate of expected
         future cash flows to be generated by its business units, except as
         described above in Note 1, I. The Company updated its assessment as of
         August 31, 2003 and concluded that based on a valuation model
         incorporating expected future cash flows in consideration of historical
         cash flows and results to date, no impairment charge was necessary.

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

         Eagle utilized an independent third party appraiser to assess the fair
         value of the intangible assets as of August 31, 2003. This is the same
         appraiser who Eagle hired to issue a fairness opinion in the ClearWorks
         purchase in 2001 and who has consulted for Eagle in presentations made
         in various subsequent litigation proceedings to defend the ClearWorks
         purchase transaction. This appraiser still maintains that the goodwill
         valuation remains at an amount greater than the current carrying value.

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

K)       Advertising Costs

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

                                       10
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

L)       Deferred Syndication Costs

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

M)       Use of Estimates

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

N)       Marketable Securities

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

O)       Other Comprehensive Income

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

P)       Beneficial Conversion Values

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

Q)       Reclassification

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

R)       Recent Pronouncements

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

                                       11
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

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

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

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

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

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

       Accounts receivable consist of the following, in thousands:


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

                                       12
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

         Components of property, plant & equipment are as follows, in thousands:
<TABLE>
<CAPTION>


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

         Components of intangible assets are as follows, in thousands:


                                                                           November 30,     August 31,
                                                                              2003            2003
                                                                           -----------      ------------
                  Goodwill                                            $        80,551  $         80,551
                  Licenses & Permits                                            5,330             5,330
                                                                           -----------      ------------
                      Total Intangible Assets                                  85,881            85,881
                         Less: Accumulated Amortization                       (4,278)           (4,278)
                                                                           -----------      ------------
                      Net Intangible Assets                           $        81,603  $         81,603
                                                                           ===========      ============
</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 in goodwill. The allocation of the
         purchase price is based on the fair value of the assets acquired based
         on management's estimates and existing contracts. At November 30, 2002,
         the Company had an accrual for $921,000 for the portion of the purchase
         that represents the difference between purchase price and market value
         of the Company's common stock on the date of purchase.

NOTE 5 - Notes Payable:
         --------------
<TABLE>
<CAPTION>

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

                                     Annual
                                                        Interest                      November 30,  August 31,
                                                          Rate           Due Date         2003          2003
                                                    ---------------- ---------------  -----------  ------------
<S>                                                     <C>             <C>          <C>             <C>
                 Vehicles                                Various         Various     $            4  $         4
                 6% Convertible Debenture (Note 9)       6.0%            Demand                 ---        1,200
                 Tail Wind Convertible Debenture         2.0%            Demand               1,595        1,595
                 Notes Payable - Investor Group          10.0%           October 2003           ---          900
                 Notes Payable - Q Series Bonds          12.0%           Various              5,275        1,363
                 Other                                   Various         Various                313          717

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

                                       13
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003


NOTE 6 - Line of Credit:
         --------------

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

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

NOTE 7 - Convertible Debentures:
         -----------------------

         During October 2002, the Company entered into a $3,000,000 convertible
         debenture agreement with Cornell Capital Partners, LP (CCP). During the
         quarter ended November 30, 2003 the Company repaid 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. Link Two entered
         an agreement with The Tail Wind Fund Ltd., under which Tail Wind
         purchased from Link Two a 2% convertible note in the initial amount of
         $5,000,000. As a result of the acquisition, Eagle the parent of Link
         Two, has guaranteed the Link Two notes issued to Tail Wind and allowed
         Tail Wind to convert the above mentioned debt into Eagle common stock
         and warrants at various rates. At August 31, 2002, Eagle and Tail Wind
         were renegotiating the terms of this note. At November 30, 2003, the
         Company owes Tail Wind $1,595,000 plus accrued interest. The Company is
         currently negotiating the settlement of this debt and has recorded the
         entire debt as a current note payable.

NOTE 8 - 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
         November 30, 2003, all of the Company's marketable equity securities
         are classified as available-for-sale; they were acquired with the
         intent to dispose of them within the next year.

         Other marketable securities include 1,095,000 shares of common stock of
         Burst.com, 65,598,000 shares of Celerity Systems common stock and
         $350,000 Celerity Systems Bonds. These common stock and bond
         investments have an aggregate cost basis of $1,075,000 and an aggregate
         fair market value of $1,876,850 and are included in the cash and cash
         equivalents category and are held for resale as of November 30, 2003.

NOTE 9 - Income Taxes:
         -------------

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

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

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

                                       14
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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


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


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

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

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

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


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

NOTE 10 - Issuance of Common Stock:
          ------------------------

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


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


NOTE 11 - Preferred Stock, Stock Options and Warrants:
          -------------------------------------------

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

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

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

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


                                       15
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       16
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

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

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

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

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

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

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

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


                                       17
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003


          The warrants outstanding are segregated into two categories (issued
          and outstanding and exercisable):
<TABLE>
<CAPTION>


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

     *Denotes warrants which would have an anti-dilutive effect if currently
     used to calculate earnings per share for the period ended November 30, 2003
     and 2002.
     **Denotes 12,700,000 warrants for shares that have been excluded from this
     table that are subject to issuance to certain employees under incentive
     clauses of employment contracts expiring 5 years from the date of issuance.
     The warrants vest based on accumulated revenue targets ranging from $50
     million to $500 million and on market performance of Eagle's common stock
     at market capitalization between $450 million and $1 billion. The warrants
     are to purchase fully paid and non-assessable shares of the common stock,
     par value $0.001 per share at purchase prices ranging from $0.41 to $1.50
     per share. The Company has determined that the probability of the
     achievement of such targets is remote as of the date of the issuance of the
     Company's financial statements and thus has not included them in the
     outstanding warrant table above. The shares of common stock underlying
     these warrants were not registered for resale under the Securities Act of
     1933. As of November 30, 2003, none of these warrants have been exercised.

NOTE 12 - Capitalization Activities:
          --------------------------

         The Company is currently offering up to $10,000,000 in "Units," each
         Unit consisting of a $25,000, 12% five-year Q-series bond ("Bonds") to
         a limited number of Accredited Investors. The Bonds are due and payable
         upon maturity at the end of the five-year period. Interest on the Bonds
         is payable at the rate of 12% per annum, and is payable semiannually.
         The Bondholder may require Eagle to convert the Bond (including any
         unpaid interest) into shares of the Company's common stock at any time
         during the first year but not thereafter. Eagle may redeem the Bonds at
         any time after the first year but not before. The issuance of the
         Bonds, or any share of the common stock to be issued in payment of the
         Bonds, has not been registered or approved by the Securities and
         Exchange Commission ("SEC") or any state securities commission nor has
         the SEC or any state securities commission passed on the accuracy of
         the Confidential Private Placement Memorandum under which these Bonds
         are being offered. Furthermore, the Bonds may not be assigned,
         transferred, sold, or otherwise hypothecated. Any representation to the
         contrary is a criminal offense. The Confidential Private Placement
         Memorandum does not constitute any offer in any jurisdiction in which
         an offer is not authorized. The Bonds, and any share of common stock to
         be issued in payment of the Bonds, are "restricted securities" as that
         term is defined in Rule 144 of the Securities Act of 1933, and may not
         be sold or otherwise disposed of except in transactions that are
         subsequently registered under applicable federal and state securities
         laws, or in transactions exempt from such registration During the three
         month period ended November 30, 2003, the Company received proceeds of
         $3,912,000 from the issuance of these bonds.

NOTE 13 - Risk Factors:
          -------------

         For the three months ended November 30, 2003 and 2002, substantially
         all of the Company's business activities have remained within the
         United States and have been extended to the wireless infrastructure,

                                       18
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

NOTE 14 - Foreign Operations:
          -------------------

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

NOTE 15 - Commitments and Contingent Liabilities:
          ---------------------------------------

         Leases

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       19
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

         Legal Proceedings

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

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

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

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

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

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

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

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

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

                                       20
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

<TABLE>
<CAPTION>

                                                      For the three months ended November 30, 2003
                                                      --------------------------------------------
                                                      Income            Shares           Per-Share
                                                    (Numerator)      (Denominator)        Amount
                                                    -----------      -------------        -------
<S>                                                  <C>               <C>                <C>
         Net Loss                                     $(8,461)

         Basic EPS:
          Income available to
          common stockholders                        $(8,461)          159,696            $(0.05)

         Effect of Dilutive Securities
           Warrants                                     ---                ---                  ---
                                                     --------         ----------          -----------
         Diluted EPS:
           Income available to
           common stockholders
             and assumed conversions.               $(8,461)           159,696            $(0.05)
                                                     ========        ==========             ======
</TABLE>
<TABLE>
<CAPTION>


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

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

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

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

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

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

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

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

                                       21
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

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

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

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

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

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

The Company has adopted the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". At August 31, 2001, the
Company's seven business units have separate management teams and
infrastructures that offer different products and services. The business units
have been aggregated into 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.

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

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

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

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

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

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

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

                  For the three months ending November 30, 2003

                (in thousands)           APC/HSI     EBS/DSS    UCG       Eagle     Other      Elim.     Consol.
                                       ----------- ---------- --------- ---------- ---------- ---------- ----------
<S>                                          <C>      <C>          <C>         <C>       <C>  <C>          <C>
                Revenue                      392      1,564        274         87        81        ---      2,397
                Segment Loss                (220)       331       (68)    (8,173)      (23)        ---    (8,152)
                Total Assets               1,126     30,156        123    175,253    57,704   (137,455)   126,907
                Capital Expenditures         ---        128        ---         25       ---                   153
                Depreciation                  39        383         15        126        51        ---        614
</TABLE>

                                       22
<PAGE>
                     Eagle Broadband, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements
                               November 30, 2003

<TABLE>
<CAPTION>

                  For the three months ending November 30, 2002

                (in thousands)           APC/HSI     EBS/DSS    UCG       Eagle     Other      Elim.     Consol.
                                       ----------- ---------- --------- ---------- ---------- ---------- ----------
<S>                                          <C>      <C>          <C>         <C>       <C>  <C>          <C>
                Revenue                    1,652        674      1,395        768       129        ---      4,618
                Segment Loss                 320      (102)      (344)      (589)     (103)        ---      (818)
                Total Assets               5,137     30,381        431    157,155    58,006   (120,468)   130,642
                Capital Expenditures           8      1,419          2         42       ---        ---      1,471
                Dep. and Amort.               56        156         31          3        20        ---        266
</TABLE>

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

Note 21 - Supplemental Non-Cash Disclosures:
          ----------------------------------

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

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

                                       23
<PAGE>




Item 2.  Management's Discussion and Analysis.

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

Results of Operations

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

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

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

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

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

         For the three month period ended November 30, 2003, Eagle's business
operations reflected further investment and expansion into higher margin
business segments including Eagle's broadband Bundled Digital Services
(Internet, video, voice and security) for residential and business customers
while shifting focus away from low-margin commodity computer products and
services. The Company's consolidated operations generated revenues of $2,397,000
with a corresponding gross profit of $1,102,000 for the three-month period ended
November 30, 2003. The significant decline in revenues in the first fiscal
quarter of 2004 as compared to the corresponding period of 2003 was primarily
attributable to the discontinuance of direct sales of low-margin commodity
computer products and a decline in structured wiring sales as the Company
continues its previously announced strategy to shift its focus to higher-margin
product sales (i.e., set-top boxes, Orb'Phone Exchange, etc) and recurring
services sales (i.e., broadband services, network monitoring / security, IT
managed services, etc.).

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

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

                                       24
<PAGE>

The follow table sets forth summarized sales information for the three months
ended November 30, 2003 and 2002.

<TABLE>
<CAPTION>

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

($ in thousands)                            2003    % of Total   2,002    % of Total  $ Change   % Change
                                            ----    ----------   -----    ----------  --------   --------
<S>                                             <C>        <C>      <C>          <C>     <C>           <C>
Structured Wiring                               392        16%      1,560        34%     (1,168)      -75%
Broadband Services                            1,564        65%        674        15%        890       132%
Products                                        361        15%      2,044        44%     (1,683)      -82%
Other                                            80         3%        340         7%       (260)      -76%
                                         ------------------------------------------------------------------
Total Sales                                   2,397       100%      4,618       100%     (2,221)      -48%
                                         ------------------------------------------------------------------
</TABLE>

Net Sales. For the three-month period ended November 30, 2003, net sales
declined to $2,397,000 from $4,618,000 during the three-month period ended
November 30, 2002. The overall decrease of 48% was primarily attributable to the
discontinuance of direct sales of low-margin commodity computer products and a
decline in structured wiring sales as the Company continues its previously
announced strategy to shift its focus to higher-margin product sales (i.e.,
set-top boxes, Orb'Phone Exchange, etc) and recurring services sales (i.e.,
broadband services, network monitoring / security, IT managed services, etc.).
The $890,000 increase in sales of the Company's broadband services was primarily
attributable to a contract valued at $1,082,767 executed by the Company's
security-monitoring subsidiary, DSS Security, Inc.; against which the Company
realized sales of $866,213 during the quarter.

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

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

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

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

         Cost Of Goods Sold. For the three-month period ended November 30, 2003,
cost of goods sold decreased by 51% to $1,295,000 from $2,626,000 during the
three-month period ended November 30, 2002. The decrease was primarily
attributable to the discontinuance of direct sales of low-margin commodity
computer products referenced above. The Company's overall gross profit
percentage was 46% and 43% for the three-month periods ended November 30, 2003
and November 30, 2002. This increase is primarily attributable to a shift away
from lower margin commodity products and services to higher margin BDS and
security-monitoring sales; partially offset by an increase in depreciation
expenses associated with the build-out of the company's BDS infrastructure.

                                       25
<PAGE>
<TABLE>
<CAPTION>

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

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

($ in thousands)                            2003       2002     $ Change   % Change
                                            ----       ----     --------   --------
<S>                                             <C>      <C>         <C>         <C>
Salaries and Related Costs                      959      1,508       (549)      -36%
Advertising and Promotion                        18         37        (19)      -51%
Depreciation and Amortization                   319        153        166       108%
Other Support Costs                           1,424        934        490        52%
Research and Development                        119         32         87       272%
                                         --------------------------------------------
Total Operating Expenses                      2,839      2,664        175         7%
                                         --------------------------------------------
</TABLE>

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


Other Support Costs:
--------------------
                                                    Three Months Ended
                                                    November 30,
-------------------------------------------------------------------------------------
($ in thousands)                            2003       2002     $ Change   % Change
                                            ----       ----     --------   --------

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

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

o             A $549,000 decrease in salaries and related costs, as a result of
              overall staffing reductions across all business units; the
              majority of which occurred in discontinued and restructured
              operations.

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

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

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

                                       26
<PAGE>

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

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

         Changes in Cash Flow. Eagle's operating activities used net cash of
$490,000 in the three-month period ended November 30, 2003, compared to use of
net cash of $720,000 in the three-month period ended November 30, 2002. The
decrease in net cash used by operating activities was primarily attributable to
an increase in the Company's net operating loss, net of non-cash charges, offset
by stock issued for services rendered combined with cash used in retiring
numerous accrued liabilities for legal and restructuring costs and cash used in
working capital increases for inventory and accounts receivable. Eagle's
investing activities used net cash of $105,000 in the three-month period ended
November 30, 2003, compared to $1,483,000 in the three-month period ended
November 30, 2002. The decrease was due primarily to a significant decline in
investment activities and purchase of equipment associated with the prior years
build out of Eagle's network and infrastructure for the delivery of broadband
services. Eagle's financing activities provided cash of $5,608,000, in the three
month period ended November 30, 2003, compared to $1,577,000 of cash provided in
the three month ended November 30, 2002. The increase is attributable to an
increase in convertible notes aggregating a net of $5,608,000 in conjunction
with the Company's financing activities in the first fiscal quarter of 2004.

         Liquidity and Capital Resources. Current assets for the three-month
period ended November 30, 2003 totaled $14,458,000 (includes cash and cash
equivalents of $7,550,000) as compared to $8,109,000 reported for the year ended
August 31, 2003. During the first fiscal quarter of 2004, Eagle received net
proceeds of $5,993,000 from the sale of convertible bonds and notes and through
the sale of marketable securities held as short term investments and has retired
or reduced certain of its notes payable and accrued expenses including numerous
lawsuits; thereby reducing the Company's current and contingent liabilities.

         The Company anticipates that it will incur significantly less capital
expenditures for broadband fiber infrastructure on a going forward basis as a
result of an emphasis of the sale of its BDS services to municipalities, real
estate developers, hotels, multi-tenant units and service providers that own or
will build out their own fiber networks versus the Company's history of building
out and owning these networks. The Company's current cash and cash equivalents,
including net proceeds received during the first fiscal quarter, will be
sufficient to fund operations for the next twelve months.

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

Contractual Obligations

                           Contractual                Payments due by period
                           obligations
                                                        Less
                                                       than 1     1-3     3-5      More than
                                              Total     year     years   years     5 years
                          -------------------------------------------------------------------
<S>                                            <C>       <C>     <C>      <C>         <C>
                          Long-Term Debt       7,187     7,187     ---     ---         ---
                          Obligations

                          Operating Lease        695       521     174     ---         ---
                          Obligations

                                        Total  7,882     7,708     174     ---         ---
</TABLE>


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

CRITICAL ACCOUNTING POLICIES

         The Company has identified the following policies as critical to its
business and the understanding of its results of operations. The Company
believes it is improbable that materially different amounts would be reported

                                       27
<PAGE>

relating to the accounting policies described below if other acceptable
approaches were adopted. However, the application of these accounting policies,
as described below, involve the exercise of judgment and use of assumptions as
to future uncertainties; therefore, actual results could differ from estimates
generated from their use.

Impairment of Long-Lived Assets and Goodwill

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

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

         The Company evaluates the carrying value of long-lived assets and
identifiable intangible assets for potential impairment on an ongoing basis. An
impairment loss would be deemed necessary when the estimated non-discounted
future cash flows are less than the carrying net amount of the asset. If an
asset were deemed to be impaired, the asset's recorded value would be reduced to
fair market value. In determining the amount of the charge to be recorded, the
following methods would be utilized to determine fair market value (i) quoted
market prices in active markets, (ii) estimate based on prices of similar assets
and (iii) estimate based on valuation techniques. The Company obtained an
independent valuation to assist it in testing the fair value of its goodwill and
intangibles as of August 31, 2003 and determined that these assets totaling
$81.6 million were not impaired.

Revenue Recognition

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

Eagle Wireless International

         Eagle designs, manufactures and markets transmitters, receivers,
controllers and software, along with other equipment used in commercial and
personal communication systems, radio and telephone systems. Revenues from these
products are recognized when the product is shipped.

BroadbandMagic

         BroadbandMagic designs, manufactures and markets the convergent set-top
boxes. Products are sent principally to commercial customers for a pre-sale test
period of 90-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 Wireless International and BroadbandMagic engage 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 companies' approval prior to sale. The distributorship or sales agent
receives commissions based on the amount of the sales invoice from the companies
to the customer. The sale is recognized at the time of shipment to the customer.
These sales agents and distributors are not a significant portion of total sales
in any of the periods presented.

Eagle Broadband Services

         Eagle Broadband Services provides Bundled Digital Services to business
and residential customers, primarily in the Texas market to date. 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.

                                       28
<PAGE>

Eagle Broadband Residential Structured Wiring

         Eagle Broadband Residential Structured Wiring sells and installs
structured wiring, audio and visual components to homes. This subsidiary
recognizes revenue and the related costs at the time the services are performed.
Revenue is derived from the billing of structured wiring to homes and the sale
of audio and visual components to the homebuyers.

Eagle Broadband Communications Services

         Eagle Broadband Communication Services 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

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

Eagle Messaging Services

         Eagle Messaging Services provides customers with one and two way
messaging systems. The revenue from these services is recognized as it is earned
from the customer.

Eagle Paging Services

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

Eagle Security Services

         Eagle Security Services 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.

Eagle Technology Services

         Eagle Technology Services provides business-to-business hardware and
software network solutions and a 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.

Receivables

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

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

Inventory

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

Recent Accounting Pronouncements

         In July 2002, the FASB issued Statement of Financial Accounting
Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated with Exit or
Disposal Activities," which nullifies EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." SFAS 146

                                       29
<PAGE>

requires that costs associated with an exit or disposal activity be recognized
only when the liability is incurred (that is, when it meets the definition of a
liability in the FASB's conceptual framework). SFAS 146 also establishes fair
value as the objective for initial measurement of liabilities related to exit or
disposal activities. SFAS 146 is effective for exit or disposal activities that
are initiated after December 31, 2002. The Company adopted SFAS in the first
quarter of fiscal 2003.

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

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

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

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

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate and Equity Market Risks

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

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

                                       30
<PAGE>

Credit Risks

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

Item 4.  Controls and Procedures

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

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

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

Part 2. - Other Information

Item 1 - Legal Proceedings

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

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

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

         None

Item 3 - Defaults Upon Senior Securities
         None

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

Item 5 - Other Information
         None


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


(a)      Financial Statements and Schedules:

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

(b) Reports on Form 8-K

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

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

                                       31
<PAGE>

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

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

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

(c)      Exhibit Listing

         EXHIBIT NO.                IDENTIFICATION OF EXHIBIT

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

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

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

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

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

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

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

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

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

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

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

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

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

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


</TABLE>

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<PAGE>




SIGNATURES

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


                              EAGLE BROADBAND, INC.


         Date: January 14, 2004                   By:   /s/David Weisman
                                                        -----------------
                                                        David Weisman
                                                        Chief Executive Officer

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




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