SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549

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

                             FORM 10-K

           FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
    SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

     [ X ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR
               ENDED JUNE 30, 2002

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

                  Commission File Number 0-28579

                        NOVO NETWORKS, INC.
      (Exact Name of Registrant as Specified in Its Charter)

                  DELAWARE                      75-2233445
               (State or Other               (I.R.S. Employer
       Jurisdiction of Incorporation)       Identification No.)

                      2311 CEDAR SPRINGS ROAD
                        DALLAS, TEXAS 75201
             (Address of Principal Executive Offices)

                           214-777-4100
       (Registrant's Telephone Number, Including Area Code)

    SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                               NONE

    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

            COMMON STOCK, PAR VALUE $0.00002 PER SHARE
                         (Title of Class)

     Indicate by a check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]

     Indicate by a check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant based on the last
reported sale price on September 23, 2002, was $2,782,468.

     As of September 20, 2002, 52,323,701 shares of our common
stock, par value $0.00002 were outstanding.

                DOCUMENTS INCORPORATED BY REFERENCE

PART III -- Incorporated by reference to our proxy statement to be
      mailed or sent to securities holders on or about
      October 28, 2002.


<PAGE>

                         TABLE OF CONTENTS
                                                             PAGE
                                                            -------

INTRODUCTORY STATEMENTS

Necessary Definitions...................................        3

Forward-Looking Statements..............................        3

PART I

   ITEM 1.  Business....................................        4

   ITEM 2.  Properties..................................       12

   ITEM 3.  Legal Proceedings...........................       12

   ITEM 4.  Submission of Matters to a Vote of
               Security Holders.........................       13

PART II

   ITEM 5.  Market for Registrant's Common Equity
                and Related Stockholder Matters.........       14

   ITEM 6.  Selected Financial Data.....................       15

   ITEM 7.  Management's Discussion and Analysis of
               Financial Condition and Results of
               Operations...............................       16

   ITEM 7A. Quantitative and Qualitative Disclosures
               About Market Risk........................       25

   ITEM 8.  Financial Statements and Supplementary
               Data.....................................       25

   ITEM 9.  Changes in and Disagreements with
               Accountants on Accounting and
               Financial Disclosure.....................       25

PART III

   ITEM 10. Directors and Executive Officers of
               the Registrant...........................       26

   ITEM 11. Executive Compensation......................       26

   ITEM 12. Security Ownership of Certain Beneficial
               Owners and Management....................       26

   ITEM 13. Certain Relationships and Related
               Transactions.............................       26

   ITEM 14. Controls and Procedures.....................       26

PART IV

   ITEM 15. Exhibits, Financial Statement
               Schedules, and Reports on Form 8-K.......       27

SIGNATURES..............................................       31

CERTIFICATIONS..........................................       32

EXHIBIT INDEX...........................................       A-1





                                -2-

<PAGE>


                      INTRODUCTORY STATEMENTS

NECESSARY DEFINITIONS

     Novo Networks, Inc. is a holding company incorporated under
the laws of the State of Delaware that is registered under the
Securities Exchange Act of 1934. Throughout this Annual Report, we
refer to Novo Networks, Inc. as "Novo Networks," "we," "us" and
"our." Our subsidiaries previously provided telecommunications
services, but they filed voluntary petitions for protection under
Title 11, Chapter 11 of the United States Code, which we will refer
to as the "bankruptcy code" throughout this Annual Report, on July
30, 2001, and September 14, 2001, respectively. We refer to these
subsidiaries as our "debtor subsidiaries" throughout this Annual
Report.

FORWARD-LOOKING STATEMENTS

     "Forward-looking" statements have been included throughout
this document. These statements describe the attempt of Novo
Networks, Inc. to predict future events. We have based these
forward-looking statements on our current expectations and
projections about future events. The important factors listed in
the section entitled "Business Considerations," as well as all
other cautionary language in this Annual Report, provide examples
of risks, uncertainties and events that may cause our actual
results or those of our debtor subsidiaries to differ materially
from the expectations described in these "forward-looking"
statements. You should be aware that the occurrence of the events
described in these considerations and elsewhere in this Annual
Report could have an adverse effect on our business, results of
operations or financial condition or those of our debtor
subsidiaries.

Forward-looking statements include, without limitation, the
following:

     *    statements regarding our future capital requirements and
          our ability to satisfy our capital needs;
     *    statements regarding our ability to continue as a going
          concern;
     *    statements regarding the ability of our debtor
          subsidiaries to successfully liquidate and distribute
          substantially all of their assets, pursuant to the
          amended plan, without causing a material adverse impact
          on us;
     *    statements regarding our ability to collect amounts owed
          by Qwest Communications Corporation and other third
          parties and to successfully pursue causes of action
          against Qwest and other third parties;
     *    statements regarding the estimated liquidation value of
          assets and settlement amounts of liabilities;
     *    statements regarding our ability to successfully redeploy
          our remaining cash assets, if any, by entering new
          sectors or industries; and
     *    statements that contain words like "believe,"
          "anticipate," "expect" and similar expressions are also
          used to identify forward-looking statements.

You should be aware that these forward-looking statements are
subject to a number of risks, assumptions and uncertainties, such
as:

     *    uncertainties in the implementation of the amended plan
          to liquidate substantially all of the remaining assets of
          our debtor subsidiaries;
     *    our ability to successfully prosecute claims against
          Qwest and other third parties;
     *    risks associated with our pursuit of other business
          opportunities;
     *    risks associated with not having any current operations
          or revenues;
     *    risks that, after the completion of the amended plan of
          liquidation, our remaining resources will limit our
          ability to pursue other opportunities to a single
          investment;
     *    risks associated with preserving the net operating losses
          of our debtor subsidiaries;
     *    risks associated with competition in the sectors or
          industries that we may enter; and
     *    changes in the laws and regulations that govern us.

     This list is only an example of some of the risks that may
affect the forward-looking statements. If any of these risks or
uncertainties materialize (or if they fail to materialize), or if
the underlying assumptions are incorrect, then actual results may
differ materially from those projected in the forward-looking
statements. We undertake no obligation to revise these statements
to reflect future events or circumstances.

                                -3-

<PAGE>

                              PART I

ITEM 1. BUSINESS

     ORGANIZATION AND HISTORIC OPERATIONS

     The company now known as Novo Networks was originally
incorporated in Delaware in 1987 as Adina, Inc., ("Adina"). Adina's
corporate existence was permitted to lapse in February of 1996 and
was subsequently reinstated as eVentures Group, Inc., ("eVentures")
in August of 1999. During the Fall of 1999, eVentures completed a
series of transactions whereby it became a holding company with two
wholly-owned operating subsidiaries, e.Volve Technology Group, Inc.
("e.Volve") and AxisTel Communications, Inc. ("AxisTel"), and made
a strategic investment in Gemini Voice Solutions, Inc. ("Gemini
Voice"), formerly PhoneFree.com, Inc. During the Spring of 2000,
eVentures acquired Internet Global Services, Inc. ("iGlobal") and
made additional strategic investments. For further details
regarding the strategic investments, see the section entitled
"Equity Investments." In December of 2000, eVentures changed its
name to Novo Networks.

     Our common stock is currently listed on the Over the Counter
Bulletin Board or OTC BB. Previously, our shares were listed on the
Nasdaq National Market System.

     During the first six months of the fiscal year ended June 30,
2002, two of our indirect wholly-owned subsidiaries, AxisTel and
e.Volve, provided telecommunications services. These subsidiaries
ceased operations in connection with their plan of liquidation,
effective September of 2001 and December of 2001, respectively.
Since that date, neither we nor any of our debtor subsidiaries have
conducted operations or generated revenue. We are currently not
providing any products or services of any kind (including
telecommunications services) to any customers. For further details
regarding the liquidation efforts of our debtor subsidiaries, see
the section entitled "Bankruptcy Proceedings."

     PLAN OF OPERATION

     On August 21, 2001, we announced that we were attempting to
redeploy some or all of our existing cash assets into, among other
things, financial services. Since that time, we have discussed and
conducted preliminary due diligence on various investment
opportunities, including some in the financial services industry.
Nevertheless, we later determined that these specific opportunities
were not in our best interest and we elected not to pursue them. We
have, in essence, been granted unlimited flexibility in the
investments that we are permitted to examine. As such, we expect to
consider, among others, the following factors when deciding upon an
appropriate investment for our remaining cash assets:

     *    the historical liquidity, financial condition and results
          of operation of the business or opportunity, if any;
     *    the growth potential and future capital requirements of
          the business or opportunity;
     *    the nature, competitive position and market potential of
          the products, processes or services of the business or
          opportunity;
     *    the relative strengths and weaknesses of the intellectual
          property of the business or opportunity;
     *    the education, experience and abilities of management and
          key personnel of the business or opportunity;
     *    the regulatory environment within the business industry
          or opportunity; and
     *    the market performance of equity securities of similarly
          situated companies in the particular industry or
          opportunity.


                                -4-

<PAGE>


     The foregoing is not an exhaustive list of the factors we may
consider in our evaluation of a potential investment opportunity.
We will also consider other factors that we deem relevant under the
circumstances. In evaluating a potential opportunity, we intend to
conduct a due diligence review that will include, among other
things:

     *    meetings with industry participants;
     *    meetings with management and/or "promoters;"
     *    inspection of properties, facilities, business models,
          products, services, material contracts, etc., if any;
     *    analysis of historical financial statements and
          projections; and
     *    any other inquiry or actions we believe are relevant
          under the circumstances.

     Our plan of operation for the upcoming twelve months calls for
the following:

     *    continuing the liquidation of substantially all of the
          assets of our debtor subsidiaries in accordance with the
          amended plan and bankruptcy code;
     *    minimizing, to the extent possible, the expenses and
          liabilities incurred by us as the ultimate parent of the
          debtor subsidiaries;
     *    determining, as quickly as reasonably possible, a viable
          plan to redeploy our assets;
     *    identifying, negotiating and consummating one or more
          appropriate investment opportunities in accordance with
          such plan;
     *    we do not expect to increase the number of employees
          prior to locating an investment opportunity; and
     *    we do not expect to incur significant expenses outside of
          our historical burn rate pending location of an
          investment opportunity.

     RECENT DEVELOPMENTS

     As indicated elsewhere in this Annual Report, we are
continuing to consider various investment opportunities across a
broad spectrum of industry groups. Although, at the date of this
filing, we have not decided upon any particular opportunity
or industry group, it has, within the past few days, elected to
focus its attention on one possible opportunity in Texas. At this
time, we have not conducted sufficient due diligence on the
opportunity or industry group to determine whether a viable
business model exists. Further, our discussions with the
controlling persons for such opportunity have not progressed beyond
a preliminary stage; however, we expect that if a transaction were
to proceed, it would do so quickly and without further notice to
the shareholders. It is impossible to determine at this point
whether we will be in a position to move forward with this
potential opportunity.

     Some of the risks and difficulties we expect to encounter in
pursuing this transaction include:

     *    our lack of industry experience;
     *    our potential inability to conduct a thorough due
          diligence review in a relatively short period of time;
     *    our ability to negotiate a transaction that will inure to
          the long term benefit of our shareholders; and
     *    each of the other risks and uncertainties inherent in
          locating, investigating and consummating a business
          transaction of this nature.


                                -5-

<PAGE>


     GOING CONCERN ISSUES

     The accompanying financial statements have been prepared
assuming that we will continue as a going concern. The bankruptcy
filings, combined with the fact that we have no operations or
revenues, raise substantial doubt about our ability to continue as
a going concern. The financial statements do not include any
adjustments that might result should we be unable to continue as a
going concern. As of June 30, 2002, and as a result of the
bankruptcy filings, we effectively have no operations, no sources
of revenue and no profits. No change can be expected unless and
until we promulgate and implement a new business plan. We cannot
predict when or if such a plan will be put into place, what it may
entail or whether we will be successful in such a new business
venture.

     BUSINESS CONSIDERATIONS

     You should consider carefully risks associated with our
forward-looking statements, as well as the following risk factors.

     THE BANKRUPTCIES OF OUR SUBSIDIARIES COULD NEGATIVELY AFFECT
     US.

     By September of 2001, all of our wholly-owned subsidiaries had
filed voluntary petitions for relief under the bankruptcy code. For
further details regarding such filings, see the section entitled
"Bankruptcy Proceedings." As a result of such filings, we may
encounter the following risks:

     *    we guaranteed certain indebtedness of our debtor
          subsidiaries. Depending on the treatment of and
          distributions to holders of such indebtedness under the
          amended plan, we may be liable for some or all of this
          indebtedness;
     *    the administration of our debtor subsidiaries' amended
          plan could negatively affect our relationship with our
          creditors, vendors and employees; and
     *    we cannot assure you that we will be successful in
          protecting or segregating our remaining cash assets.

     WE WILL BE FUNCTIONING AS AN EARLY STAGE COMPANY.

     As previously indicated, we do not presently expect to re-
enter the telecommunications industry, although we reserve the
right to invest in any suitable opportunity. Instead, we expect to
seek out opportunities in which to deploy our remaining cash
assets. Consequently, we will not have any history upon which to
base an evaluation of our business and prospects going forward. Our
prospects must be considered in light of the many risks,
uncertainties, expenses, delays and difficulties encountered by
companies adopting a new or dramatically changed business model
after the failure (for whatever reason) of a prior business model.
Some of the risks and difficulties we expect to encounter include,
without limitation, our ability to:

     *    create and successfully execute a revised business plan;
     *    locate, invest in and otherwise manage a commercially
          viable base of suitable opportunities;
     *    manage and adapt to changing operations;
     *    respond effectively to competitive developments;
     *    attract, retain and motivate qualified personnel,
          including, particularly those with appropriate industry
          experience; and
     *    overcome the impact of the failure of our previous
          business model upon our current and future reputation.

     Because of our possible lack of industry experience, we may
have limited insight into trends and conditions that may exist or
might emerge and affect our new investments. No assurances can be
given that we will be in a position to redeploy our assets at the
parent level or, if we do redeploy our assets, that we will
successfully address and overcome these risks.


                                -6-

<PAGE>


     WE MAY NOT BE ABLE TO FUND A MODIFIED BUSINESS PLAN.

     Even if we are successful in identifying a suitable
alternative investment opportunity, we may not possess sufficient
funds to capitalize on it. No assurances can be made that adequate
levels of financing to fund any new business venture will be
available at all or on acceptable terms. Any financing could
involve the issuance of securities with rights superior to those of
our common stockholders. The issuance of additional securities
could also result in significant dilution to our existing
stockholders.

     WE MAY NOT BE ABLE TO REDEPLOY OUR REMAINING CASH ASSETS.

     The time, effort and expense associated with implementing an
appropriate investment strategy for our remaining cash assets
cannot be predicted with any degree of accuracy. Further, we have
expended, and will continue to expend, a significant amount of time
dealing with the administration of the amended bankruptcy plan of
our debtor subsidiaries. If we do not devote adequate time to the
investigation, due diligence and negotiation of appropriate
investment opportunities or if we are precluded from doing so
before our cash assets are further depleted, we may be unable to
successfully redeploy our remaining cash assets. We cannot assure
you that we will be successful in redeploying our remaining cash
assets. Further, to the extent we are able to redeploy our
remaining cash assets, we cannot assure you that our investments
will ultimately prove successful.

     WE DO NOT EXPECT TO BE IN A POSITION TO DIVERSIFY OUR
     INVESTMENT RISK.

     As of June 30, 2002, we maintained cash and cash equivalents
of approximately $9.9 million. We currently anticipate that as of
September 30, 2002, after paying certain bankruptcy obligations
related to the debtor subsidiaries and current operating expenses,
we will have approximately $8.6 million of remaining cash available
to redeploy into one or more investment opportunities and to
support our monthly cash requirements. We currently have a monthly
cash requirement of approximately $0.2 million to fund recurring
corporate general and administrative expenses, excluding costs
associated with the debtor subsidiaries' bankruptcy proceedings. We
do not believe that additional funding sources will be available to
us in the near term. Accordingly, the cash assets available for
redeployment may be limited. Consequently, we will probably not be
in a position to make more than a limited number of investments,
and broad diversification is unlikely. Depending on the investment
opportunity, we may only have the ability to make one or two
investments. A lack of diversification may subject us to a variety
of economic, competitive and regulatory risks, any or all of which
may have a substantial adverse impact on our continued viability.

     OUR STOCKHOLDERS WILL NOT BE AFFORDED AN OPPORTUNITY TO
     APPROVE ANY POSSIBLE TRANSACTION.

     We do not intend to provide information to our stockholders
regarding potential business opportunities that we are considering.
Our Board of Directors will have the executive and voting power to
unilaterally approve all corporate actions related to the
redeployment of our cash assets. As a result, our stockholders will
have no effective voice in decisions made by our Board of Directors
and will be entirely dependent on their judgment in the selection
of an appropriate investment opportunity and the negotiation of the
specific terms thereof.

     THERE IS SUBSTANTIAL DOUBT CONCERNING OUR ABILITY TO CONTINUE
     AS A GOING CONCERN.

     The financial statements contained in this Annual Report have
been prepared assuming we will continue as a going concern.
However, substantial doubt exists concerning our ability to do so.
The auditor's opinion to our financial statements as of and for the
year ended June 30, 2002, notes the fact that we have no
operations and no sources of capital to fund business operations,
which raises substantial doubt as to our ability to continue as a
going concern. On a consolidated basis, we incurred operating losses
of $22.7 million, $172.5 million and $28.8 million for the fiscal
years ended June 30, 2002, 2001 and 2000, respectively. As of
June 30, 2002, we had an accumulated deficit of $247.2 million.
We do not expect to incur material liabilities on behalf of our
debtor subsidiaries in connection with the bankruptcy proceedings,
other than certain guarantee obligations and funding for the
liquidating trust of the debtor subsidiaries. However, there can be
no assurances that we will not incur additional operating losses or
other liabilities in connection with our debtor subsidiaries'
bankruptcy filings. The financial statements do not include any
adjustments related to the recoverability and classification of
asset carrying amounts or the amount and classification of
liabilities that might result should we be unable to continue as
a going concern.


                                -7-

<PAGE>


     OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES WHICH
     MAY MAKE IT A LESS ATTRACTIVE INVESTMENT.

     Our common stock currently trades on the OTC BB. Although we
may file an application to list our shares on one of the national
exchanges at some point in the future, for any number of reasons,
we may be unable to obtain such a listing. In addition, our common
stock may at any time be subject to the "penny stock" rules. The
United States Securities and Exchange Commission (the "SEC") has
adopted regulations that define a "penny stock" to be an equity
security that has a market price of less than $5.00 per share,
subject to certain exceptions. These rules impose additional sales
practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors.
For transactions covered by the penny stock rules, a broker-dealer
must make a suitability determination for the purchaser, must have
received the purchaser's written consent to the transaction prior
to the sale, must disclose the commissions payable to both the
broker-dealer and the registered representative and must provide
current quotations for the securities. Additionally, if the broker-
dealer is selling the securities as a market maker, the broker-
dealer must disclose that fact and that the broker-dealer is
presumed to exercise control over the market. Finally, a monthly
statement must be sent to the account holder disclosing recent
price information and information on the limited market in the
particular stock.

     Consequently, as a result of the additional suitability
requirements, additional disclosure requirements and additional
sales practices imposed by the penny stock rules, both the ability
of a broker-dealer to sell our common stock and the ability of
holders of our common stock to sell their securities in the
secondary market may be adversely effected.

     ANTI-TAKEOVER PROVISIONS COULD LIMIT OUR SHARE PRICE AND DELAY
     A CHANGE OF MANAGEMENT.

     Our certificate of incorporation and by-laws contain
provisions that could make it more difficult or even prevent a
third party from acquiring us without the approval of our incumbent
Board of Directors. These provisions, among other things:

     *    divide  our  Board of Directors into three classes,  with
          members  of each class to be elected in staggered  three-
          year terms;

     *    limit  the right of stockholders to call special meetings
          of stockholders;

     *    limit  the right of stockholders to present proposals  or
          nominate  directors  for election at annual  meetings  of
          stockholders; and

     *    authorize our Board of Directors to issue preferred stock
          in  one or more series without any action on the part  of
          stockholders.

     These provisions could limit the price that investors might be
willing to pay in the future for shares of our common stock and
significantly impede the ability of the holders of our common stock
to change management. Provisions and agreements that inhibit or
discourage takeover attempts could reduce the market value of our
common stock.

     OUR STOCK PRICE IS HIGHLY VOLATILE.

     The market price for our common stock has been highly volatile
and is likely to continue to be so. Prior to July 30, 2001, when
Nasdaq suspended the trading of our common stock on the Nasdaq
National Market, our trading price experienced significant price
and volume fluctuations. When our common stock began trading on the
OTC BB on January 1, 2002, it became even more volatile and has
remained so since then. The market price of our common stock may
fluctuate significantly in response to a number of factors, some of
which are beyond our control, including, without limitation, the
following:

     *    quarterly variations in operating results;

     *    changes in financial estimates by securities analysts;

     *    announcements  by us or our competitors of  new  products
          and   services  or  significant  acquisitions,  strategic
          partnerships or joint ventures;

     *    departures of key personnel and consultants; and

     *    future sales of common stock.


                                -8-

<PAGE>



     BANKRUPTCY PROCEEDINGS

     On April 2, 2001, our subsidiary iGlobal filed a voluntary
petition under Chapter 7 of the bankruptcy code in the United
States Bankruptcy Court for the Northern District of Texas due to
iGlobal's inability to service its debt obligations, potential
contingent liabilities and our inability to raise sufficient
capital to fund operating losses at iGlobal. As a result of the
filing, we recorded an impairment loss of $62.4 million for the
year ended June 30, 2001, primarily relating to non-cash goodwill
recorded in connection with our March 2000 acquisition of iGlobal.

     On July 30, 2001, five of our direct and indirect wholly-owned
subsidiaries filed voluntary petitions under Chapter 11 of the
bankruptcy code in the United States Bankruptcy Court for the
District of Delaware, in order to stabilize their operations and
protect their assets while attempting to reorganize their
businesses. The five subsidiaries that filed for bankruptcy
protection were Novo Networks Operating Corp., AxisTel, e.Volve,
Novo Networks International Services, Inc. and Novo Networks Global
Services, Inc. On September 14, 2001, Novo Networks Metro Services,
Inc., a subsidiary of AxisTel, also filed a voluntary petition
under Chapter 11 of the bankruptcy code.

     We have set forth below a table summarizing the current status
of our wholly-owned subsidiaries.

<TABLE>
<CAPTION>

                                                          Status as of     Subject to
                                                           September     Bankruptcy Plan
          Wholly Owned Subsidiary          Date Acquired   30, 2002*     or Proceedings?
   -------------------------------------   -------------  ------------  -----------------
   
                                       <c>           <c>           <c>
   Novo Networks Operating Corp.               2/8/00**     Inactive     Yes, Chapter 11
   AxisTel Communications, Inc.               9/22/99       Inactive     Yes, Chapter 11
   Novo Networks International Services,      9/22/99       Inactive     Yes, Chapter 11
     Inc.
   Novo Networks Global Services, Inc.        9/22/99       Inactive     Yes, Chapter 11
   Web2Dial Communications, Inc.              9/22/99       Inactive           No
   Novo Networks Metro Services, Inc.         9/22/99       Inactive     Yes, Chapter 11
   Novo Networks Metro Services (Virginia),   9/22/99       Inactive           No
     Inc.
   Novo Networks Media Services, Inc.         9/22/99       Inactive           No
   Novo Networks (UK) Ltd.                    9/22/99       Inactive           No
   e.Volve Technology Group, Inc.            10/19/99       Inactive     Yes, Chapter 11
   Internet Global Services, Inc.             3/10/00       Inactive     Yes, Chapter 7
   eVentures Holdings, LLC                     9/7/99**     Active***           No

</TABLE>

-----------------------
  *    "Active" status indicates current operations within the
       respective entity; "Inactive" status indicates no current
       operations, but may include certain activities associated
       with the administration of its estate pursuant to a
       bankruptcy filing or plan.
  **   Indicates date of incorporation, if organized by us.
  ***  This entity has no operations other than to hold certain
       equity investments.


                                -9-

<PAGE>



     As of September 28, 2001, the goal of the reorganization
effort was to preserve the going concern value of our debtor
subsidiaries' core assets and to provide distributions to their
creditors. However, after that date, and based largely on the fact
that our debtor subsidiaries ceased receiving traffic from their
sole remaining customer, a determination was made that the
continued viability of the debtor subsidiaries was not realistic,
and a decision was made to amend the plan. The amended plan and
disclosure statement were filed with the bankruptcy court on
December 31, 2001. The amended plan provides for a liquidation of
substantially all of the assets of our debtor subsidiaries,
pursuant to Chapter 11 of the bankruptcy code, instead of a
reorganization as previously planned.

     On January 14, 2002, the bankruptcy court approved the amended
disclosure statement, with certain minor modifications, and on
March 1, 2002, it confirmed the amended plan of the debtor
subsidiaries, again with minor modifications. On April 3, 2002, the
amended plan became effective and a liquidating trust was formed,
with funding provided by us in the amount of $0.2 million. Assets
to be liquidated of $0.7 million were transferred to the
liquidating trust during the fourth quarter of fiscal 2002. The
purpose of the trust is to collect, liquidate and distribute the
remaining assets of the debtor subsidiaries and prosecute certain
causes of action against various third parties, including, without
limitation, Qwest. Subsequent to the 2002 fiscal year end, we
provided additional funding of $0.1 million to the trust. No
assurance can be given that our debtor subsidiaries will be
successful in liquidating substantially all of their assets
pursuant to the amended plan. Also, it is not possible to predict
the outcome of the prosecution of causes of action against third
parties, including, without limitation, Qwest, as disclosed in the
amended plan and disclosure statement.

     In connection with the bankruptcy proceedings, we provided our
debtor subsidiaries with approximately $1.9 million in secured
debtor-in-possession financing to fund their reorganization
efforts. The credit facility made funds available to permit the
debtor subsidiaries to pay employees, vendors, suppliers, customers
and professionals consistent with the requirements of the
bankruptcy code. In connection with the amended plan being
confirmed by the bankruptcy court and becoming effective on April
3, 2002, the credit facility was converted into a new secured note.
The current balance on the new secured note is approximately $2.9
million. For further details regarding the funding provided to the
debtor subsidiaries, see the section entitled "Liquidity and
Capital Resources."

     We provided administrative services to our debtor subsidiaries
pursuant to an administrative services agreement approved by the
bankruptcy court. The agreement provided that our debtor
subsidiaries pay us $30,000 per week for legal, accounting, human
resources and other services. The original agreement expired on
April 2, 2002, and an interim agreement was reached whereby, the
liquidating trust, as successor-in-interest to our debtor
subsidiaries, paid us $40,000 per month for the same services. The
interim agreement expired on August 15, 2002. We are currently
negotiating the terms of an on-going agreement with the liquidating
trust. As of June 30, 2002, we had an outstanding receivable from
the debtor subsidiaries relating to the provision of such
administrative services of approximately $0.5 million. Due to the
uncertainty surrounding the collection of the receivable, it has
been fully reserved.

     It is not possible to predict the outcome or success of any
bankruptcy proceeding or plan or the effects of such efforts on our
business or on the interests of our creditors or stockholders.

     SALE OF E.VOLVE TECHNOLOGY GROUP DE MEXICO, S.A. DE C.V.

     In a stock purchase agreement dated February 28, 2002, a
wholly owned subsidiary of e.Volve, e.Volve Technology Group de
Mexico, S.A. de C.V., was sold to a company that is owned by one or
more former employees of the subsidiary. The transaction closed on
April 12, 2002. The buyer acquired telecommunications assets and
assumed certain liabilities of e.Volve Technology Group de Mexico,
S.A. de C.V. and received a payment of approximately $70,000. As a
result of this transaction, a gain of approximately $0.3 million
was recorded in other income during the fourth quarter of fiscal
2002.

     LITIGATION AGAINST QWEST

     On June 17, 2002, we and the liquidating trust filed a lawsuit
seeking damages resulting from numerous disputes over business
dealings and agreements with Qwest, a former customer and vendor,
and John L. Higgins, a former employee and consultant. On August
14, 2002, Qwest filed a motion to stay the lawsuit and a demand for
arbitration with the American Arbitration Association. For further
details regarding the lawsuit, see the section entitled "Legal
Proceedings." No assurances can be given that any recoveries will
result from the prosecution of such causes of action against Qwest
and Mr. Higgins. Furthermore, if there are any recoveries, they may
or may not inure to our benefit.


                               -10-

<PAGE>



     NETWORK/PRODUCTS AND SERVICES/CUSTOMERS

     During the first six months of the fiscal year ended June 30,
2002, two of our indirect wholly-owned operating subsidiaries,
AxisTel and e.Volve, provided telecommunications services. These
subsidiaries ceased operations in connection with the bankruptcy
filings effective in September of 2001 and December of 2001,
respectively. Since the latter date, neither we nor any of our
debtor subsidiaries have conducted operations or generated revenue.
We are currently not providing any products or services of any kind
(including telecommunications services) to any customers.

The majority of our consolidated revenues during the first six
months of fiscal 2002 were derived through telecommunication
services offered by e.Volve. e.Volve offered network transport to
its customers, primarily Qwest, on a wholesale basis. Customers
originated traffic through their own facilities using various
signaling protocols. After December 31, 2001, no telecommunication
services were offered. Approximately 70% of the consolidated
revenues for fiscal 2002 came from Qwest. No other customer
accounted for more than 10% of revenues during the most recently
completed fiscal year. Currently, we are not providing any products
or services to any customers, nor do we expect to be providing
products or services until we can successfully locate and
consummate an appropriate investment for some or all of our
available cash. No assurances can be given that we will ever
generate additional revenue.

     EQUITY INVESTMENTS

     Previously, we acquired minority positions in Internet and
communications companies. As of June 30, 2002, we maintained
investments in the following companies:


<TABLE>
<CAPTION>


                                                                                               For the
                                                     % Ownership *          Accounting    Fiscal Year Ended
Company Name                                      Common    Preferred        Method         June 30, 2002
------------------------------------------------  -------------------      -----------    -----------------

                                                 <c>       <c>            <c>            <c>
Gemini Voice Solutions (f/k/a PhoneFree.com)        17.2%      31.7%         Equity           $   264,751
ORB Communications & Marketing, Inc                 19.0%     100.0%         Equity                     -
FonBox, Inc                                         14.0%      50.0%         Equity                     -
Launch Center 39                                     0.0%       2.1%          Cost                      -
Spydre Labs                                          5.0%       0.0%          Cost                      -
                                                                                           -----------------
                                                                                              $   264,751

</TABLE>

*  The percentage ownership reflects our ownership percentage at June 30, 2002.

     As of June 30, 2002, our net asset value in Gemini Voice was
approximately $0.3 million. During fiscal 2002, an impairment loss
of $2.4 million was recorded related to our investment in ORB. The
investments in FonBox, Launch Center 39 and Spydre Labs were
written off during fiscal 2001, resulting in an aggregate
impairment loss of $10.8 million. Impairment in our investments
resulted from declining market conditions, negative operating
results of the investment companies, lack of investor liquidity and
other uncertainties surrounding the recoverability of these
investments.

     Gemini Voice offers packetized, network-based, broadband voice
services. It is focused on providing a turnkey, fully managed IP
software and hardware, voice-over-broadband, telephony solution. By
doing so, it enables cable operators and DSL providers to offer
local and long-distance services to their high-speed access
customers using a standard telephone. Currently, Gemini Voice has
deployed a managed telephony service with a cable operator, and is
concentrating on growing its customer base, while also seeking to
conserve its available cash and explore strategic alternatives.
Gemini Voice maintains websites at www.geminivoice.com and
www.phonefree.com.

     Two  of our directors, Barrett N. Wissman and Jan R. Horsfall,
are  also members of the seven-member Board of Directors of  Gemini
Voice.

     COMPETITION

     We expect to encounter intense competition from other
organizations that have similar business objectives, namely the
acquisition of, or investment in, new business opportunities. In
this regard, many of our potential competitors have significant
cash resources that will be available for use following an initial
investment. In addition, many of our potential competitors possess
more experienced management teams, investment personnel and greater
technical, human and other resources than we do. Further, some of
our competitors may possess more attractive business or industry
relationships than we have. Lastly, we may encounter some
resistance from potential business partners due to our prior
business model or operating history. The inherent limitations on
our competitive position may give others an advantage in pursuing
attractive business opportunities.


                               -11-

<PAGE>



     We do not have any agreements or understandings with respect
to any investment opportunity that we currently intend to pursue.
In recent months, we have discussed and conducted preliminary due
diligence on various investment opportunities. However, we later
determined that these specific opportunities were not in our best
interest, and we elected not to pursue them. We can provide no
assurance that any future investment will be completed or that, if
completed, any such investment will prove profitable or otherwise
successful. Investments of the type proposed involve a number of
risks, including, without limitation, the following:

     *    the potential distraction of company management;

     *    the need for additional working capital;

     *    our ability to manage potentially distinct business
          opportunities, particularly in light of our  possible
          lack of industry experience;

     *    the obligations associated with our debtor subsidiaries'
          amended plan including, without limitation, the funding
          of the liquidating trust and the prosecution of claims
          against Qwest;

     *    the potential impairment of our reputation and
          relationships; and

     *    the ability to locate, consummate, fund and integrate
          suitable investment opportunities while we maintain cash
          assets available for redeployment and numerous other
          risks and uncertainties.

     For further details regarding the risks associated with the
types of investments proposed, see the section entitled "Business
Considerations."

     DIRECTORS/OFFICERS/EMPLOYEES

     As of June 30, 2002, we had eight full-time employees.
One of our debtor subsidiaries, Novo Networks Operating Corp.
had one full-time employee. On March 7, 2002, David N. Link,
our Executive Vice President of Global Operations, gave us notice
of his intent to resign from his position effective June 30, 2002.
On May 15, 2002, we announced that our Executive Vice President
and Chief Financial Officer, Daniel J. Wilson, resigned from his
positions. Additionally, we announced that Clark K. Hunt and
Olaf Guerrand-Hermes resigned from our Board of Directors. On
August 28, 2002, Chad E. Coben, our Senior Vice President of
Finance and Corporate Development, gave us notice of his intent
to resign from his position effective October 31, 2002.  With the
exception of Mr. Coben, none of these officers or directors
resigned, to our knowledge, because of a disagreement with us
relating to our operations, policies or practices. We do not
expect to replace the chief financial officer at this time. We
also employ a limited number of independent contractors and
temporary employees on a periodic basis. None of the employees
are represented by a labor union.

     ITEM 2. PROPERTIES

     Our corporate offices are located at 2311 Cedar Springs Road,
Suite 400, Dallas, Texas, occupying approximately 3,300 square
feet. Our lease expires on April 30, 2005.

     ITEM 3. LEGAL PROCEEDINGS

     On June 17, 2002, we and the liquidating trust filed a lawsuit
against Qwest and Mr. Higgins in the Eighth Judicial District Court
of Clark County, Nevada. The amended plan called for certain causes
of action to be pursued by the liquidating trust against various
third parties, including Qwest, in an attempt to marshall
sufficient assets to make distributions to creditors. We were a co-
proponent of the amended plan and suffered independent damages as a
result of Qwest's actions. Accordingly, we and the liquidating
trust asserted, among other things, the following claims against
Qwest: (i) breach of contract, (ii) conversion, (iii)
misappropriation of trade secrets, (iv) breach of a confidential
relationship, (v) fraud, (vi) breach of the covenant of good faith
and fair dealing, (vii) tortious interference with existing and
prospective business relations, (viii) aiding and abetting Mr.
Higgins's misconduct, (ix) civil conspiracy, and (x) unjust
enrichment. The following claims also have been asserted against
Mr. Higgins: (i) breach of contract, (ii) breach of fiduciary
duties, (iii) breach of a confidential relationship, (iv) fraud,
(v) aiding and abetting Qwest's misconduct, (vi) civil conspiracy,
and (vii) unjust enrichment. In addition to an award of attorneys'
fees, we and the liquidating trust are seeking such actual,
consequential and punitive damages as may be awarded by a jury or
other trier of fact. On August 14, 2002, Qwest filed a motion to
stay the lawsuit and a demand for arbitration with the American
Arbitration Association. A hearing has been scheduled on
October 17, 2002, to determine the proper forum for the disputes
to be heard. No assurances can be given that any recoveries will
result from the prosecution of such causes of action against
Qwest and Mr. Higgins. Furthermore, if there are any recoveries,
they may or may not inure to our benefit. Also, it currently is
not possible to predict whether or not any counterclaims will
be asserted by Qwest.


                               -12-

<PAGE>


     On August 28, 2002, Mr. Coben, our Senior Vice President of
Finance and Corporate Development, initiated an arbitration
proceeding against us with the American Arbitration Association.
Mr. Coben has asserted that he has "good reason" under his
employment agreement to resign and receive certain contractual
payments totaling approximately $0.5 million. According to Mr.
Coben, the events that give rise to his ability to take such action
are as follows: (i) that he no longer reports to any one of three
individuals identified in his employment agreement, (ii) that his
duties and responsibilities changed in such a way as to constitute
a material demotion, (iii) that we failed to maintain an incentive
bonus plan, and (iv) that we failed to pay a bonus of $90,000 to
him during fiscal 2002. We have disputed the validity of Mr.
Coben's claims, and we have denied that "good reason" exists for
Mr. Coben's resignation. Nevertheless, Mr. Coben has informed us that his
resignation will be effective October 31, 2002. Under the
circumstances, we intend to vigorously defend ourselves in the
arbitration proceeding. Since the process has not proceeded beyond
the initial pleadings stage, no realistic assessment can be made
with respect to potential exposure, except to refer to the amount
of damages requested and note that, if Mr. Coben prevails, we could
be required to pay interest and his attorneys' fees.

     As previously reported, the bankruptcy court confirmed the
amended plan of the debtor subsidiaries by an order dated March 14,
2002. On April 3, 2002, the amended plan became effective and a
liquidating trust was formed, with funding provided by us in the
amount of $0.2 million. Assets to be liquidated of $0.7 million
were transferred to the liquidating trust during fiscal 2002. The
purpose of the trust is to collect, liquidate and distribute the
remaining assets of the debtor subsidiaries and prosecute certain
causes of action against various third parties, including, without
limitation, Qwest. No assurances can be given that claims brought
against such third parties or Qwest will be successful or that
those parties will not file one or more counterclaims.  Also, as
previously reported, iGlobal filed a voluntary petition under
Chapter 7 of the bankruptcy code in the United States Bankruptcy
Court for the Northern District of Texas on April 2, 2001. It is
not possible to predict the outcome of either iGlobal's bankruptcy
proceedings or the administration of the debtor subsidiaries'
amended plan or the effects of such efforts on our business or
our non-debtor subsidiaries or the interests of creditors or
stockholders.

     We have previously disclosed in other reports filed with the
SEC certain other legal proceedings pending against us and our
subsidiaries. Consistent with the rules promulgated by the SEC,
descriptions of these matters have not been included in this Annual
Report because they have not been terminated and there have not
been any material developments during the period ended June 30,
2002. Readers are encouraged to refer to our prior reports, as
filed with the SEC, for further information concerning other legal
proceedings affecting us and our subsidiaries.

     We and our subsidiaries are involved in other legal
proceedings from time to time, none of which we believe, if decided
adversely to us or our subsidiaries, would have a material adverse
effect on our business, financial condition or results of
operations.

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


                               -13-

<PAGE>


                              PART II

     ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS

     Our common stock is currently listed on the OTC BB. Our common
stock has been previously listed as follows:


          From                       To           Ticker    Market
-------------------------     ----------------    ------    -------
January 1, 2002               Present             NVNW      OTC BB
December 12, 2000             December 31, 2001 * NVNW      Nasdaq
November 22, 2000             December 11, 2000   EVNT      Nasdaq
August 25, 1999               November 21, 2000   EVNT      OTC BB
Prior to August 25, 1999      -                   ADII      OTC BB

*    Trading was halted by Nasdaq from July 30, 2001, until
     December 31, 2001.


     The following table sets forth the high and low bid price of
our common stock on the applicable market for the quarterly periods
indicated. Such prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent
actual transactions.

          Quarter Ending               Low            High
          ----------------------   -----------    -----------
          June 30, 2002            $      0.02    $      0.21
          March 31, 2002                  0.01           0.13
          December 31, 2001                *              *
          September 30, 2001               *              *
          June 30, 2001                   0.21           1.81
          March 31, 2001                  0.78           6.38
          December 30, 2000               2.94           7.50
          September 30, 2000              9.50          18.25

          *    Trading was halted by Nasdaq from July 30,
               2001, until December 31, 2001.

     Our stock has experienced periods, including certain extended
periods, of limited or sporadic quotations.

     As of June 30, 2002, there were 1,246 record holders of our
common stock; 18 record holders of our Series B convertible preferred
stock; 7 record holders of our Series C convertible preferred stock,
and 2 record holders of our Series D convertible preferred stock.

     RECENT SALES OF UNREGISTERED SECURITIES

     None.

     DIVIDEND POLICY

     The holders of our common stock are entitled to receive
dividends at such time and in such amounts as may be determined by
our Board of Directors. However, we have not paid any dividends in
the past and do not intend to pay cash dividends on our common
stock for the foreseeable future.


                               -14-

<PAGE>



     ITEM 6. SELECTED FINANCIAL DATA

     Prior to September 22, 1999, we were a publicly-held company
with no material operations. As discussed previously, we were
formerly known as eVentures and prior thereto, as Adina, which was
incorporated in the State of Delaware on June 24, 1987. In
September of 1999, eVentures acquired (i) all of the outstanding
shares of AxisTel; (ii) approximately 66.7% of the outstanding
shares of e.Volve; (iii) approximately 17% of the outstanding
shares of Gemini Voice; and (iv) a note receivable from e.Volve in
the amount of $8,540,159, including accrued interest. In a related
transaction, eVentures acquired the remaining 33.3% of e.Volve in
October of 1999. All of the acquisitions and the purchase of the
$8,540,159 e.Volve note were settled through the issuance of
26,827,552 shares of eVentures' common stock and are collectively
referred to as the "Initial Transaction". Upon completion of the
Initial Transaction, approximately 77% of the outstanding common
stock of the Company was owned by three shareholders that are
affiliated with each other, IEO Investments Limited, Infinity
Emerging Subsidiary Limited and Infinity Investors Limited, known
collectively as the "Infinity Entities." For further details
regarding the Infinity Entities, see the section entitled
"Business" in the footnotes to the financial statements.

     Since we had no material operations prior to the transaction
on September 22, 1999, the acquisitions of the Infinity Entities
interests were accounted for as a recapitalization of e.Volve. The
interests in Gemini Voice and AxisTel contributed by the Infinity
Entities have been included from the date of investment by the
Infinity Entities. In March of 2000, we acquired 100% of iGlobal.
On April 2, 2001, iGlobal filed a voluntary petition under Chapter
7 of the bankruptcy code. The financial results of iGlobal are
included in the financial statements since its acquisition on March
10, 2000, through April 2, 2001. For further details regarding
iGlobal, see the section entitled "Acquisition and Disposal of
iGlobal" in the footnotes to the financial statements. On July 30,
2001, our principal subsidiaries, including AxisTel and e.Volve,
filed voluntary petitions under Chapter 11 of the bankruptcy code.
During fiscal 2002, all of the revenues and direct costs reflected
in our consolidated financial statements resulted from the
operations of e.Volve and AxisTel.


<TABLE>
<CAPTION>


                                                                                                 Pro Forma
                                                                                               -------------
                                                                                                  Fiscal
                                                              For the Fiscal Year                Year Ended
                                                                 Ended June 30,                   June 30,
Consolidated Statements                           -------------------------------------------  -------------
of Operations Data                                    2002           2001           2000            2000
                                                  -------------  -------------  -------------  -------------

                                               <c>            <c>            <c>            <c>
Revenues                                          $  10,486,982     72,031,554  $  55,354,030  $  62,149,705

Operating expenses:
  Direct costs                                       14,614,766     70,807,489     51,656,016     59,616,970
  Selling, general and administrative expenses       14,803,110     28,867,054     22,471,732     26,555,721
  Reorganization and restructuring charge                     -      3,898,656              -              -
  Impairment loss                                     2,400,543    120,476,247              -              -
  Depreciation and amortization                       1,370,958     20,453,633     10,007,859     22,753,691
                                                  -------------  -------------  -------------  -------------
                                                     33,189,377    244,503,079     84,135,607    108,926,382

Loss from operations, before
   other (income) expense                           (22,702,395)  (172,471,525)   (28,781,577)   (46,776,677)

Other (income) expense:
 Interest (income) expense, net                          17,355       (402,376)      (920,161)    (1,122,086)
 Write off of unamortized debt discount                       -              -        917,615              -
 Equity in loss of investments                        1,720,000      9,023,882      5,236,183      5,236,183
 Foreign currency loss (gain)                            98,135        130,511       (168,431)      (168,431)
 Net gain on liquidation of debtor subsidiaries     (16,074,355)             -              -              -
 Other                                                 (668,993)       341,052         29,057        176,114
                                                  -------------  -------------  -------------  -------------
                                                    (14,907,858)     9,093,069      5,094,263      4,121,780
                                                  -------------  -------------  -------------  -------------

Net loss                                             (7,794,537)  (181,564,594)   (33,875,840)   (50,898,457)

Imputed preferred dividend                                    -     (2,299,750)   (10,407,954)   (10,407,954)
Series D preferred dividends                           (603,432)      (324,860)             -              -
                                                  -------------  -------------  -------------  -------------
Net loss allocable
  to common shareholders                          $  (8,397,969) $(184,189,204) $ (44,283,794) $ (61,306,411)
                                                  =============  =============  =============  =============

Net loss per share - (basic and diluted)          $       (0.16) $       (3.53) $       (1.14) $       (1.18)
                                                  =============  =============  =============  =============
Weighted average number of shares
  outstanding - (basic and diluted)                  52,323,701     52,222,671     38,739,230     52,061,258
                                                  =============  =============  =============  =============




</TABLE>



                               -15-

<PAGE>

<TABLE>
CAPTION>

                                                                       As of June 30,
                                                       -------------------------------------------
                                                            2002           2001          2000
Consolidated Balance Sheet Data                        -------------  -------------  -------------

                                                    <c>            <c>            <c>
Cash and cash equivalents                              $   9,871,305  $  16,696,537  $  40,764,246
Working capital                                            8,274,829      6,048,792     32,891,976
Total assets                                              11,131,053     37,897,369    218,316,373
Capital leases, net of current portion                             -      5,189,094      5,780,851
Long term debt                                                     -              -      3,685,145
Total stockholders' equity                                 9,259,253     16,646,296    191,950,797

</TABLE>


     "Pro Forma" results are unaudited and reflect operating
results for the year ended June 30, 2000, as though the acquisition
of AxisTel, the acquisition of the remaining 33.3% of e.Volve and
the purchase of 100% of iGlobal each had occurred on July 1, 1999.
The unaudited pro forma results are not necessarily indicative of
future results or actual results of operations that would have
occurred had the acquisitions been made on July 1, 1999.

     ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with
the consolidated financial statements and the notes found on pages
F-1 to F-29 of this Annual Report.

     OVERVIEW

     Due to the lack of stability in the capital markets, and sharp
downturns in both the telecommunications industry and the economy
as a whole, we did not raise the additional capital required to
complete the build-out of our subsidiaries' global broadband
network. Following this shift in market conditions during fiscal
2001, we re-assessed our business plans and undertook a
strategic review of our businesses. Faced with a continuing
deterioration of our subsidiary businesses and a calamitous
downturn in the telecommunications sector generally, our Board of
Directors determined that it was appropriate for certain of our
operating subsidiaries to seek bankruptcy protection. During the
current fiscal year, our operating subsidiaries filed voluntary
petitions under Chapter 11 of the bankruptcy code. For further
details regarding such filings, see the section entitled "Business
- Bankruptcy Proceedings" in the footnotes to the financial
statements. At this same time, we announced that we were exploring
the option of diversifying our business by entering into the
financial services sector or another industry.

     As of June 30, 2002, we effectively had no operations, no
sources of revenue and no profits, and do not anticipate being in a
position to resume operations until we promulgate and implement a
new business plan. We cannot predict when or if such a plan will be
put into place, what it may entail or whether we will be successful
in such a new business venture.

     During the six months ended June 30, 2002, no revenue was
generated based on (i) the termination of operations of our debtor
subsidiaries, which have historically provided all significant
revenues for us and (ii) uncertainty surrounding our plans to
explore opportunities available in the financial services sector
and other industries. As of December 31, 2001, e.Volve was no
longer terminating traffic for any customers. During the current
fiscal year, e.Volve's only significant customer had been Qwest,
which accounted for approximately 70% of consolidated revenues for
the six months ended December 31, 2001. e.Volve is no longer
providing services to Qwest, and as part of our debtor
subsidiaries' amended plan, substantially all of the assets
associated with such services are being liquidated. In addition and
in connection with the debtor subsidiaries' bankruptcy proceedings,
AxisTel ceased all telecommunications services and as part of our
debtor subsidiaries' amended plan, substantially all of the assets
associated with those services are being liquidated as well.

     We currently anticipate that we will not have any revenue from
telecommunications or any other services in the near term. In
addition, and as part of the amended plan, substantially all of the
telecommunications assets of the debtor subsidiaries are being sold
and they will be unable to provide such services in the future.


                               -16-

<PAGE>


     BASIS OF PRESENTATION

     The accompanying consolidated financial statements include our
accounts and those of our wholly owned subsidiaries for all periods
presented, except as described below. On April 2, 2001, iGlobal,
one of our subsidiaries, filed a voluntary petition for protection
under Chapter 7 of the bankruptcy code. The financial results of
iGlobal are included in the financial statements from its
acquisition on March 10, 2000, through commencement of the
bankruptcy proceedings on April 2, 2001. The consolidated balance
sheets as of June 30, 2001, and June 30, 2002, do not include the
accounts of iGlobal due to the decision to dispose of iGlobal
during the quarter ended March 31, 2001. On July 30, 2001, our
principal operating subsidiaries, including AxisTel and e.Volve
and certain of their subsidiaries, filed voluntary petitions for
protection under Chapter 11 of the bankruptcy code. During the
fiscal year ended June 30, 2002, all of the revenues and direct
costs reflected in the consolidated financial statements resulted
from the operations of e.Volve and AxisTel.

     The consolidated financial statements for us and our
subsidiaries that are not involved in bankruptcy proceedings have
been prepared in accordance with accounting principles generally
accepted in the United States of America applicable to a going
concern. Our consolidated financial statements presented as of June
30, 2001, do not include the accounts of iGlobal due to our
management's decision to abandon iGlobal operations during the
quarter ended March 31, 2001. For further details regarding the
bankruptcy proceedings of iGlobal, see the section entitled
"Acquisition and Disposal of iGlobal" in the footnotes to the
financial statements. At June 30, 2002, the assets and liabilities
of the debtor subsidiaries have been deconsolidated, as the
liquidating trust controls their assets.  For further details
regarding the debtor subsidiaries bankruptcy proceedings, see the
section entitled "Business - Bankruptcy Proceedings" in the
footnotes to the financial statements. We have recorded an
accrual of approximately $1.2 million in the accompanying financial
statements for the estimated costs of liquidating substantially
all of the assets and liabilities of these entities. The
estimated realizable values and settlement amounts may be different
from the proceeds ultimately received or payments ultimately made.

     Revenues. For the first six months of the fiscal year ended
June 30, 2002, two of our indirect wholly-owned operating
subsidiaries, AxisTel and e.Volve, provided telecommunications
services. These subsidiaries ceased operations in connection with
their bankruptcy filings, effective September of 2001 and December
of 2001, respectively. Since that date, neither we nor our debtor
subsidiaries have conducted operations or generated revenue. Qwest
accounted for 70% of the consolidated revenues for the twelve
months ended June 30, 2002. We are currently not providing any
products or services of any kind (including telecommunications
services) to any customers.

     Direct Costs. Direct costs included per minute termination
charges, lease payments and fees for fiber optic cable.
Historically, the call termination expense component of these
direct costs has declined as measured on a cost per minute basis.

     Prior to December 31, 2001, we provided wholesale
telecommunication services from the United States to Mexico through
e.Volve's operations. The majority of e.Volve's termination fees
and certain fiber optic lease payments were payable in Mexican
pesos. As a result, e.Volve was exposed to exchange rate risk due
to fluctuation in the Mexican peso compared to the United States
dollar. We did not maintain financial hedges against the effects of
fluctuations in the peso to dollar exchange rate. Since December of
2001, e.Volve has not terminated traffic for Qwest or any other
customers and, as such, there is no current exposure to exchange
rate risk due to fluctuation of the Mexican peso.

     Selling, General and Administrative Expenses. These expenses
include general corporate expenses, management and operations
salaries and expenses, professional fees, sales and marketing
expenses, travel expenses, benefits, facilities costs and
administrative expenses. Currently, we maintain our corporate
headquarters in Dallas, Texas. We provided administrative services
to our debtor subsidiaries pursuant to an administrative services
agreement approved by the bankruptcy court. The agreement provided
that our debtor subsidiaries pay us $30,000 per week for legal,
accounting, human resources and other services. The original
agreement expired on April 2, 2002, and an interim agreement was
reached whereby, the liquidating trust, as successor-in-interest to
our debtor subsidiaries, paid us $40,000 per month for the same
services. The interim agreement expired on August 15, 2002. We are
currently negotiating the terms of an on-going agreement with the
liquidating trust. As of June 30, 2002, we had an outstanding
receivable from the debtor subsidiaries relating to the provision
of such administrative services of approximately $0.5 million. Due
to the uncertainty surrounding the collection of the receivable, it
has been fully reserved.

     Depreciation and Amortization. Depreciation and amortization
represents the depreciation of property and equipment and the
amortization of goodwill resulting from the Initial Transaction and
the acquisition of iGlobal. Due to the significant impairment
losses recorded during fiscal 2001 and the liquidation accounting
for our debtor subsidiaries, we expect our depreciation and
amortization costs to decrease significantly.


                               -17-

<PAGE>


     Equity in Loss of Investments. Equity in loss of investments
results from our minority ownership in certain non-impaired
investments that are accounted for under the equity method of
accounting. Under the equity method, our proportionate share of
each of our investments' operating losses is included in equity in
loss of investments. We anticipate that our strategic investments
will continue to incur operating losses and we expect to record
future charges to earnings as we record our proportionate share of
such losses incurred by the investee. For those equity investments
which have been impaired completely, we ceased recording our share
of losses incurred by the investee.

     Net Gain on Liquidation of Debtor Subsidiaries. Net gain on
liquidation of debtor subsidiaries results from liquidation
accounting for our debtor subsidiaries, which are involved in
Chapter 11 bankruptcy proceedings and deconsolidation of assets and
liabilities for the debtor subsidiaries. Pursuant to liquidation
accounting, all debtor subsidiary assets have been stated at
estimated realizable values. Similarly, liabilities have been
reflected at estimated settlement amounts, subject to the approval
of the bankruptcy court, with those secured by specific assets
being offset against such amounts, as allowed. The estimated
realizable values and settlement amounts may be different from the
proceeds ultimately received or payments ultimately made.

     SUMMARY OF OPERATING RESULTS

     The table below summarizes our consolidated operating results:


<TABLE>
<CAPTION>

                                                                         For the Fiscal Year Ended June 30,
                                                  ------------------------------------------------------------------------
                                                       2002         %           2001         %           2000         %
                                                  -------------  -------   -------------  -------   -------------  -------

                                               <c>              <c>     <c>              <c>     <c>              <c>
Revenues                                          $  10,486,982    100%    $  72,031,554    100%    $  55,354,030    100%

Operating expenses:
  Direct costs                                       14,614,766    139%       70,807,489     98%       51,656,016     93%
  Selling, general and administrative expenses       14,803,110    141%       28,867,054     40%       22,471,732     41%
  Reorganization and restructuring charge                     -      0%        3,898,656      6%                -      0%
  Impairment loss                                     2,400,543     23%      120,476,247    167%                -      0%
  Depreciation and amortization                       1,370,958     13%       20,453,633     28%       10,007,859     18%
                                                  -------------  --------  -------------  --------  -------------  --------
                                                     33,189,377              244,503,079               84,135,607
Loss from operations, before
  other (income) expense                            (22,702,395)  (216%)    (172,471,525)  (239%)     (28,781,577)   (52%)

Other (income) expense:
  Interest expense (income), net                         17,355      0%         (402,376)    (1%)        (920,161)    (2%)
  Write off of unamortized debt discount                      -      0%                -      0%          917,615      2%
  Equity in loss of investments                       1,720,000     16%        9,023,882     13%        5,236,183      9%
  Foreign currency (gain) loss                           98,135      1%          130,511      0%         (168,431)    (0%)
  Net gain on liquidation of debtor subsidiaries    (16,074,355)  (153%)               -      0                 -      0%
  Other                                                (668,993)    (6%)         341,052      1%           29,057      0%
                                                  -------------  --------  -------------  --------  -------------  --------
                                                    (14,907,858)  (142%)       9,093,069     13%        5,094,263      9%
                                                  -------------  --------  -------------  --------  -------------  --------

Net loss                                             (7,794,537)   (74%)    (181,564,594)  (252%)     (33,875,840)   (61%)

Imputed preferred dividend                                    -               (2,299,750)             (10,407,954)
Series D preferred dividends                           (603,432)                (324,860)                       -
                                                  -------------            -------------            -------------
Net loss allocable
  to common shareholders                          $  (8,397,969)           $(184,189,204)           $ (44,283,794)
                                                  =============            =============            =============

Net loss per share - (basic and diluted)          $       (0.16)           $       (3.53)           $       (1.14)
                                                  =============            =============            =============
Weighted average number of shares
  outstanding - (basic and diluted)                  52,323,701               52,222,671               38,739,230
                                                  =============            =============            =============





</TABLE>






                               -18-

<PAGE>



FISCAL YEAR ENDED JUNE 30, 2002 COMPARED TO FISCAL YEAR ENDED JUNE
30, 2001

     Revenues. Revenues decreased to $10.5 million during fiscal
2002, a decrease of $61.5 million or 85% from $72.0 million in
fiscal 2001. No revenue was generated for the six months ended June
30, 2002, based on (i) the termination of operations of our debtor
subsidiaries, which have historically provided all significant
revenues for us and (ii) uncertainty surrounding our plans to
explore other opportunities. Prior to the elimination of our
operations, fiscal 2002 revenues were generated through the sale
of: (i) 97% voice services and (ii) 3% broadband services. Fiscal
2001 revenues were generated through the sale of: (i) 94.5% voice
services, (ii) 3.5% broadband services and (iii) 2% internet
services.

     During fiscal 2002, our subsidiaries transmitted approximately
134 million minutes versus 753 million minutes in fiscal 2001, a
decrease of 82%. The average revenue per minute decreased to
approximately $0.08 in fiscal 2002 from $0.10 in fiscal 2001.

     We currently do not anticipate generating additional revenues
from operations until we successfully redeploy some or all of our
remaining cash assets, if at all. No assurances can be given that
we will ever generate revenues from operations in the future.

     Direct Costs. Direct costs decreased to $14.6 million during
fiscal 2002 from $70.8 million during fiscal 2001, a decrease of
$56.2 million. The decrease resulted from ceasing operations during
fiscal 2002. As a percentage of revenues, direct costs during
fiscal 2002 increased to 139% from 98% during fiscal 2001. The
increase in direct costs as a percentage of revenues was primarily
due to the lack of revenues during the period in which we
terminated the operations of our debtor subsidiaries while fixed
line costs remained relatively constant.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 49% or $14.1 million during
fiscal 2002 to $14.8 million from $28.9 million in fiscal 2001. The
decrease in selling, general and administrative expenses during
fiscal 2002 resulted primarily from (i) downsizing of the
workforce, (ii) closing facilities, (iii) termination of operations
as a result of the various bankruptcy proceedings and (iv) a
decrease in professional fees. As a percentage of revenues,
selling, general and administrative expenses during fiscal 2002
increased to 141% from 40% during fiscal 2001. The increase was
primarily due to the lack of revenues during the period in which we
terminated the operations of our debtor subsidiaries while general
and administrative expenses remained relatively constant.

     Reorganization and Restructuring Charge. In October 2000, we
began the execution of a plan to consolidate the operations and
management of our wholly-owned subsidiaries into a single broadband
network and communication services company. The plan focused on
providing broadband and voice services to other service providers,
which resulted in the discontinuation of retail Internet access
services. We recorded reorganization and restructuring expenses
totaling approximately $3.9 million during fiscal 2001. The
reorganization and restructuring charge, of $3.9 million includes
cash expenditures totaling $1.5 million related to (i) personnel
severance of $0.6 million (ii) lease abandonment of $0.6 million,
and (iii) other costs of $0.3 million and $2.4 million of non-cash
charges, primarily for the write-down of impaired assets and the
fair value of stock options granted to a former employee as part
of his separation agreement. The positions eliminated included
three senior management positions as a result of the management
consolidation and 16 technical and support positions related to
the discontinuation of the retail Internet access services.

     Impairment Loss. Impairment loss decreased to $2.4 million
during fiscal 2002 from $120.5 million during fiscal 2001, a
decrease of $118.1 million. During fiscal 2002, we completely
impaired our investment in ORB due to a negative liquidation
analysis. During fiscal 2001 we recorded an impairment loss
totaling $120.5 million related to (i) our investment in iGlobal,
(ii) goodwill relating to the Initial Transaction, (iii) equity
investments and (iv) property and equipment. As previously
discussed, during fiscal 2001 we made the decision to discontinue
all iGlobal product offerings, services and operations which
resulted in recording an impairment loss of $61.6 million,
comprised primarily of the write off of non-cash goodwill. Further,
in assessing the recoverability of the remaining goodwill related
to the Initial Transaction, we recorded an impairment loss of $24.2
million. We also recorded an impairment loss of $10.8 million
related to our equity investments as a result of the declining
market conditions and the uncertainties surrounding the
recoverability of those investments. As a result of the decision to
discontinue the historical business of AxisTel, we recorded an
impairment loss of $23.9 million related to certain of AxisTel's
network assets. The impairment charge of $23.9 million includes the
write-down of AxisTel's New York to Los Angeles fiber optic circuit
of $12.4 million and related prepaid maintenance of $1.6 million.

     Depreciation and Amortization. As a result of the
reorganization transactions in September of 1999 and October of
1999 and the acquisition of iGlobal in March of 2000, we recorded
approximately $116.0 million in goodwill. During fiscal 2001 all of
the goodwill was written off; therefore, no amortization of
goodwill was recorded during fiscal 2002. Amortization of goodwill
during fiscal 2001 was $15.3 million. To the extent there are no
future acquisitions, we do not anticipate incurring any additional
amortization expense due to the goodwill impairment charges
recorded during the March 2001 period. Depreciation recorded on
fixed assets during the current period totaled $1.4 million
compared to $5.2 million for the prior period. Reduced depreciation
expense during the current fiscal year is the result of asset
impairment charges taken during the fiscal year ended June 30, 2001,
and liquidation accounting for our debtor subsidiaries during
fiscal 2002, where the assets of the debtor subsidiaries were
impaired and subsequently written off.


                               -19-

<PAGE>


     Interest Expense (Income). We recorded interest expense, net
of income, of approximately $17,000 in fiscal 2002 compared to
interest income, net of expense, of approximately $0.4 million in
fiscal 2001. The decrease in interest income is due to lower cash
balances during fiscal 2002.

     Equity in Loss of Investments. Equity in loss of investments
resulted from our minority ownership in certain investments that
are accounted for under the equity method of accounting. Under the
equity method, our proportionate share of each investment's
operating losses is included in equity in loss of investments.
Equity in loss of investments was $1.7 million in fiscal 2002 and
$9.0 million during fiscal 2001. The fiscal 2002 loss primarily
resulted from our 22% equity interest in Gemini Voice. We anticipate
that our investments accounted for under the equity method will
continue to recognize operating losses, which will result in
future charges to earnings as we record our proportionate share of
such losses. For those investments that were impaired completely in
fiscal 2001, we have ceased recording our share of losses incurred
by the investee.

     Foreign Currency Gain or Loss. Foreign currency loss during
fiscal 2002 and 2001 was approximately $0.1 million for each year.
This variance was the result of unfavorable exchange rate
fluctuations in the Mexican peso compared to the U.S. dollar.

     Net Gain on Liquidation of Debtor Subsidiaries. During fiscal
2002, we recorded a net gain on liquidation of debtor subsidiaries
of $16.1 million related to (i) a write down of long-lived assets
of $8.1 million, (ii) an accrual estimate of $0.5 million for the
costs of liquidating substantially all of the assets of the debtor
subsidiaries, (iii) $1.5 million in cash expenditures to settle
administrative claims associated with the bankruptcy, (iv) a gain
on the write off of capital lease obligations of $7.7 million, (v)
a net gain on the write off of debtor subsidiary assets and
liabilities of $17.8 million under liquidation accounting and (vi)
a gain of $0.7 million from the deconsolidation of the debtor
subsidiaries assets.

     Other (income) expense. During fiscal 2002, we recorded other
income, net of other expense of approximately $0.7 million compared
to other expense, net of other income of approximately $0.3 million
in fiscal 2001. The net gain recorded in fiscal 2002 is related to
(i) a $0.4 million gain on the receipt of liquidation investment
proceeds from Launch Center 39, an investment written off in the
prior fiscal year and (iv) a $0.3 million net gain on the sale of
our indirect non-debtor subsidiary, e.Volve Technology Group de
Mexico, S.A. de C.V. In a stock purchase agreement dated February
28, 2002, a wholly owned subsidiary of eVolve, e.Volve Technology
Group de Mexico, S.A. de C.V. was sold to a company that is owned
by one or more former employees of the subsidiary. The transaction
closed on April 12, 2002. The buyer acquired telecommunications
assets and assumed certain liabilities of e.Volve Technology Group
de Mexico, S.A. de C.V. and received a payment of approximately
$70,000.  The net expense for fiscal 2001 of approximately $0.3
million is primarily related to Delaware franchise tax expense for
the period.

FISCAL YEAR ENDED JUNE 30, 2001 COMPARED TO FISCAL YEAR ENDED  JUNE
30, 2000

     Revenues. Revenues increased to $72.0 million during fiscal
2001, an increase of $16.7 million or 30.0% from $55.4 million in
fiscal 2000. Fiscal 2001 revenues were generated through the sale
of: (i) 94.5% voice services, (ii) 3.5% broadband services and
(iii) 2% Internet services. Fiscal 2000 revenues were generated
through the sale of (i) 96% voice services, (ii) 3.0% broadband
services and (iii) 1.0% Internet services.

     The increase in fiscal 2001 revenues was primarily the result
of both (i) revenues generated from AxisTel, which was acquired as
part of the Initial Transaction, being included for a full twelve
months during the current year versus nine months in the prior year
and (ii) a 42.0% increase in the number of minutes transmitted.
During fiscal 2001, our subsidiaries transmitted approximately 753
million minutes versus 504 million minutes in fiscal 2000, an
increase of 49%. The average revenue per minute decreased to $0.10
in fiscal 2001 from $0.11 in fiscal 2000.

     Direct Costs. Direct costs increased to $70.8 million during
fiscal 2001 from $51.7 million during fiscal 2000, an increase of
$19.1 million. Approximately $15.5 million of the increase during
the current year is a result of the increased volume of minutes
transmitted over the network. The remainder of the increase is
primarily related to increased fixed line costs associated with
adding network capacity during the first and second quarters in
anticipation of growth for broadband services. As a percentage of
revenues, direct costs during fiscal 2001 increased to 98% from 93%
during fiscal 2000. The increase in direct costs as a percentage of
revenues was primarily due to network expansion during the first
and second quarters.


                               -20-

<PAGE>


     Selling, General and Administrative Expenses. Selling, general
and administrative expenses increased 28% or $6.4 million during
fiscal 2001 to $28.9 million from $22.5 million in fiscal 2000. The
increase in selling, general and administrative expenses during
fiscal 2001 resulted primarily from (i) increase of $8.0 million in
costs related to the global network build-out of our operating
subsidiaries and the associated expansion of staffing and
facilities (ii) increased bad debt expense of $2.8 million due to
an increase in revenues and a deterioration in the credit quality
of certain customers of AxisTel and e.Volve and (iii) increased
iGlobal expense of $1.9 million due to the inclusion of iGlobal for
9 months during fiscal 2001, compared to 3 months during fiscal
2000. The increase was offset in part by decreases in (i)
professional fees and consulting expense of $3.4 million, (ii)
stock-based compensation of $1.2 million and (iii) vendor
settlement costs included in the prior year of $1.7 million.

     Reorganization and Restructuring Charge. In October of 2000, we
began execution of a plan to consolidate the operations and
management of its wholly-owned subsidiaries into a single broadband
network and communication services company. Additionally, the plan
had a renewed focus on providing broadband and voice services to
other service providers, which resulted in the discontinuation of
retail Internet access services. We recorded reorganization and
restructuring expenses totaling $3.9 million during fiscal 2001.
The reorganization and restructuring resulted in the elimination of
19 positions, which occurred over approximately a three-month
period. The reorganization and restructuring charge of $3.9 million
includes cash expenditures totaling $1.5 million related to (i)
personnel severance of $0.6 million (ii) lease abandonment of $0.6
million, and (iii) other costs of $0.3 million and $2.4 million of
non-cash charges, primarily for the write-down of impaired assets
and the fair value of stock options granted to a former employee as
part of his separation agreement.

     Impairment Loss. During fiscal 2001 we recorded an impairment
loss totaling $120.5 million related to (i) our investment in
iGlobal, (ii) goodwill relating to the Initial Transaction, (iii)
equity investments and (iv) property and equipment. As previously
discussed, during fiscal 2001 we made the decision to discontinue
all iGlobal product offerings, services and operations which
resulted in recording an impairment loss of $61.6 million,
comprised primarily of the write off of non-cash goodwill. Further,
in assessing the recoverability of the remaining goodwill related
to the Initial Transaction, we recorded an impairment loss of $24.2
million. We also recorded an impairment loss of $10.8 million
related to our equity investments as a result of the declining
market conditions and the uncertainties surrounding the
recoverability of investments. As a result of the decision to
discontinue the historical business of AxisTel, we recorded an
impairment loss of $23.9 million related to certain of AxisTel's
network assets. The impairment charge of $23.9 million includes the
write-down of AxisTel's New York to Los Angeles fiber optic circuit
of $12.4 million and related prepaid maintenance of $1.6 million.

     Depreciation and Amortization. As a result of the
reorganization transactions in September of 1999 and October of
1999 and the acquisition of iGlobal in March of 2000, we recorded
approximately $113.9 million in goodwill. Amortization of goodwill
during the twelve months ended June 30, 2001 totaled $15.3 million
compared to $7.5 million in fiscal 2000. During fiscal 2001 we
recorded an impairment loss of $86.6 million relating to goodwill.
As a result of the decision to dispose of iGlobal operations,
iGlobal-related goodwill of $62.4 million was written off.
Additionally, in assessing the recoverability of the goodwill
related to the September 1999 and October 1999 transactions, we
wrote-off the remaining goodwill of $24.2 million. In July 2001,
the FASB issued SFAS No. 142, "Goodwill and Other Intangibles".
Under SFAS 142, goodwill is no longer subject to amortization over
its estimated useful life. To the extent there are any future
acquisitions, there will no longer be amortization expense related
to goodwill. Depreciation recorded on fixed assets during fiscal
2001 totaled $4.9 million compared to $2.5 million during fiscal
2000. The increased depreciation is reflective of our continued
investment in our network infrastructure during fiscal 2001.

     Interest (Income)Expense, Net. We recorded interest income,
net of expense of $0.4 million in fiscal 2001 compared to $0.9
million in fiscal 2000. The decreased interest income is due to
lower cash balances during fiscal 2001. The higher fiscal 2000 cash
balances resulted from private placements of preferred and common
stock of $86.7 million in fiscal 2000.

     Equity in Loss of Investments. Equity in loss of investments
resulted from our minority ownership in certain investments that
are accounted for under the equity method of accounting. Under the
equity method, our proportionate share of each affiliate's
operating losses and amortization of our net excess investment over
our equity in each affiliate's net assets is included in equity in
loss of investments. Equity in loss of investments was $9.0 million
in fiscal 2001 from $5.2 million during fiscal 2000, an increase of
$3.8 million. This loss primarily resulted from our 22% equity
interest in Gemini Voice. We anticipate that our strategic
investments accounted for under the equity method will continue to
invest in the development of the their products and services, and
will continue to recognize operating losses, which will result in
future charges to earnings as we record our proportionate share of
such losses.

     Foreign Currency Gain or Loss. Foreign currency loss during
fiscal 2001 was $0.1 million compared to a gain of $0.2 million
during fiscal 2000. This variance was the result of unfavorable
exchange rate fluctuations in the Mexican peso compared to the
United States dollar.


                               -21-

<PAGE>


     LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 2002, we had consolidated current assets of $10.1
million, including cash and cash equivalents of approximately $9.9
million and $8.3 million of net working capital. We currently have
a monthly cash requirement of approximately $0.2 million to fund
recurring corporate general and administrative expenses, excluding
costs associated with the debtor subsidiaries' bankruptcy
proceedings. Historically, we have funded our subsidiary operations
primarily through the proceeds of private placements of our common
and preferred stock and borrowings under loan and capital lease
agreements. We do not currently believe that either of these
funding sources will be available in the near term. Principal uses
of cash have historically been to fund (i) operating losses; (ii)
acquisitions and strategic investments; (iii) working capital
requirements and (iv) capital expenditures, primarily related to
network equipment and capacity. Due to our financial performance,
the lack of stability in the capital markets and the economy's
recent downturn, our only source of funding, in the near term, is
expected to be cash on hand.

     Assuming we make an investment within the next two years, with
no current return on that investment, given our current
obligations, we expect to have approximately $4.0 million of cash
available for investment. Current obligations include (i) funding
working capital, (ii) funding the liquidating trust and (iii)
funding the Qwest litigation. No assurance can be given that we
will be able to deploy any remaining cash assets or that if
deployed we can continue as a going concern with the new business
model.

     As discussed in footnote 1 of the financial statements, our
debtor subsidiaries have gone through bankruptcy proceedings under
Chapter 11 of the bankruptcy code. As the ultimate parent, we
agreed to provide our debtor subsidiaries with up to $1.6 million
in secured debtors-in-possession financing. Immediately prior to
the confirmation hearing, we increased the credit facility to
approximately $1.9 million, which had been advanced as of March 31,
2002. The credit facility made funds available to permit the debtor
subsidiaries to pay employees, vendors, suppliers, customers and
professionals consistent with the requirements of the bankruptcy
code. This credit facility provided for interest at the rate of
prime plus 3.0% per annum and provided "super-priority" lien
status, meaning that we had a valid first lien pursuant to the
bankruptcy code on substantially all of the debtor subsidiaries'
assets. The facility maintained a default interest rate of prime
plus 5.0% per annum.

     In connection with the amended plan being confirmed by the
bankruptcy court and becoming effective on April 3, 2002, the
credit facility was converted into a new secured note in the
principal amount of approximately $2.5 million, representing the
principal amount of the debtors-in-possession financing, accrued
interest and applicable attorneys fees. Subsequent to fiscal year
end, the new secured note was amended to approximately $2.9
million, representing additional trust funding, payments to an
employee, accrued interest and applicable attorneys fees. The new
secured note is guaranteed by the debtor subsidiaries under an
agreement in which the debtor subsidiaries have pledged
substantially all of their remaining assets as collateral. Due to
the uncertainty surrounding the collection of the note, it has been
fully reserved.

     We currently anticipate that we will not generate any revenue
in the near term based on (i) the termination of the operations of
our debtor subsidiaries which have historically provided all of our
significant revenues on a consolidated basis and (ii) uncertainties
surrounding our plan to explore opportunities available in the
financial services industry or any other industry. In recent
months, we have conducted preliminary due diligence on various
investment opportunities; however, management has currently elected
not to continue to pursue any such opportunities at this time.
Accordingly, we may be required to obtain additional outside
funding which could be difficult to obtain on acceptable terms, if
at all. Failure to obtain adequate funding will jeopardize our
ability to continue as a going concern. Due to the uncertainty
surrounding Novo Networks, management is unable to determine
whether current available financing will be sufficient to meet the
funding requirements of (i) our debtor subsidiaries through the
liquidation process, (ii) our ongoing general and administrative
expenses and (iii) the undetermined capital requirements relating
to our plan to explore other opportunities including, without
limitation, those in the financial services sector or other
industries.

     The accompanying consolidated financial statements have been
prepared assuming that we will continue as a going concern. The
financial statements do not include any adjustments that might
result should we be unable to continue as a going concern.

                               -22-

<PAGE>


     The net cash provided by or used in operating, investing, and
financing activities for the years ended June 30, 2002, 2001 and
2000 is summarized below:

<TABLE>
<CAPTION>

                                           For the Year Ended June 30,
                                   ------------------------------------------
                                       2002           2001           2000
                                   ------------   ------------   ------------

                                <c>            <c>            <c>
Net cash provided by (used in):
  Operating activities             $ (6,176,754)  $(23,580,873)  $ (9,159,753)
  Investing activities                  471,008     (4,581,003)   (34,978,025)
  Financing activities               (1,119,486)     4,094,167     84,862,645
                                   ------------   ------------   ------------
                                   $ (6,825,232)  $(24,067,709)  $ 40,724,867
                                   ============   ============   ============

</TABLE>


     The decrease in net cash used in operating activities in
fiscal 2002 as compared to fiscal 2001 was principally a result of
the debtor subsidiaries' bankruptcy and wind down of operations
associated with the bankruptcy. The increased use of cash in
operating activities during fiscal 2001 compared to fiscal 2000 was
primarily attributable to increased overhead costs associated with
expanding our subsidiaries' overall operations which encompass: (i)
networks, (ii) facilities, (iii) employee costs and (iv) costs
incurred by companies acquired during fiscal 2000.

     Net cash provided by investing activities was approximately
$0.5 million in fiscal year 2002. Net cash used in investing
activities was approximately $4.6 million and $35.0 million in
fiscal 2001 and 2000, respectively. Cash flows provided by
investing activities in the current year period consisted primarily
of a distribution from an investment of approximately $0.4 million.
Investing activities in fiscal 2001 was principally the result of
purchases of network equipment of $3.0 million by our subsidiaries
and equity investments of $1.1 million. Fiscal 2000 investing
activities were comprised primarily of investments in companies of
$21.1 million and purchases of network equipment and other fixed
assets by our subsidiaries of $13.6 million.

     Cash flows used in financing activities totaled approximately
$1.1 million in fiscal 2002. Cash flows provided by financing
activities totaled $4.1 million and $84.9 million in fiscal years
2001 and 2000, respectively. Fiscal 2002 financing activities
consisted of capital lease payments of $1.1 million. Fiscal 2001
financing activities consisted principally of (i) net proceeds from
the private placement of our common and preferred stock of $6.5
million, and (ii) borrowings by a subsidiary under a credit
agreement for equipment purchases of $0.3 million, offset partially
by capital lease payments of $2.8 million. Cash flows provided by
financing activities for fiscal 2000 consisted principally of net
proceeds from the private placement of our common and preferred
stock of $86.7 million offset in part by capital lease payments of
$1.3 million.

     CRITICAL ACCOUNTING STANDARDS

     Basis of Presentation

     The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets 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. The consolidated financial statements include
our accounts and those of our wholly owned subsidiaries.

     The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America applicable to a going concern. Our
consolidated financial statements presented as of June 30, 2001, do
not include the accounts of iGlobal due to our management's
decision to abandon iGlobal operations during the quarter ended
March 31, 2001. For further details regarding iGlobal, see the
section entitled "Acquisition and Disposal of iGlobal" in the
footnotes to the financial statements. At June 30, 2002, the assets
and liabilities of the debtor subsidiaries have been
deconsolidated, as the liquidating trust controls their assets. For
further details regarding the debtor subsidiaries bankruptcy
proceedings, see the section entitled "Business - Bankruptcy Proceedings"
in the footnotes to the financial statements. We have recorded an
accrual of approximately $1.2 million in the accompanying financial
statements for the estimated costs of liquidating substantially all of
the assets and liabilities of these entities. The estimated realizable
values and settlement amounts may be different from the proceeds
ultimately received or payments ultimately made.


                               -23-

<PAGE>


     Principles of Consolidation and Accounting for Ownership in
     Subsidiaries

     We account for our ownership interests in subsidiaries under
three methods: consolidation, equity method and cost method. The
applicable accounting method is generally determined based on our
voting interest in the subsidiary, as well as our degree of
influence over each of the subsidiaries.

     Consolidation. Companies in which we directly or indirectly
owns more than 50% of the outstanding voting securities are
generally accounted for under the consolidation method of
accounting. Under this method, a subsidiary's accounts are
reflected within our consolidated financial statements, except as
discussed in the Basis of Presentation above.

     Equity Method. Subsidiaries whose results are not
consolidated, but over whom we exercise significant influence, are
accounted for under the equity method of accounting. Whether or not
we exercise significant influence with respect to a subsidiary
depends on an evaluation of several factors including, among
others, representation on the subsidiary's Board of Directors and
ownership level, which is generally a 20% to 50% interest in the
voting securities of the subsidiary, including voting rights
associated with our holdings in common stock, preferred stock and
other convertible instruments in the subsidiary. Under the equity
method of accounting, a subsidiary's accounts are not reflected
within the accompanying consolidated statements of operations. Our
proportionate share of each investment's operating earnings and
losses are included in the caption "Equity in loss of investments"
in the accompanying consolidated statements of operations.

     Cost Method. Subsidiaries not accounted for under either the
consolidation or the equity method of accounting are accounted for
under the cost method of accounting. Under this method, our share
of the earnings or losses of these companies is not included in the
accompanying consolidated statements of operations. In certain
cases, we have representation on the Board of Directors of the
subsidiaries accounted for under the cost method.

     Long-lived Assets

     Our long-lived assets consist of property and equipment. In
accordance with the Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-lived Assets and for Long-
lived Assets to be Disposed of", we assess the recoverability of
long-lived assets by determining whether the net book value of the
assets can be recovered through projected undiscounted future cash
flows. The amount of impairment, if any, is measured based on fair
value and is charged to operations in the period in which
impairment is determined by us. During the fiscal year ended June
30, 2002, long-lived assets related to the debtor subsidiaries were
written off by recording a loss of $7.5 million to our net gain on
liquidation of debtor subsidiaries account. During the fiscal year
ended June 30, 2001, we recorded impairment losses related to
goodwill and certain property and equipment totaling $120.5
million. No impairment losses were recorded in fiscal 2000.

     Revenue Recognition

     As of December 31, 2002, and pursuant to the amended
bankruptcy filings, we effectively have no operations, no sources
of revenue and no profits unless and until we implement a new
business plan. Prior to December of 2001, revenues for communication
services were recorded based on minutes (or fractions thereof) of
customer usage. We recorded payments received in advance for
prepaid calling card services and services to be supplied under
contractual agreements as deferred revenues until such related
services were provided. Due to the bankruptcy of the debtor
subsidiaries, there were no deferred revenues at June 30, 2002.
However, at June 30, 2001, deferred revenues were approximately
$0.7 million.

     Internet access subscription service revenues were recognized
over the period that services are provided, which relates to fiscal
2001 before the disposal of iGlobal.

     Server collocation service revenues were recognized ratably
over the contractual period.


                               -24-

<PAGE>


     Earnings Per Share

     SFAS No. 128, "Earnings Per Share" ("EPS") requires dual
presentation of basic EPS and diluted EPS on the face of the income
statement for all entities with complex capital structures. Basic
EPS is computed as net income divided by the weighted average
number of common shares outstanding for the period. The weighted
average shares outstanding for fiscal 2000 also includes 71,513
shares to be issued which were outstanding from March 10, 2000.
During fiscal 2001, we determined we did not have an obligation to
issue the additional shares, and the 71,513 shares have been
removed from the weighted average number of common shares
outstanding. Diluted EPS reflects the potential dilution that could
occur from common shares issuable through stock options, warrants
and convertible debentures. Diluted EPS has not been presented for
the effects of stock options, warrants and convertible debentures,
as the effect would be antidilutive. Accordingly, basic and diluted
EPS did not differ for any period presented. Had the effect not
been antidilutive, 71,227,758 shares would have been included in
the diluted earnings per share calculation for the year ended June
30, 2002. For purposes of computation of EPS, the shares issued for
the acquisition of 67% of e.Volve (11,365,614 shares) are deemed to
have been in existence for the entire period.

     Segment Information

     SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", established standards for reporting
information about operating segments in the consolidated financial
statements. Operating segments are defined as components of an
enterprise about which separate financial information is available
that is evaluated regularly by the chief operating decision maker,
or decision making group, in deciding how to allocate resources and
in assessing performance. We determined that we operate in one
segment.

     CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

<TABLE>
<CAPTION>

                                                Payments due
                    -------------------------------------------------------------------------
                     Less than 1 yr.          1-3 yrs.       4-5 yrs.  6 yrs or more  Total
                    -------------------------------------------------------------------------

                 <c>                      <c>                <c>          <c>     <c>
Operating Leases    $  166,197               131,894            0            0       $298,091

</TABLE>





     EFFECTS ON INFLATION

     We do not believe that the businesses of our subsidiaries are
impacted by inflation to a significantly different extent than is
the general economy. However, there can be no assurances that
inflation will not have a material effect on operations in the
future.

     ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
     RISK

     We are exposed to the impact of interest rate and other risks.
We have investments in money market funds of approximately $9.9
million at June 30, 2002. Due to the short-term nature of our
investments, we believe that the effects of changes in interest
rates are limited and would not materially affect profitability.

     ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Please refer to pages F-1 to F-29, as well as FS-1 and FS-2.

     ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
     ACCOUNTING AND FINANCIAL DISCLOSURE

     On July 30, 2002, our Audit Committee and Board of Directors
unanimously recommended the dismissal of Arthur Andersen LLP as our
independent accountant. Arthur Andersen LLP previously served as
our outside auditor since January 2, 2001. For the year ended June
30, 2001, Arthur Andersen LLP's audit report did not contain any
adverse opinion or a disclaimer of opinion nor was it qualified or
modified as to audit scope or accounting principles, except that
such report did state that substantial doubt existed that we could
continue as a going concern.

     During the period from January 2, 2001, through the end of our
fiscal year ended June 30, 2001, and the subsequent interim period
from July 1, 2001, to July 30, 2002 (the date of the referenced
dismissal), there were no disagreements between us and Arthur
Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Arthur
Anderson LLP, would have caused it to make reference to the subject
matter of the disagreement in its report. During the period from
January 2, 2001 through the end of our fiscal year ended June 30,
2001, and the subsequent interim period from July 1, 2001, to July
30, 2002 (the date of the referenced dismissal), there have been no
reportable events (as defined in regulation S-K Item 304(a)(1)(v)).


                               -25-

<PAGE>


     Effective July 30, 2002, Grant Thornton LLP was approved by
our Audit Committee and Board of Directors as our new independent
accountant. We have not previously consulted with Grant Thornton
LLP concerning any accounting, auditing or reporting matter.

     PART III

     ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information called for by Item 10 will be set forth under the
caption "Election of Directors" in our 2002 Proxy Statement, which
will be filed not later than 120 days after the end of our fiscal
year ended June 30, 2002, and which is incorporated herein by this
reference.

     ITEM 11. EXECUTIVE COMPENSATION

     Information called for by Item 11 will be set forth under the
caption "Executive Compensation and Other Matters" in our 2002
Proxy Statement, which will be filed not later than 120 days after
the end of our fiscal year ended June 30, 2002, and which is
incorporated herein by this reference.

     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
     MANAGEMENT

     Information called for by Item 12 will be set forth under the
caption "Security Ownership of Directors, Management and Principal
Stockholders" in our 2002 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended June 30,
2002, and which is incorporated herein by this reference.

     ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information called for by Item 13 will be set forth under the
caption "Certain Relationships and Related Transactions" in our
2002 Proxy Statement, which will be filed not later than 120 days
after the end of our fiscal year ended June 30, 2002, and which is
incorporated herein by this reference.

     ITEM 14. CONTROLS AND PROCEDURES

     There were no significant changes in our internal controls or
in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

     PART IV

     ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
     ON FORM 8-K

     (a) The following documents are filed as part of this report.

     1. Financial Statements:

     Our Consolidated Financial Statements of as of June 30, 2002,
     2001 and 2000.

     2. Financial Statement Schedules

     Schedule II-Valuation and Qualifying Accounts and Reserves


                               -26-

<PAGE>


3. Exhibits

<TABLE>
<CAPTION>

 EXHIBIT                                                                                        FILED
 NUMBER                      DESCRIPTION                        INCORPORATED BY REFERENCE     HEREWITH
 -------  ------------------------------------------------  --------------------------------  --------
                                                              FORM       DATE        NUMBER

 
      <c>                                                 <c>      <c>           <c>         <c>
 2.1      Proposed Disclosure Statement with respect to       10-Q    02/14/2002      2.1
          the Joint Plan by AxisTel Communications, Inc.,
          its Affiliated Debtors and Novo Networks, Inc.
          dated December 31, 2001

 2.2      Joint Plan of Liquidation by and between AxisTel    10-Q    02/14/2002      2.2
          Communications, Inc., Novo Networks Global
          Services, Inc., Novo Networks, International
          Services, Inc., e.Volve Technology Group, Inc.,
          Novo Networks Operating Corp., Novo Networks
          Metro services, Inc., and Novo Networks, Inc.
          dated December 31, 2001

 3.1      Amended and Restated Certificate of                 10-Q    05/15/2000      3.1
          Incorporation of eventures Group, Inc.

 3.2      Amended and Restated Certificate of Designation      10     12/20/1999      3.6
          of Rights, Preferences and Privileges of Series
          A Convertible Preferred Stock, dated October 14,
          1999.

 3.3      Certificate of Designation of Rights,                10     12/20/1999      3.7
          Preferences and Privileges of Series B
          Convertible Preferred Stock, dated as of
          November 10, 1999

 3.4      Certificate of Amendment, dated as of December       10     12/20/1999      3.8
          15, 1999, to the Certificate of Designation of
          Rights, Preferences and Privileges of Series B
          Convertible Preferred Stock.

 3.5      Certificate of Designation, Preferences and         10/A    03/08/2000      3.9
          Rights of Series C Convertible Preferred Stock,
          dated as of February 22, 2000.

 3.6      Amendment to Amended and Restated Certificate of    10-Q    02/14/2001      3.1
          Incorporation, filed with the Secretary of State
          of the State of Delaware on November 13, 2000.

 3.7      Amendment to Amended and Restated Certificate of    10-Q    02/14/2001      3.2
          Incorporation, filed with the Secretary of State
          of the State of Delaware on December 11, 2000.

 3.8      Certificate of Designation, Rights and              10-Q    02/14/2001      4.1
          Preferences of Series D Convertible Preferred
          Stock, filed on December 5, 2000.

 3.9      Amended and Restated By-Laws of eVentures Group,    10-Q    05/15/2000      3.2
          Inc.

 4.1      Registration Rights Agreement, dated as of           8-K    10/07/1999      4.1
          September 22, 1999, among the Registrant and the
          persons and entities set forth on Schedule 1
          thereto (the "First Registration Rights
          Agreement).

 4.2      Addendum to the First Registration Rights           10/A    03/08/2000      4.2
          Agreement, dated as of October 19, 1999, among
          eventures Group, Inc., the persons set forth on
          Schedule 1 thereto and the other parties to the
          First Registration Rights Agreement.

 4.3      Registration Rights Agreement, dated as of          10/A    03/08/2000      4.3
          November 24, 1999, between eVentures Group, Inc.
          and the person and entities signatories thereto,
          as holders of shares of Series B Convertible
          Preferred Stock.

 4.4      Letter Agreement, dated December 15, 1999, to       10/A    03/08/2000      4.4
          the parties to the Registration Rights Agreement
          dated as of September 27, 1999.

 4.5      Registration Rights Agreement, dated as of          10/A    03/08/2000      4.5
          December 31, 1999, between eVentures Group, Inc.
          and the persons and entities signatories
          thereto, as holders of shares of Series C
          Convertible Preferred Stock.

 4.6      Registration Rights Agreement, dated as of March     8-K    03/27/2000      4.1
          10, 2000, among eVentures Group, Inc. and the
          persons and entities listed on Schedule 1
          thereto.

 4.7      Registration Rights Agreement, dated as of April    10-Q    05/15/2000      4.2
          4, 2000, by and among eVentures Group, Inc. and
          the signatories thereto.

 4.8      Registration Rights Agreement, dated as of May      10-K    09/28/2000      4.8
          26, 2000, by and among eventures Group, Inc.,
          Andrew Pakula and Laura Berland.

 4.9      Registration Rights Agreement, dated as of June     10-K    09/28/2000      4.9
          16, 2000, between eVentures Group, Inc. and U.S.
          Telesource.

 4.10     Registration Rights Agreement, dated as of          10-Q    02/14/2001      10.1
          December 5, 2000, among Rock Creek Partners, II,
          Ltd., CB Private Equity Partners L.P. and
          eVentures Group, Inc.

 9.1      Voting Agreement, dated as of December 5, 2000,     10-Q    02/14/2001       9
          among Rock Creek Partners II, Ltd, CB Private
          Equity Partners L.P. and eVentures Group, Inc.

 10.1     Securities Purchase Agreement, dated as of June     10/A    03/08/2000      10.1
          11, 1998, among Orix Global Communications,
          Inc., certain of its shareholders and the
          purchasers named thereunder and Exhibits
          thereto.

 10.2     Debenture, dated as of June 11, 1998.                10     12/20/1999      10.2

 10.3     Letter Agreement, dated as of August 19, 1998        10     12/20/1999      10.3
          between Orix Global Communications and Infinity
          Investors Limited.

 10.4     Debenture, dated as of August 19, 1998.              10     12/20/1999      10.4



                                        -27-

<PAGE>


 EXHIBIT                                                                                        FILED
 NUMBER                      DESCRIPTION                        INCORPORATED BY REFERENCE     HEREWITH
 -------  ------------------------------------------------  --------------------------------  --------
                                                              FORM       DATE        NUMBER

 10.6     Debenture, dated as of February 9, 1999.             10     12/20/1999      10.6

 10.7     Letter Agreement, dated as of April 15, 1999         10     12/20/1999      10.7
          among Orix Global Communications, Inc., Infinity
          Investors Limited and the Founders (as defined
          therein).

 10.8     Amended and Restated Debenture, dated as of          10     12/20/1999      10.8
          April 15, 1999.

 10.9     Letter Agreement, dated as of April 29, 1999         10     12/20/1999      10.9
          between Orix Global Communications and Infinity
          Investors Limited.

 10.10    Debenture, dated as of April 29, 1999.               10     12/20/1999     10.10

 10.11    Letter Agreement, dated as of April 30, 1999,        10     12/20/1999     10.11
          between Orix Global Communications, Inc. and
          Infinity Investors Limited.

 10.12    Debenture, dated as of April 30, 1999.               10     12/20/1999     10.12

 10.13    Note, dated as of August 20, 1999.                  10/A    03/08/2000     10.13

 10.14    Promissory Note, dated as of March 2, 2000.         10/A    03/08/2000     10.14

 10.15    Warrant Agreement, dated as of March 2, 2000,       10/A    03/08/2000     10.15
          between i2v2.com Inc. and eVentures Group, Inc.

 10.16    Lease Agreement, dated December, 1998, between       10     12/20/1999     10.13
          AxisTel International, Inc. and Evergreen
          America Corporation.

 10.17    Lease Agreement, dated November 24, 1997,            10     12/20/1999     10.14
          between Orix Global Communications, Inc. and
          Trust F/3959 of Banco del Atlantico.

 10.18    Assignment Agreement, dated April 1, 1998, among     10     12/20/1999     10.15
          Orix Global Communications, Inc., Latin Gate de
          Mexico S.A. de C.V. and Trust F/3959 of Banco
          del Atlantico.

 10.19    Letter Agreement, dated April 3, 2000, between      10-K    09/28/2000     10.26
          Marcus & Partners, L.P. and eventures Group,
          Inc.

 10.20    Guaranty Agreement by eventures Group, Inc. as       10     12/20/1999     10.20
          inducement to Telecommunications Finance Group
          to provide a lease to AxisTel Communications,
          Inc., dated as of October 13, 1999.

 10.21    Amended and Restated 1999 Omnibus Securities        10/A    03/08/2000     10.23
          Plan, dated as of September 22, 1999.
          (compensatory agreement)

 10.22    Employment Agreement, dated as of April 4, 2000,    10-Q    05/15/2000      10.5
          between eVentures Group, Inc. and Daniel J.
          Wilson. (compensatory agreement)

 10.23    Amendment No. 1 to Employment Agreement between     10-Q    11/14/2000      10.2
          eventures Group, Inc. and Daniel J. Wilson,
          dated as of September 25, 2000.

 10.24    Stock Option Agreement, dated as of April 4,        10-Q    05/15/2000      10.6
          2000 between eVentures Group, Inc. and Daniel J.
          Wilson. (compensatory agreement).

 10.25    Employment Agreement, dated as of April 4, 2000,    10-Q    05/15/2000      10.7
          between eVentures Group, Inc. and Chad E. Coben.
          (compensatory agreement).

 10.26    Amendment No. 1 to Employment Agreement between     10-Q    11/14/2000      10.5
          eVentures Group, Inc. and Chad E. Coben, dated
          as of September 25, 2000.

 10.27    Stock Option Agreement, dated as of April 4,        10-Q    05/15/2000      10.8
          2000 between eVentures Group, Inc. and Chad E.
          Coben. (compensatory agreement).

 10.28    Employment Agreement, dated as of April 4, 2000,    10-Q    05/15/2000      10.9
          between eVentures Group, Inc. and Barrett N.
          Wissman. (compensatory agreement).

 10.29    Stock Option Agreement, dated as of April 4,        10-Q    05/15/2000     10.10
          2000 between eVentures Group, Inc. and Barrett
          N. Wissman. (compensatory agreement).

 10.30    Employment Agreement, dated as of April 17,         10-Q    05/15/2000     10.13
          2000, between eVentures Group, Inc. and Susie C.
          Holliday. (compensatory agreement).

 10.31    Amendment No. 1 to Employment Agreement between     10-Q    11/14/2000      10.6
          eVentures Group, Inc. and Susie C. Holliday,
          dated as of September 25, 2000.

 10.32    Stock Option Agreement, dated as of April 17,       10-Q    05/15/2000     10.14
          2000 between eVentures Group, Inc. and Susie C.
          Holliday. (compensatory agreement).

 10.33    Amendment to Non-Qualified Stock Option             10-Q    11/14/2000      10.7
          Agreement between eVentures Group, Inc. and
          Susie C. Holliday, dated October 2, 2000.

 10.34    Employment Agreement, dated as of March 10,         10-K    09/28/2000     10.44
          2000, between IGS Acquisition Corporation and
          David N. Link. (compensatory agreement).

 10.35    Amendment No. 1 to Employment Agreement between     10-Q    11/14/2000      10.8
          eVentures Group, Inc. and David N. Link, dated
          as of September 25, 2000

 10.36    Common Stock Subscription Agreement, dated as of    10-Q    05/15/2000     10.15
          April 4, 2000, by and among eVentures Group,
          Inc. and the signatories thereto.

 10.37A   Form of New Directors and Officers                  10-K    09/28/2000     10.49A
          Indemnification Agreement.

 10.37B   Schedule of Parties to New Directors and            10-K    09/28/2000     10.49B
          Officers Indemnification Agreement.

 10.38A   Form of Incumbent Directors and Officers            10-K    09/28/2000     10.50A
          Indemnification Agreement.

 10.38B   Schedule of Parties to Incumbent Directors and      10-K    09/28/2000     10.50B
          Officers.




                                        -28-

<PAGE>

 EXHIBIT                                                                                        FILED
 NUMBER                      DESCRIPTION                        INCORPORATED BY REFERENCE     HEREWITH
 -------  ------------------------------------------------  --------------------------------  --------
                                                              FORM       DATE        NUMBER

 10.40    Issuer Option Agreement, dated as of April 10,      10-Q    05/15/2000     10.16
          2000, between eVentures Group, Inc. and Samuel
          L. Litwin. (compensatory agreement).

 10.41    Issuer Option Agreement, dated as of April 10,      10-Q    05/15/2000     10.17
          2000, between eVentures Group, Inc. and Mitchell
          C. Arthur. (compensatory agreement).

 10.42    2001 Equity Incentive Plan                          10-Q    05/15/2000      10.1

          Employment Agreement, dated as of July 17, 2001     10-K    09/28/2001     10.42
          between Novo Networks Operating Corp. and Steven
          R. Loglisci.

          Consulting Agreement, dated as of July 30, 2001,    10-K    09/28/2001     10.42
          between Novo Networks Operating Corp. and John
          L. Higgins.

          Employment Agreement, dated as of March 10,         10-K    09/28/2001     10.42
          2000, between IGS Acquisition Corporation and
          Patrick G. Mackey. (compensatory agreement).

          Amendment No. 1 to Employment Agreement between     10-K    09/28/2001     10.42
          eVentures Group, Inc. and Patrick G. Mackey,
          dated as of September 25, 2000.

          Amendment No. 2 to Employment Agreement between     10-K    09/28/2001     10.42
          Novo Networks, Inc. and Patrick G. Mackey, dated
          as of January 10, 2001.

          Credit and Guaranty Agreement dated as of August    10-K    09/28/2001     10.42
          9, 2001 among Axistel Communications, Inc., a
          corporation organized and existing under the
          laws of Delaware and a debtor and debtor-in-
          possession ("AxisTel"), Novo Networks Global
          Services, Inc., a corporation organized and
          existing under the laws of Delaware and a debtor
          and debtor-in-possession ("NNGS"), Novo Networks
          International Services, Inc., a corporation
          organized and existing under the laws of
          Delaware and a debtor and debtor-in-possession
          ("NNIS"), and e.Volve Technology Group, Inc., a
          corporation organized and existing under the
          laws of Nevada and a debtor and debtor-in-
          possession ("e.Volve"), Novo Networks Operating
          Corp., a corporation organized and existing
          under the laws of Delaware and a debtor and
          debtor-in-possession ("NNOC" and collectively
          with AxisTel, NNGS, NNIS and e.Volve, the
          "Borrowers"), Novo Networks (UK) Ltd., a
          corporation organized and existing under the
          laws of the United Kingdom ("NNL"), Web2dial
          Communications, Inc., a corporation organized
          and existing under the laws of Delaware
          ("Web2Dial"), Servicios Profesionales J.R.J.S.,
          S.A. DE C.V., a corporation organized and
          existing under the laws of Mexico ("Servicios"),
          Novo Networks Metro Services, Inc., a
          corporation organized and existing under the
          laws of Delaware ("NNMS"), Novo Networks Media
          Services, Inc., a corporation organized and
          existing under the laws of Delaware ("NNMedia"),
          Novo Networks Metro Services (Virginia), Inc., a
          corporation organized and existing under the
          laws of Virginia ("NNMSV"), and e.Volve
          Technology Group De Mexico, S.A. DE C.V., a
          corporation organized and existing under the
          laws of Mexico ("EGM" and collectively with NNL,
          Web2Dial, Servicios, NNMS, NNMedia and NNMSV,
          the "Guarantors"), and Novo Networks, Inc., a
          corporation organized and existing under the
          laws of Delaware (the "Lender").

 10.43    Switched Services Agreement, dated April 29,       10-K/A   02/19/2002     10.43
          1998, by and between Orix Global Communications,
          Inc. and Qwest Communications Corporation.

 10.44    Carrier Service Agreement for International        10-K/A   02/19/2002     10.44
          Terminating Traffic, dated September 17, 1998,
          by and between Qwest Communications Corporation
          and Orix Global Communications, Inc.

 10.45    Qwest Communications Corporation Carrier Service   10-K/A   02/19/2002     10.45
          Agreement, dated April 12, 1999, by and between
          Qwest Communications Corporation and Orix Global
          Communications, Inc.

 10.46    IRU Agreement, dated September 30, 1999, by and    10-K/A   02/19/2002     10.46
          between Qwest Communications Corporation and
          e.Volve Technologies.

 10.47    Amendment No. 1 to IRU Agreement, dated June 16,   10-K/A   02/19/2002     10.47
          2000, by and between Qwest Communications
          Corporation, e.Volve Technologies and AxisTel
          Communications, Inc.

 10.48    Letter Agreement, dated June 19, 2000, by and      10-K/A   02/19/2002     10.48
          between Qwest Communications Corporation and
          Axistel Communications, Inc.

 21.1     Subsidiaries of Novo Networks, Inc.                                                     X

 23.1     Consent of Grant Thornton LLP                                                           X

 23.2     Consent of Arthur Andersen LLP                                                          *

 23.3     Consent of BDO Seidman, LLP                                                             X

 24       Power of Attorney                                                        See
                                                                                   Signature
                                                                                   Pages

--------------------
*  Not available

</TABLE>




                               -29-

<PAGE>


     (b) During the quarter ended June 30, 2002, the Company filed
the following Current Reports on Form 8-K:

     1. On August 2, 2002, we filed a Report on Form 8-K,
        disclosing the dismissal of Arthur Andersen, LLP as our
        independent public accountants and the retention of Grant
        Thornton, LLP as our independent public accountants for our
        fiscal year ended June 30, 2002, which was subsequently
        amended by a Form 8-K/A, filed August 22, 2002, and a Form 8-
        K/A filed on September 5, 2002.



















                               -30-

<PAGE>


SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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 in Dallas, Texas on the 30th day of
September, 2002.

     Novo Networks, Inc.


     By:  /s/  BARRETT N. WISSMAN
         -----------------------------
     Name: Barrett N. Wissman
     Title:   President

     Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report has been signed by the following persons
in the capacities and on the dates indicated:

          SIGNATURE                       TITLE                    DATE
-------------------------     --------------------------    -------------------

/s/ BARRETT N. WISSMAN        President and Director        September 30, 2002
-------------------------     (Principal Executive Officer
Barrett N. Wissman


/s/ SUSIE C. HOLLIDAY         Senior Vice President         September 30, 2002
-------------------------     (Principal Financial and
Susie C. Holliday             Accounting Officer)


/s/ MARK R. GRAHAM            Director                      September 30, 2002
-------------------------
Mark R. Graham


/s/ JAN ROBERT HORSFALL       Director                      September 30, 2002
-------------------------
Jan Robert Horsfall


/s/ JOHN STEVENS ROBLING, JR. Director                      September 30, 2002
----------------------------
John Stevens Robling, Jr.














                               -31-


<PAGE>

                          CERTIFICATIONS

PRINCIPAL EXECUTIVE OFFICER'S CERTIFICATION:

I, Barrett N. Wissman, certify that:

     1.   I have reviewed this annual report on Form 10-K of Novo
          Networks, Inc.;

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

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


Date:     September 30, 2002


                                   /S/  BARRETT N. WISSMAN
                              ----------------------------------
                              Barrett N. Wissman
                              President
                              (Principal Executive Officer)


PRINCIPAL FINANCIAL OFFICER'S CERTIFICATION:

I, Susie C. Holliday, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Novo
          Networks, Inc.;

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

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


Date:     September 30, 2002


                                   /S/  SUSIE C. HOLLIDAY
                              -------------------------------
                              Susie C. Holliday
                              Senior Vice President
                              (Principal  Financial and  Accounting
                              Officer)










                               -32-


<PAGE>




              NOVO NETWORKS, INC. AND SUBSIDIARIES
           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Certified Public Accountants
  for the fiscal year ended June 30, 2002..............      F-2

Report of Independent Public Accountants for the
  fiscal year ended June 30, 2001......................      F-3

Report of Independent Certified Public Accountants
  for the fiscal year ended June 30, 2000..............      F-4

Consolidated Balance Sheets as of June 30, 2002
  and 2001.............................................      F-5

Consolidated Statements of Operations for the
years ended June 30, 2002, 2001 and 2000...............      F-6

Consolidated Statements of Shareholders' Equity
  (Deficit) for the years ended June 30, 2002,
  2001 and 2000........................................      F-7

Consolidated Statements of Cash Flows for the
  years ended June 30, 2002, 2001 and 2000.............      F-9

Notes to Consolidated Financial Statements.............      F-11

Report of Independent Certified Public Accountants
  for Valuation and Qualifying Accounts and
  Reserves..............................................     FS-1

Financial Statement Schedule:
 Schedule II - Valuation and Qualifying Accounts
   and Reserves.........................................     FS-2







                               F-1

<PAGE>



       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of Novo Networks, Inc.:

     We have audited the accompanying consolidated balance sheet
of Novo Networks, Inc. and subsidiaries (a Delaware corporation)
as of June 30, 2002 and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The
financial statements of Novo Networks, Inc. as of June 30, 2001,
and for the year then ended were audited by other auditors who
have ceased operations. Those auditors expressed an unqualified
opinion on those financial statements in their report dated
September 19, 2001, except that such report did state that
substantial doubt existed that Novo Networks could continue as a
going concern.

     We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.

     In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Novo Networks, Inc. and subsidiaries as of June 30, 2002, and
the results of their operations and their cash flows for the year
then ended, in conformity with accounting principles generally
accepted in the United States of America.

     The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. However,
as discussed in Note 2 to the financial statements, the Company
has no operations and no sources of capital to fund business
opportunities.  These matters raise substantial doubt about
the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that
might result should the Company be unable to continue as a
going concern.



                              Grant Thornton LLP

Dallas, Texas
September 6, 2002













                               F-2



<PAGE>



  This report is a copy of the previously issued report and the
        predecessor auditor has not reissued the report.



            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Novo Networks, Inc.:

     We have audited the accompanying consolidated balance sheet
of Novo Networks, Inc. and subsidiaries (a Delaware corporation)
as of June 30, 2001 and the related consolidated statements of
operations, shareholders' equity (deficit), and cash flows for
the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.

     We conducted our audit in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.

     In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Novo Networks, Inc. and subsidiaries as of June 30, 2001, and
the results of their operations and their cash flows for the
period then ended, in conformity with accounting principles
generally accepted in the United States.

     The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1(b) to the financial statements, the Company
has placed all its operating subsidiaries into bankruptcy, which
raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are
described in Note 2. The financial statements do not include any
adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to
continue as a going concern.



                              Arthur Andersen LLP

Dallas, Texas
September 19, 2001







                               F-3



<PAGE>

       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Stockholders
Novo Networks, Inc.
Dallas, Texas

We have audited the accompanying consolidated statements of
operations, shareholders' equity (deficit) and cash flows of Novo
Networks, Inc. (the "Company"), see Note 1, for the year ended
June 30, 2000. We have also audited the financial statement
schedule listed in the accompanying index for the year ended June
30, 2000. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule
based on our audit.

We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of
operations of the Company and its cash flows for the year ended
June 30, 2000, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion,
the schedule presents fairly, in all material respects, the
information set forth therein for the year ended June 30, 2000.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 1(b) to the financial statements, all of the Company's
operating subsidiaries have filed voluntary petitions for
protection under chapter 11 and chapter 7 of the Bankruptcy Code
which raises substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and
classification of liabilities that might result should the
Company be unable to continue as a going concern.



/s/  BDO SEIDMAN, LLP

New York, New York
September 1, 2000, except for Note 1(b), as to which the date is
September 25, 2001.





                               F-4

<PAGE>



              NOVO NETWORKS, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>

                                                                      As of June 30,
                                                            ----------------------------------
                    ASSETS                                       2002                 2001
                                                            --------------      --------------

                                                         <c>                 <c>
CURRENT ASSETS
   Cash and cash equivalents                                $    9,871,305      $   16,696,537
   Accounts receivable, net of allowances for
     doubtful accounts ($0 - 2002;  $4,589,647 - 2001)                   -           2,521,408
   Note receivable and other receivables,
     net of allowance ($3,603,299 - 2002; $0 - 2001)                     -                   -
   Prepaid expenses                                                275,324           1,066,518
   Deposits                                                              -             420,379
   VAT receivable                                                        -           1,405,929
                                                            --------------      --------------
                                                                10,146,629          22,110,771
                                                            --------------      --------------

LONG-TERM ASSETS
   Restricted cash                                                       -              94,180
   Prepaid expenses                                                187,153                   -
   Deposits                                                          5,745             811,482
   Network equipment under capital leases, net                           -           4,404,587
   Property and equipment, net                                     526,775           5,699,577
   Equity investments                                              264,751           4,776,772
                                                            --------------      --------------
                                                                   984,424          15,786,598
                                                            --------------      --------------
                                                            $   11,131,053      $   37,897,369
                                                            ==============      ==============

          LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Capital leases, current portion                          $            -      $    3,676,604
   Accounts payable                                                 28,335           3,601,650
   Accrued other                                                 1,841,465           7,480,259
   Accrued reorganization and restructuring charge                       -             426,297
   Accrued interest payable                                              -             134,683
   Customer deposits and deferred revenues                           2,000             742,486
                                                            --------------      --------------
                                                                 1,871,800          16,061,979
                                                            --------------      --------------
LONG-TERM LIABILITIES
   Capital leases, net of current portion                                -           5,189,094

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Preferred stock, $0.00002 par value, $1,000
     liquidation preference per share, authorized
     25,000,000 for 2002 and 2001, issued and
     outstanding 26,839 and 26,395 for  2002 and 2001,
     liquidation value - $26,839,000 and $26,395,000
     in 2002 and 2001                                                    -                   -
   Common stock, $0.00002 par value, authorized
     200,000,000 for 2002 and 2001, issued and
     outstanding, 52,323,701 for 2002 and 2001                       1,050               1,050
   Additional paid-in capital                                  256,511,879         255,908,447
   Accumulated deficit                                        (247,221,732)       (238,823,763)
   Deferred compensation                                           (31,944)           (439,438)
                                                            --------------      --------------
                                                                 9,259,253          16,646,296
                                                            --------------      --------------
                                                            $   11,131,053      $   37,897,369
                                                            ==============      ==============


</TABLE>


The accompanying notes are an integral part of these financial
statements.


                               F-5


<PAGE>


              NOVO NETWORKS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>

                                                            Fiscal Year Ended June 30,
                                                  -------------------------------------------
                                                      2002           2001            2000
                                                  -------------  -------------  -------------

                                               <c>            <c>            <c>
Revenues                                          $  10,486,982  $  72,031,554  $  55,354,030
Operating expenses:
   Direct costs                                      14,614,766     70,807,489     51,656,016
   Selling, general and administrative expenses      14,803,110     28,867,054     22,471,732
   Reorganization and restructuring charge                    -      3,898,656              -
   Impairment loss                                    2,400,543    120,476,247              -
   Depreciation and amortization                      1,370,958     20,453,633     10,007,859
                                                  -------------  -------------  -------------
                                                     33,189,377    244,503,079     84,135,607
Loss from operations, before
   other (income) expense                           (22,702,395)  (172,471,525)   (28,781,577)

Other (income) expense
   Interest (income) expense, net                        17,355       (402,376)      (920,161)
   Write off of unamortized debt discount                     -              -        917,615
   Equity in loss of investments                      1,720,000      9,023,882      5,236,183
   Foreign currency loss (gain)                          98,135        130,511       (168,431)
   Net gain on liquidation of debtor subsidiaries   (16,074,355)             -              -
   Other                                               (668,993)       341,052         29,057
                                                  -------------  -------------  -------------
                                                    (14,907,858)     9,093,069      5,094,263
                                                  -------------  -------------  -------------

Net loss                                             (7,794,537)  (181,564,594)   (33,875,840)

Imputed preferred dividend                                    -     (2,299,750)   (10,407,954)
Series D preferred dividends                           (603,432)      (324,860)             -
                                                  -------------  -------------  -------------

Net loss allocable to common shareholders         $  (8,397,969) $(184,189,204) $ (44,283,794)
                                                  =============  =============  =============

Net loss per share - (basic and diluted)          $       (0.16) $       (3.53) $       (1.14)
                                                  =============  =============  =============
Weighted average number of shares
   outstanding - (basic and diluted)                 52,323,701     52,222,671     38,739,230
                                                  =============  =============  =============
</TABLE>


The accompanying notes are an integral part of these financial
statements.



                               F-6


<PAGE>

              NOVO NETWORKS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                        Preferred Stock                 Common Stock           Common Stock to be Issued
                                   -------------------------     -------------------------     -------------------------
                                     Shares         Amount         Shares         Amount         Shares         Amount
                                   ----------     ----------     ----------     ----------     ----------     ----------

                                <c>            <c>            <c>            <c>            <c>            <c>
Balance, June 30, 1999                      -     $        -      1,800,000     $       36              -     $        -
Issuance of Common Stock
  in connection with the
  Initial Transaction
    Acquisition of AxisTel                  -              -     12,381,000            248              -              -
    Acquisition of eVentures                -              -     10,330,610            207              -              -
    Acquisition of 66.67% of
       e.Volve                              -              -      9,565,614            190              -              -
    Net effect of the purchase
       of the remaining
     33.33% of e.Volve                      -              -      5,831,253            117              -              -
    Contribution of Gemini Voice
       cost investment from Major
       Shareholders                         -              -      2,879,386             58              -              -
Private Placements of Common and
  Preferred Stock:
     Issuance of Common Stock               -              -      5,013,477            100              -              -
    Issuance of Series A Preferred
       Stock                            1,000              -              -              -              -              -
    Issuance of Series B Preferred
       Stock                            7,000              -              -              -              -              -
    Issuance of Series C Preferred
       Stock                           15,570              -              -              -              -              -
Conversion of Series A Preferred
  Stock                                (1,000)             -        200,000              4              -              -
Conversion of Series B Preferred
  Stock                                (2,500)             -        181,159              4              -              -
Acquisition of iGlobal                      -              -      2,551,087             51         71,513              1
Acquisition of minority interest
  in equity investments                     -              -        312,027              7              -              -
Issuance of Common Stock for
  settlement of accounts payable            -              -        426,799              9              -              -
Issuance of Common Stock as
  payment for assets.                       -              -        517,333             10              -              -
Intrinsic value of stock options            -              -              -              -              -              -
Amortization of deferred
  compensation                              -              -              -              -              -              -
Imputed preferred dividend                  -              -              -              -              -              -
Acquisition of call options
  to purchase treasury stock                -              -              -              -              -              -
Net loss                                    -              -              -              -              -              -
                                   ----------     ----------     ----------     ----------     ----------     ----------
Balance, June 30, 2000                 20,070              -     51,989,745          1,041         71,513              1
Settlement of iGlobal purchase              -              -              -              -        (71,513)            (1)
Amortization of deferred
  compensation                              -              -              -              -              -              -
Repayment on note receivable
  from shareholders                         -              -              -              -              -              -
Foreclosure on note receivable
  from shareholders                         -              -       (171,911)             -              -              -
Private placement of common
  and preferred stock                   7,000              -        450,001              9              -              -
Imputed preferred dividend                  -              -              -              -              -              -
Series D Preferred Stock
  dividends                               325              -              -              -              -              -
Intrinsic value of stock
  options                                   -              -              -              -              -              -
Conversion of Series C Preferred
  to Common                            (1,000)             -         55,866              -              -              -
Net loss                                    -              -              -              -              -              -
                                   ----------     ----------     ----------     ----------     ----------     ----------
Balance, June 30, 2001                 26,395              -     52,323,701          1,050              -              -
Amortization of deferred
  compensation                              -              -              -              -              -              -
Series D Preferred Stock dividends        444              -              -              -              -              -
Net loss                                    -              -              -              -              -              -
                                   ----------     ----------     ----------     ----------     ----------     ----------
Balance June 30, 2002                  26,839     $        -     52,323,701     $    1,050     $        -     $        -
                                   ==========     ==========     ==========     ==========     ==========     ==========


</TABLE>

The accompanying notes are an integral part of these financial
statements.

                               F-7


<PAGE>


              NOVO NETWORKS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)


<TABLE>
<CAPTION>


                                                                                         Notes
                                     Additional                                       Receivable
                                      Paid-in      Accumulated          Deferred         from
                                      Capital        Deficit          Compensation    Shareholders       Total
                                   -------------  --------------      ------------    ------------   -------------

                                <c>            <c>                 <c>             <c>            <c>
Balance, June 30, 1999             $   4,418,508  $  (10,350,765)     $          -    $          -   $  (5,932,221)
Issuance of Common Stock
  in connection with the
  Initial Transaction
    Acquisition of AxisTel            17,110,929               -                 -               -      17,111,177
    Acquisition of eVentures              (2,980)              -                 -               -          (2,773)
    Acquisition of 66.67% of
       e.Volve                         8,540,159               -                 -               -       8,540,349
  Net effect of the purchase
    of the remaining 33.33%
    of e.Volve                        11,662,389               -                 -               -      11,662,506
  Contribution of Gemini Voice
    cost investment from
    Major Shareholders                         -               -                 -               -              58
Private Placements of Common
  and Preferred Stock:
    Issuance of Common Stock          63,202,526               -                 -               -      63,202,626
    Issuance of Series A
      Preferred Stock                  1,000,000               -                 -               -       1,000,000
    Issuance of Series B
      Preferred Stock                  6,997,500               -                 -               -       6,997,500
    Issuance of Series C
      Preferred Stock                 15,469,985               -                 -               -      15,469,985
Conversion of Series A
  Preferred Stock                             (4)              -                 -               -               -
Conversion of Series B
  Preferred Stock                             (4)              -                 -               -               -
Acquisition of iGlobal                85,352,234               -                 -      (1,048,872)     84,303,414
Acquisition of minority
  interest in equity
  investments                          4,177,567               -                 -               -       4,177,574
Issuance of Common Stock
  for settlement of
  accounts payable                     7,888,592               -                 -               -       7,888,601
Issuance of Common Stock as
  payment for assets                   9,571,060               -                 -               -       9,571,070
Intrinsic value of stock options       3,311,250               -        (3,311,250)              -               -
Amortization of deferred
  compensation                                 -               -         2,036,771               -       2,036,771
Imputed preferred dividend            10,407,954     (10,407,954)                -               -               -
Acquisition of call options to
  purchase treasury stock               (200,000)              -                 -               -        (200,000)
Net loss                                       -     (33,875,840)                -               -     (33,875,840)
                                   -------------  --------------      ------------    ------------   -------------
Balance, June 30, 2000               248,907,665     (54,634,559)       (1,274,479)     (1,048,872)    191,950,797
Settlement of iGlobal purchase        (2,073,876)              -                 -               -      (2,073,877)
Amortization of deferred
  compensation                                 -               -           835,041               -         835,041
Repayment on note receivable
  from shareholders                            -               -                 -          96,984          96,984
Foreclosure on note receivable
  from shareholders                     (951,888)              -                 -         951,888               -
Private placement of common
  and preferred stock                  6,523,991               -                 -               -       6,524,000
Imputed preferred dividend             2,299,750      (2,299,750)                -               -               -
Series D Preferred Stock
  dividends                              324,860        (324,860)                -               -               -
Intrinsic value of stock options         877,945               -                 -               -         877,945
Conversion of Series C Preferred
  to Common                                    -               -                 -               -               -
Net loss                                       -    (181,564,594)                -               -    (181,564,594)
                                   -------------  --------------      ------------    ------------   -------------
Balance, June 30, 2001               255,908,447    (238,823,763)         (439,438)              -      16,646,296
Amortization of deferred
  compensation                                 -               -           407,494               -         407,494
Series D Preferred Stock dividends       603,432        (603,432)                -               -               -
Net loss                                       -      (7,794,537)                -               -      (7,794,537)
                                   -------------  --------------      ------------    ------------   -------------
Balance June 30, 2002              $ 256,511,879  $ (247,221,732)     $    (31,944)   $          -   $   9,259,253
                                   =============  ==============      ============    ============   =============





</TABLE>


                               F-8

<PAGE>

              NOVO NETWORKS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>

                                                                       For the Fiscal Year Ended June 30,
                                                            ------------------------------------------------------
                                                                 2002                2001                2000
                                                            --------------      --------------      --------------

                                                         <c>                 <c>                 <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                  $   (7,794,537)     $ (181,564,594)     $  (33,875,840)
  Adjustments to reconcile net loss to net cash
     used in net operating activities:
     Depreciation and amortization                               1,370,958          20,453,633          10,007,859
     Other non-cash charges and credits:
       Stock-based compensation                                    407,493             835,042           2,036,771
       Bad debt expense                                          6,063,299           4,038,479             793,900
       Equity in loss of investments                             1,720,000           9,023,882           5,236,183
       Loss on sale of property and equipment                       69,907           1,483,952                   -
       Impairment loss                                           2,400,543         120,476,247                   -
       Write off of prepaids and other intangibles                       -             121,826                   -
       Write off of VAT receivable                               1,405,929                   -                   -
       Intrinsic value of stock options                                  -             877,952                   -
       Net gain on liquidation of debtor subsidiaries          (16,074,355)                  -                   -
       Gain on sale of subsidiary                                 (268,853)                  -                   -
       Other                                                             -                   -           1,513,527
     Change in operating assets and liabilities:
       Accounts receivable                                      (3,920,228)         (3,156,763)         (4,083,786)
       Prepaid expenses                                            317,765              95,824          (1,302,900)
       VAT receivable                                                    -             725,348             626,091
       Restricted cash                                            (186,070)            (94,180)          1,857,437
       Accounts payable                                          9,613,825            (990,220)          6,963,313
       Accrued other                                            (1,160,425)          3,670,059           2,404,151
       Accrued interest payable                                    115,688             186,711             195,012
       Customer deposits and deferred revenues                    (257,693)            235,929          (1,531,471)
                                                            --------------      --------------      --------------
Net cash used in operating activities                           (6,176,754)        (23,580,873)         (9,159,753)
                                                            --------------      --------------      --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Deposits received (made)                                           17,335           (250,721)           (343,948)
  Purchase of property and equipment                                (77,110)        (3,137,165)        (13,574,092)
  Sale of property and equipment                                    241,605            124,698                   -
  Net cash resulting from (dispositions) acquisitions              (102,300)          (262,703)            509,021
  Transaction costs included in goodwill                                  -                  -            (490,011)
  Distributions from (investments in) investments                   391,478         (1,055,112)        (21,078,995)
                                                            ---------------     --------------      --------------
Net cash provided by (used in) investing activities                 471,008         (4,581,003)        (34,978,025)
                                                            ---------------     --------------      --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Shareholder repayments                                                  -             96,984                   -
  Payments on capital leases                                     (1,119,486)        (2,777,721)         (1,322,780)
  Advances (repayments) on notes payable                                  -            335,000            (184,744)
  Purchase of call options                                                -                  -            (200,000)
  Issuance of notes receivable - affiliate                                -            (84,096)           (100,000)
  Issuance of debentures                                                  -                  -                   -
  Issuance of common and preferred stock, net of
    issuance costs                                                        -          6,524,000          86,670,169
                                                            ---------------     --------------      --------------
Net cash (used in) provided by financing activities              (1,119,486)         4,094,167          84,862,645
                                                            ---------------     --------------      --------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                          (6,825,232)       (24,067,709)         40,724,867
CASH AND CASH EQUIVALENTS, beginning of year                     16,696,537         40,764,246              39,379
                                                            ---------------     --------------      --------------
CASH AND CASH EQUIVALENTS, end of year                      $     9,871,305     $   16,696,537      $   40,764,246
                                                            ===============     ==============      ==============

</TABLE>

The accompanying notes are an integral part of these financial
statements.


                              F-9

<PAGE>


              NOVO NETWORKS, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)



<TABLE>
<CAPTION>

                                                                 For the Fiscal Year Ended June 30,
                                                            ------------------------------------------
                                                                2002            2001          2000
                                                            ------------   ------------   ------------

                                                         <c>            <c>            <c>
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

     Cash paid for interest                                 $    496,839   $  1,039,651   $  1,349,592
                                                            ============   ============   ============
     Cash paid for taxes                                    $          -   $          -   $          -
                                                            ============   ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING,
     INVESTING AND FINANCING ACTIVITIES:

     Purchases of equipment under capital leases            $          -   $  3,296,103   $  3,951,829
                                                            ============   ============   ============

     Goodwill arising from acquisitions settled
          through the issuance of stock                     $          -   $          -   $115,530,069
                                                            ============   ============   ============

     Net assets of subsidiaries acquired through an
        issue of stock                                      $          -   $          -   $    197,169
                                                            ============   ============   ============

     Stock issued for settlement of accounts payable        $          -   $          -   $  7,888,601
                                                            ============   ============   ============

     Stock issued for purchase of equipment and equipment
       maintenance                                          $          -   $          -   $  9,571,070
                                                            ============   ============   ============

     Stock issued for purchase of minority interest in
       equity investments                                   $          -   $          -   $  4,177,574
                                                            ============   ============   ============

     Conversion of notes receivable to common stock of an
       equity investment                                    $          -   $    184,096   $          -
                                                            ============   ============   ============

     Foreclosure on notes receivable from shareholders      $          -   $    951,888   $          -
                                                            ============   ============   ============


</TABLE>


The accompanying notes are an integral part of these financial
statements.


                              F-10


<PAGE>

              NOVO NETWORKS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Business

(a)  General

Novo Networks, Inc. is a company that, through its operating
subsidiaries, previously engaged in the business of providing
voice services over a facilities-based network. References to
"Novo Networks," "Company", "we," "us" or "our" refer to Novo
Networks, Inc., the ultimate parent of these operating
subsidiaries and the registrant under the Securities Exchange Act
of 1934. Prior to September 22, 1999, Novo Networks was a
publicly held company with no material operations. The Company
was formerly known as eVentures Group, Inc. and prior thereto,
Adina, Inc., which was incorporated in the state of Delaware on
June 24, 1987.

During the current fiscal year, all of our operating subsidiaries
filed voluntary petitions under Chapter 11 of the bankruptcy
code, described more fully below. We will refer to the
subsidiaries that have gone through bankruptcy proceedings under
Chapter 11 of the bankruptcy code as our "debtor subsidiaries"
throughout this Report.

Due to the ongoing liquidation of substantially all of our debtor
subsidiaries' assets, pursuant to a liquidation plan confirmed by
the bankruptcy court, we currently have no operations or
revenues. We are not providing any products or services of any
kind (including telecommunications services) to any customers.

Our common stock is currently listed on the Over the Counter
Bulletin Board or OTC BB. Previously, our shares were listed on
the Nasdaq National Market System. However, on July 30, 2001, the
Nasdaq Stock Market Inc. temporarily suspended the trading of our
common stock pending satisfactory resolution of concerns related
to the effects of our debtor subsidiaries' bankruptcy proceedings
and our ability to satisfy certain of its minimum listing
requirements. On October 24, 2001, Nasdaq notified us that our
common stock would be delisted on November 1, 2001. However, on
October 30, 2001, we filed an appeal with Nasdaq, which stayed
the delisting until the Nasdaq Listing Qualifications Panel heard
the appeal on December 13, 2001. On December 31, 2001, the Nasdaq
Panel denied our request for continued listing and delisted our
stock from the Nasdaq National Market System.

In September of 1999, the Company acquired (i) all of the
outstanding shares of AxisTel Communications, Inc. ("AxisTel");
(ii) approximately 66.7% of the outstanding shares of e.Volve
Technology Group, Inc. ("e.Volve"); (iii) approximately 17% of
the outstanding shares of Gemini Voice Solutions, formerly
PhoneFree.com, Inc. ("Gemini Voice"); and (iv) a note receivable
from e.Volve in the amount of $8,540,159, including accrued
interest ("Notes"). In a related transaction, the remaining 33.3%
of e.Volve was acquired by the Company in October of 1999. All of
the acquisitions and the purchase of the Notes were settled
through the issuance of 26,827,552 shares of common stock of Novo
Networks and are collectively referred to as the "Initial
Transaction". Upon completion of the Initial Transaction,
approximately 77% of the outstanding common stock of the Company
was owned by three shareholders that are affiliated with each
other, IEO Investments Limited, Infinity Emerging Subsidiary
Limited and Infinity Investors Limited, known collectively as the
"Infinity Entities."

Allocation of consideration given for the assets acquired in the
Initial Transaction is as follows:

<TABLE>
<CAPTION>

                                               <c>
Purchase of AxisTel on September 22, 1999
   Cost of investment                             $   15,957,319
   Net liabilities acquired                             (902,806)
                                                  --------------
   Excess attributed to Goodwill                  $   16,860,125
                                                  ==============

Purchase of 33.3% of e.Volve on October 19, 1999
   Cost of investment                             $   11,662,506
   Net assets acquired                                        --
                                                  --------------
   Excess attributed to Goodwill                  $   11,662,506
                                                  ==============

</TABLE>

The above represents the final purchase price allocations.
Consideration given was recorded at the fair value of Novo Networks
common stock.

Since Novo Networks had no material operations prior to the
transaction on September 22, 1999, the acquisitions of the Infinity
Entities interests were accounted for as a recapitalization of
e.Volve. The acquisitions of AxisTel and e.Volve were treated as
purchases for accounting purposes. The interests in Gemini Voice
and AxisTel contributed by the Infinity Entities have been included
from the date of investment. On March 10, 2000, the Company
acquired 100% of Internet Global Services, Inc. ("iGlobal"). On
April 2, 2001, iGlobal filed a voluntary petition for bankruptcy
under Chapter 7 of the bankruptcy code, described below. For
further details regarding the acquisition and disposal of iGlobal,
see footnote 9. The financial results of iGlobal are included in
the financial statements since its acquisition on March 10, 2000,
through April 2, 2001.

                               F-11

<PAGE>

During fiscal 2002, the Infinity Entities distributed their common
stock ownership to individual fund investors. Consequently, there
was no shareholder with greater than 50% ownership in Novo Networks
at June 30, 2002.

(b)  Bankruptcy Proceedings

On April 2, 2001, our subsidiary, iGlobal filed a voluntary
petition under Chapter 7 of the bankruptcy code in the United
States Bankruptcy Court for the Northern District of Texas due to
iGlobal's inability to service its debt obligations and contingent
liabilities, as well as Novo Networks' inability to raise
sufficient capital to fund operating losses at iGlobal. As a result
of the Chapter 7 filing, Novo Networks recorded an impairment loss
of $62.4 million during fiscal 2001, the majority of which related
to non-cash goodwill recorded in connection with our acquisition of
iGlobal. For further details regarding the acquisition and disposal
of iGlobal, see footnote 9.

On July 30, 2001, certain of our remaining operating subsidiaries
filed voluntary petitions for protection under Chapter 11 of the
bankruptcy code in the United States Bankruptcy Court for the
District of Delaware, in order to stabilize their operations and
protect their assets while attempting to reorganize their
businesses.

We have set forth below a table summarizing the current status of
our wholly owned subsidiaries.

<TABLE>
<CAPTION>

                                                          Status as of     Subject to
                                                           September     Bankruptcy Plan
          Wholly Owned Subsidiary          Date Acquired   30, 2002*     or Proceedings?
   -------------------------------------   -------------  ------------  -----------------
   
                                       <c>           <c>           <c>
   Novo Networks Operating Corp.               2/8/00**     Inactive     Yes, Chapter 11
   AxisTel Communications, Inc.               9/22/99       Inactive     Yes, Chapter 11
   Novo Networks International Services,      9/22/99       Inactive     Yes, Chapter 11
     Inc.
   Novo Networks Global Services, Inc.        9/22/99       Inactive     Yes, Chapter 11
   Web2Dial Communications, Inc.              9/22/99       Inactive     No
   Novo Networks Metro Services, Inc.         9/22/99       Inactive     Yes, Chapter 11
   Novo Networks Metro Services (Virginia),   9/22/99       Inactive     No
     Inc.
   Novo Networks Media Services, Inc.         9/22/99       Inactive     No
   Novo Networks (UK) Ltd.                    9/22/99       Inactive     No
   e.Volve Technology Group, Inc.            10/19/99       Inactive     Yes, Chapter 11
   Internet Global Services, Inc.             3/10/00       Inactive     Yes, Chapter 7
   eVentures Holdings, LLC                   9/7/99**       Active***    No

</TABLE>
----------------------
     *    "Active" status indicates current operations within the
          respective entity; "Inactive" status indicates no
          current operations, but may include certain activities
          associated with the administration of its estate
          pursuant to a bankruptcy filing or plan.
     **   Indicates date of incorporation, if organized by Novo
          Networks.
     ***  This entity has no operations other than to hold
          certain equity investments.


                              F-12

<PAGE>

As of September 28, 2001, the goal of the reorganization effort
was to preserve the going concern value of our debtor
subsidiaries' core assets and to provide distributions to their
creditors. However, after that date, and based largely on the
fact that our debtor subsidiaries ceased receiving traffic from
their sole remaining customer, a determination was made that the
continued viability of the debtor subsidiaries was not realistic,
and a decision was made to amend the plan. The amended plan and
disclosure statement were filed with the bankruptcy court on
December 31, 2001. The amended plan provides for a liquidation of
substantially all of the assets of our debtor subsidiaries,
pursuant to Chapter 11 of the bankruptcy code, instead of a
reorganization as previously planned.

On January 14, 2002, the bankruptcy court approved the amended
disclosure statement, with certain minor modifications and on
March 1, 2002, the bankruptcy court confirmed the amended plan of
the debtor subsidiaries, again with minor modifications. On April
3, 2002, the amended plan became effective and a liquidating
trust was formed, with funding provided by Novo Networks in the
amount of $0.2 million. Assets to be liquidated of $0.7 million
were transferred to the liquidating trust during the fourth
quarter of fiscal 2002. The purpose of the trust is to collect,
liquidate and distribute the remaining assets of the debtor
subsidiaries and prosecute certain causes of action against
various third parties including, without limitation, Qwest
Communications Corporation and its affiliates, ("Qwest").
Subsequent to the 2002 fiscal year end, Novo Networks provided
additional funding of $0.1 million to the trust. No assurance can
be given that our debtor subsidiaries will be successful in liquidating
substantially all of their assets pursuant to the amended plan.
Also, it is not possible to predict the outcome of the
prosecution of causes of action against third parties, including
without limitation, principally Qwest as disclosed in the amended
plan and disclosure statement.

(c)  Sale of e.Volve Technology Group de Mexico, S.A. de C.V.

In a stock purchase agreement dated February 28, 2002, a wholly
owned subsidiary of e.Volve, e.Volve Technology Group de Mexico,
S.A. de C.V., was sold to a company that is owned by one or more
former employees of the subsidiary. The transaction closed on
April 12, 2002. The buyer acquired telecommunications assets and
assumed certain liabilities of e.Volve Technology Group de
Mexico, S.A. de C.V. and received a payment of approximately
$70,000.   As a result of this transaction, a gain of approximately
$0.3 million was recorded in other income during the fourth quarter
of fiscal 2002.

(d)  Litigation against Qwest

On June 17, 2002, Novo Networks and the liquidating trust filed a
lawsuit seeking damages resulting from numerous disputes over
business dealings and agreements with Qwest, a former customer and
vendor, and Mr. Higgins, a former employee and consultant. For
further details regarding this litigation, see footnote 12.  No
assurances can be given that any recoveries will result from the
prosecution of such causes of action against Qwest and Mr. Higgins.
Furthermore, if there are any recoveries, they may or may not inure
to the benefit of Novo Networks.

2.   Liquidity And Capital Resources

General
-------

At June 30, 2002, Novo Networks had consolidated current assets
of $10.1 million, including cash and cash equivalents of
approximately $9.9 million and $8.3 million of net working
capital. Historically, we have funded our subsidiary operations
primarily through the proceeds of private placements of our
common and preferred stock and borrowings under loan and capital
lease agreements. We do not currently believe that either of
these funding sources will be available in the near term.
Principal uses of cash have been to fund (i) operating losses;
(ii) acquisitions and strategic investments; (iii) working
capital requirements and (iv) capital expenditures, primarily
related to network equipment and capacity. Due to our financial
performance, the lack of stability in the capital markets and the
economy's recent downturn, our only source of funding, in the
near term, is expected to be cash on hand.

As discussed in footnote 1, our debtor subsidiaries have gone
through bankruptcy proceedings under Chapter 11 of the bankruptcy
code. As the ultimate parent, we agreed to provide our debtor
subsidiaries with up to $1.6 million in secured debtors-in-possession
financing. Immediately prior to the confirmation hearing, we
increased the credit facility to approximately $1.9 million,
which had been advanced as of March 31, 2002. The credit facility
made funds available to permit the debtor subsidiaries to pay
employees, vendors, suppliers, customers and professionals
consistent with the requirements of the bankruptcy code. This
credit facility provided for interest at the rate of prime plus
3.0% per annum and provided "super-priority" lien status, meaning
that we had a valid first lien pursuant to the bankruptcy code on
substantially all of the debtor subsidiaries' assets. The
facility maintained a default interest rate of prime plus 5.0%
per annum.

                              F-13

<PAGE>

In connection with the amended plan being confirmed by the
bankruptcy court and becoming effective on April 3, 2002, the
credit facility was converted into a new secured note in the
principal amount of approximately $2.5 million, representing the
principal amount of the debtors-in-possession financing, accrued
interest and applicable attorneys fees. Subsequent to June 30,
2002, the new secured note was amended to approximately $2.9
million, representing additional trust funding, payments to an
employee, accrued interest and applicable attorneys fees. The new
secured note is guaranteed by the debtor subsidiaries under an
agreement in which the debtor subsidiaries have pledged
substantially all of their remaining assets as collateral. Due to
the uncertainty surrounding the collection of the note, it has
been fully reserved.

For the first six months of the fiscal year ended June 30, 2002,
two of Novo Networks' indirect wholly-owned operating subsidiaries,
AxisTel and e.Volve, provided telecommunications services. These
subsidiaries ceased operations in connection with their plan of
liquidation effective September of 2001 and December of 2001,
respectively. Since that date, neither Novo Networks nor any of
the debtor subsidiaries have conducted operations or generated
revenue. We are currently not providing any products or services
of any kind (including telecommunications services) to any
customers. During the current fiscal year, e.Volve's only
significant customer had been Qwest, which accounted for
approximately 70% of consolidated revenues. e.Volve is no longer
providing services to Qwest and as part of our debtor
subsidiaries' plan of liquidation, certain causes of action have
been brought against Qwest.

We currently anticipate that we will not generate any revenue in
the near term based on (i) the termination of the operations of
our debtor subsidiaries which have historically provided all of
our significant revenues on a consolidated basis and (ii)
uncertainties surrounding our plan to explore opportunities
available in the financial services sector or any other industry.
Accordingly, we may be required to obtain additional outside
funding which could be difficult to obtain on acceptable terms,
if at all. Failure to obtain adequate funding or failure to
implement a new business plan will jeopardize Novo Networks'
ability to continue as a going concern. Due to the uncertainty
surrounding Novo Networks, management is unable to determine
whether current available financing will be sufficient to meet
the funding requirements of (i) our debtor subsidiaries through
the liquidation process, (ii) ongoing general and administrative
expenses of Novo Networks and (iii) the undetermined capital
requirements relating to our plan to explore other opportunities
including, without limitation, those in the financial services
sector or other industries.

3.   Summary of Significant Accounting Policies

Basis of Presentation
---------------------

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets 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. The consolidated financial statements
include the accounts of Novo Networks and all of our wholly owned
subsidiaries.

The consolidated financial statements for Novo Networks and our
subsidiaries that are not involved in bankruptcy proceedings,
have been prepared in accordance with accounting principles
generally accepted in the United States of America applicable to
a going concern. The consolidated financial statements of Novo
Networks presented as of June 30, 2001, do not include the
accounts of iGlobal due to our management's decision to abandon
iGlobal operations during the quarter ended March 31, 2001. For
further details regarding the acquisition and disposal of
iGlobal, see footnote 9. At June 30, 2002, the assets and
liabilities of the debtor subsidiaries have been deconsolidated,
as the liquidating trust controls the assets of the debtor
subsidiaries. For further detail regarding the bankruptcy
proceedings, see footnote 1. We have recorded an accrual of
approximately $1.2 million in the accompanying financial
statements for the estimated costs of liquidating substantially
all of the assets and liabilities of these entities. The
estimated realizable values and settlement amounts may be
different from the proceeds ultimately received or payments
ultimately made.

All significant intercompany accounts have been eliminated.

                              F-14

<PAGE>

Principles of Consolidation and Accounting for Ownership in
Subsidiaries
-----------------------------------------------------------

Novo Networks accounts for its ownership interests in
subsidiaries under three methods: consolidation, equity method
and cost method. The applicable accounting method is generally
determined based on Novo Networks' voting interest in the
subsidiary, as well as Novo Networks' degree of influence over
each of the subsidiaries.

Consolidation. Companies in which Novo Networks directly or
indirectly owns more than 50% of the outstanding voting
securities are generally accounted for under the consolidation
method of accounting. Under this method, a subsidiary's accounts
are reflected within Novo Networks' consolidated financial
statements, except as discussed in the Basis of Presentation
above.

Equity Method. Subsidiaries whose results are not consolidated,
but over whom the Company exercises significant influence, are
accounted for under the equity method of accounting. Whether or
not the Company exercises significant influence with respect to a
subsidiary depends on an evaluation of several factors including,
among others, representation on the subsidiary's Board of
Directors and ownership level, which is generally a 20% to 50%
interest in the voting securities of the subsidiary, including
voting rights associated with Novo Networks' holdings in common
stock, preferred stock and other convertible instruments in the
subsidiary. Under the equity method of accounting, a subsidiary's
accounts are not reflected within the accompanying consolidated
statements of operations. The Company's proportionate share of
each investment's operating earnings and losses are included in
the caption "Equity in loss of investments" in the accompanying
consolidated statements of operations.

Cost Method. Subsidiaries not accounted for under either the
consolidation or the equity method of accounting are accounted
for under the cost method of accounting. Under this method, Novo
Networks' share of the earnings or losses of these companies is
not included in the accompanying consolidated statements of
operations. In certain cases, the Company has representation on
the Board of Directors of the subsidiaries accounted for under
the cost method.

Cash and Cash Equivalents
-------------------------

Novo Networks considers all highly liquid instruments purchased
with an original maturity of three months or less to be cash
equivalents. At June 30, 2002, cash equivalents totaled
approximately $9.9 million and consisted of a money market
account. The Company maintains its cash and cash equivalents with
one financial institution. A significant amount of the cash
balance is in excess of the FDIC insurance limit.

Prepaid Expenses
----------------

Prepaid expenses are recorded as assets and expensed in the
period in which the related services are received.

Deposits
--------

Deposits at June 30, 2002, were for Novo Networks office space.
Deposits at June 30, 2001, represent security deposits for
facility leases as well as advance payments to vendors for
services to be provided.

Long-lived Assets
-----------------

The Company's long-lived assets consist of property and
equipment. In accordance with the Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to be Disposed of", the Company
assesses the recoverability of long-lived assets by determining
whether the net book value of the assets can be recovered through
projected undiscounted future cash flows. The amount of
impairment, if any, is measured based on fair value and is
charged to operations in the period in which impairment is
determined by management. During the fiscal year ended June 30,
2002, long-lived assets related to the debtor subsidiaries were
written off by recording a charge of $7.5 million to our net gain
on liquidation of debtor subsidiaries account. During the fiscal
year ended June 30, 2001, Novo Networks recorded impairment
losses related to goodwill and certain property and equipment
totaling $120.5 million. No impairment losses were recorded in
fiscal 2000.

Property and Equipment
----------------------

Property and equipment are recorded at cost and are depreciated
using the straight-line method over the estimated useful lives of
the related assets. Maintenance and repairs are charged to
expense as incurred. Significant renewals and betterments are
capitalized. As of the time of retirement or other disposition of
property and equipment, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is
reflected in operations.

                              F-15

<PAGE>

Goodwill
--------

Goodwill arising from the excess of cost over net assets of
businesses acquired by Novo Networks (see Notes 1, 4 and 9) was
amortized on a straight-line basis over periods ranging from five
to ten years. During the fiscal year ended June 30, 2001, we
recorded an impairment loss of $86.6 million relating to (i)
$62.4 million of iGlobal related goodwill from the disposal of
iGlobal operations and (ii) $24.2 million for the impairment of
goodwill related to the Initial Transaction.

Accrued Other
------------

At June 30, 2002, an accrual of approximately $1.2 million is
included in accrued other, which represents the costs of
liquidating substantially all of the assets of the debtor
subsidiaries. At June 30, 2001 accrued other includes
approximately $4.2 million of accrued carrier charges.

Revenue Recognition
-------------------

As of December 31, 2001, and pursuant to the amended bankruptcy
filings, we effectively have no operations, no sources of revenue
and no profits unless and until we implement a new business plan.
Prior to December of 2001, revenues for communication services were
recorded based on minutes (or fractions thereof) of customer
usage. Novo Networks recorded payments received in advance for
prepaid calling card services and services to be supplied under
contractual agreements as deferred revenues until such related
services were provided. Due to the bankruptcy of the debtor
subsidiaries, there were no deferred revenues at June 30, 2002.
However, at June 30, 2001, deferred revenues were approximately
$0.7 million.

Internet access subscription service revenues were recognized
over the period that services are provided, which relates to
fiscal 2001 before the disposal of iGlobal.

Server collocation service revenues were recognized ratably over
the contractual period.

Foreign Currency Gain or Loss
-----------------------------

The functional currency of a wholly owned subsidiary formed for
the purpose of transacting business in Mexico is the U.S. dollar.
However, certain transactions are conducted in Mexican pesos and
are remeasured at the time in which the services are rendered to
the Company and are settled in U.S. dollars. Foreign currency
transaction gains and losses are recognized as incurred in
accordance with SFAS No. 52, Foreign Currency Translation.
Novo Networks does not currently maintain any financial hedges
against future fluctuations in the peso to dollar exchange rate.
As of June 30, 2002, our Mexican subsidiary was sold. We do not
expect to have any gain or loss associated with foreign currency
in the immediate future.

Income Taxes
------------

The Company accounts for income taxes in accordance with SFAS No.
109, "Accounting for Income Taxes." Under the asset and liability
method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on the deferred tax
assets and liabilities of a change in tax rates is recognized as
income in the period that includes the enactment date. A
valuation allowance is provided for significant deferred tax
assets when it is more likely than not, that such assets will not
be recovered.

Stock Based Compensation
------------------------

The FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation," which defines a fair value based method of
accounting for stock-based compensation. However, SFAS No. 123
allows an entity to continue to measure compensation cost related
to stock and stock options issued to employees using the
intrinsic method of accounting prescribed by Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees". Entities electing to follow APB No. 25 must
make pro forma disclosures of net income and earnings per share,
as if the fair value method of accounting defined in SFAS No. 123
had been applied. Novo Networks has elected to account for its
stock-based compensation to employees under APB No. 25.

                              F-16

<PAGE>



Earnings Per Share
------------------

SFAS No. 128, "Earnings Per Share" ("EPS") requires dual
presentation of basic EPS and diluted EPS on the face of the
income statement for all entities with complex capital
structures. Basic EPS is computed as net income divided by the
weighted average number of common shares outstanding for the
period. The weighted average shares outstanding for fiscal 2000
also includes 71,513 shares to be issued which were outstanding
from March 10, 2000. During fiscal 2001, Novo Networks'
determined we did not have an obligation to issue the additional
shares, and the 71,513 shares have been removed from the weighted
average number of common shares outstanding. Diluted EPS reflects
the potential dilution that could occur from common shares
issuable through stock options, warrants and convertible
debentures. Diluted EPS has not been presented for the effects of
stock options, warrants and convertible debentures, as the effect
would be antidilutive. Accordingly, basic and diluted EPS did not
differ for any period presented. Had the effect not been
antidilutive, 71,227,758 shares would have been included in the
diluted earnings per share calculation for the year ended June
30, 2002. For purposes of computation of EPS, the shares issued
for the acquisition of 67% of e.Volve (11,365,614 shares) are
deemed to have been in existence for the entire period.

Fair Value of Financial Instruments
-----------------------------------

The carrying value of financial instruments approximated fair
value as of June 30, 2002 and 2001, due to their short maturity.

Segment Information
-------------------

SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", established standards for reporting
information about operating segments in the consolidated
financial statements. Operating segments are defined as
components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief
operating decision maker, or decision making group, in deciding
how to allocate resources and in assessing performance. Novo
Networks has determined that it operates in one segment.

Effect of New Accounting Pronouncements
---------------------------------------

In July of 2001, the FASB issued SFAS No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other
Intangibles." SFAS No. 141 requires all business combinations
initiated after June 30, 2001, to be accounted for using the
purchase method of accounting. Under SFAS No. 142, goodwill is no
longer subject to amortization over its estimated useful life.
Prospectively, goodwill is subject to at least an annual
assessment for impairment applying a fair-value-based test.
Additionally, an acquired intangible asset should be separately
recognized if the benefit of the intangible asset is obtained
through contractual or other legal rights, or if the intangible
asset can be sold, transferred, licensed, rented, or exchanged,
regardless of the acquirer's intent to do so. Statement No. 142
is effective for fiscal years beginning after December 15, 2001.
As of June 30, 2002 and 2001, the Company did not have any
purchased intangibles recorded on its balance sheet due to the
impairment loss recorded during fiscal 2001. The adoption of SFAS
No. 141 and SFAS No. 142 will not have a material impact on Novo
Networks' financial position or results of operations.

In August of 2001, the FASB issued Statement No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" which
establishes one accounting model to be used for long-lived assets
to be disposed of by sale and broadens the presentation of
discontinued operations to include more disposal transactions.
Statement No. 144 supercedes Statement No. 121, "Accounting for
the Impairment of Long-Lived Assets to Be Disposed Of" and the
accounting and reporting provisions of APB Opinion No. 30.
Statement No. 144 is effective for fiscal years beginning after
December 15, 2001. The Company does not anticipate any immediate
financial statement impact with the adoption of this statement.

Accounting Estimates
--------------------

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets 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.

                              F-17

<PAGE>

Reclassifications
-----------------

Certain prior year balances have been reclassified to confirm to
the fiscal 2002 presentation.

4.   Goodwill and Other Intangibles, Net

During the fiscal year ended June 30, 2001, the Company recorded
an impairment loss of $86.6 million relating to goodwill. As a
result of the decision to dispose of iGlobal operations, iGlobal
related goodwill of $62.4 million was written off. Additionally,
in assessing the recoverability of the goodwill related to the
Initial Transaction, the Company wrote off the remaining goodwill
of $24.2 million.  No goodwill was recorded during fiscal 2002.

At June 30, 2000, goodwill and other intangibles was comprised of
the following:

<TABLE>
<CAPTION>

                                                                   June 30,
                                                                 ------------
                                                                     2000
                                                                 ------------

                                                              <c>
Goodwill arising from the Initial Transaction
  Conversion of Major Shareholders options in AxisTel            $  4,500,000
  Purchase of 50% of AxisTel                                       12,360,125
  Purchase of 33% of e.Volve                                       11,662,506
Goodwill arising from the acquisition of iGlobal                   87,446,044
                                                                 ------------
                                                                  115,968,675
Less:  Accumulated amortization                                    (7,513,941)
Other, net                                                            184,752
                                                                 ------------
                                                                 $108,639,486
                                                                 ============
</TABLE>

5.   VAT Receivable

VAT is a tax similar in nature to a sales and/or use tax. VAT is
assessed by vendors operating in foreign countries. The tax was
paid by e.Volve, a debtor subsidiary, directly to the assessing
vendor who remits the tax to the Mexican Taxing Authority ("MTA").
e.Volve was exempt from incurring this tax. During fiscal 2002,
the VAT receivable balance of $1.4 million was deemed to be
uncollectible and written off to operating expenses. As of
June 30, 2001, VAT receivable consists of amounts due from
either the assessing vendor or MTA (as applicable).

6.   Restricted Cash

At June 30, 2002, there was no restricted cash. Restricted cash at
June 30, 2001, represents one certificate of deposit (including
accrued interest) that serves as collateral for a letter of
credit in the amount of $75,000.

7.   Property and Equipment

During the fourth quarter of fiscal 2001, the Company made the
decision to no longer transmit traffic for certain of its
domestic and international routes, which were determined to be
unprofitable, or low margin routes. As a result, certain network
assets identified to be phased out of operations, were determined
to be impaired. The Company recorded an impairment loss totaling
$22.3 million during fiscal 2001 relating to such property and
equipment. During fiscal 2002, as a result of the debtor
subsidiaries filing for bankruptcy, the remaining property and
equipment of the debtor subsidiaries was charged to net gain on
liquidation of debtor subsidiaries.

                              F-18

<PAGE>

Property and equipment consists of the following:

                                                     June  30,
                                 Useful      ---------------------------
                                  Life           2002           2001
                              ------------   ------------   ------------
Leasehold improvements          2-10 Yrs.    $     12,482   $    413,703
IRU fiber optic circuit          20 Yrs                 -      3,405,379
Other network equipment         3-5 Yrs.          301,712      3,516,539
Furniture and fixtures          3-7 Yrs           500,772        959,012
                                             ------------   ------------
                                                  814,966      8,294,633
Accumulated depreciation
  and amortization                               (288,191)    (2,595,056)
                                             ------------   ------------
                                             $    526,775   $  5,699,577
                                             ============   ============


During the years ended June 30, 2002, 2001 and 2000, depreciation
and amortization expense totaled approximately $1.4 million, $4.9
million and $2.5 million, respectively.

At June 30, 2002, Novo Networks had no network equipment under
capital leases due to the bankruptcy proceedings of our debtor
subsidiaries. For further details regarding disclosure of
collective lease terms, see footnote 11. At June 30, 2001, we had
network equipment under capital leases with a cost of
approximately $8.4 million and accumulated amortization of
approximately $4.0 million.

8.   Equity Investments

Novo Networks has minority investments in development stage
Internet and communications companies. We account for the
majority of our investments using the equity method. During the
fiscal years ended June 30, 2002, 2001 and 2000, we recorded
equity losses totaling $1.7 million, $9.0 million and $5.2
million, respectively.

Due to declining market conditions, negative operating results of
the investment companies, lack of investee liquidity and other
uncertainties surrounding the recoverability of these
investments, an impairment loss of $2.4 million and $10.8 million
was recorded during fiscal 2002 and fiscal 2001, respectively.
For those investments, which have been impaired completely, the
Company will cease recording its share of losses incurred by the
investee.

Equity investments consists of the following at June 30, 2002 and
2001:

<TABLE>
<CAPTION>


                                                                                                  Balance at June 30,
                                                     % Ownership *         Accounting       ---------------------------
Company Name                                      Common    Preferred        Method             2002           2001
--------------------------------------------      ------    ---------      ----------       ------------   ------------

                                               <c>       <c>            <c>              <c>            <c>
Gemini Voice Solutions (f/k/a PhoneFree.com)       17.2%      31.7%         Equity          $    264,751   $  1,617,161
ORB Communications & Marketing, Inc.               19.0%     100.0%         Equity                     -      2,772,614
FonBox, Inc.                                       14.0%      50.0%         Equity                     -              -
Launch Center 39                                    0.0%       2.1%         Cost                       -        386,997
Spydre Labs                                         5.0%       0.0%         Cost                       -              -
                                                                                            ------------   ------------
                                                                                            $    264,751   $  4,776,772
                                                                                            ============   ============
</TABLE>

*  The percentage ownership reflects Novo Networks' ownership
percentage at June 30, 2002.

During fiscal 2002, Novo Networks received a cash distribution
from Launch Center 39 of approximately $0.8 million, of which
$0.4 million was recorded against the investment balance and $0.4
million in other income.

                              F-19

<PAGE>

9.   Acquisition and Disposal of iGlobal

On March 10, 2000, Novo Networks issued an aggregate of 2,551,087
shares of common stock to the stockholders of iGlobal in exchange
for all of the outstanding voting securities of iGlobal. In
connection therewith, a total of 385,876 warrants and 580,678
options to purchase shares of common stock of iGlobal were
converted into an aggregate of 139,378 warrants and 209,732
options to purchase shares of Novo Networks' common stock
pursuant to the terms of each agreement. Allocation of
consideration given for the purchase of 100% of iGlobal is as
follows:

   Cost of investment                        $  85,352,404
   Add: Net liabilities acquired                 1,655,034
                                             -------------
   Excess attributed to goodwill             $  87,007,438
   Less: Value attributed to shares not         (2,073,877)*
   issued                                    -------------
   Adjusted excess attributed to goodwill       84,933,561
                                             =============

* The value of 71,513 shares to be issued was initially included
in the cost of the investment. During fiscal 2001, it was
determined that iGlobal did not meet the required performance
criteria and the shares were not issued.

In addition to the amounts presented above, Novo Networks
incurred approximately $0.4 million in transaction costs, which
were capitalized in goodwill.

In March 2001, Novo Networks made the decision to dispose of its
investment in iGlobal. On April 2, 2001, iGlobal filed a
voluntary petition for bankruptcy under Chapter 7 of the United
States Bankruptcy Code. In conjunction with the bankruptcy filing
all of iGlobal's product offerings were discontinued or
abandoned. As a result of the disposition, the Company recorded
an impairment loss of $62.4 million during fiscal 2001
related to non-cash goodwill recorded in connection with the
initial acquisition of iGlobal. The Company does not control the
operations of iGlobal and, accordingly, has not included the
accounts of iGlobal in its consolidated balance sheet. The
iGlobal results of operations have been included from March 10,
2000, the date of acquisition, through April 2, 2001, the date
of the bankruptcy filing. As a result of the disposition, the
Company eliminated $3.7 million in assets excluding goodwill and
$9.1 million in liabilities from its consolidated balance sheet.
The Company believes it has no further liabilities or
contingencies resulting from the iGlobal disposition.

The following unaudited pro forma financial information assumes
the disposition of iGlobal took place at the beginning of each of
the fiscal periods presented:

                                           For the Fiscal Year
                                             Ended June 30,
                                   -----------------------------------
                                         2001              2000
                                   ----------------  -----------------
   Revenues                        $     70,708,197  $    54,877,483
   Loss from operations, before
     other (income) expense        $   (172,005,844) $  (104,843,692)
   Net loss allocable to common    $   (183,616,089) $  (120,237,852)
     shareholders
   Net loss per share - (basic     $          (3.52) $         (3.10)
   and diluted)                    ================  ===============


10.  Reorganization And Restructuring Charge

In October of 2000, Novo Networks began execution of a plan to
consolidate the assets, network and management of its wholly
owned operating subsidiaries into a single broadband network and
communication services company. The plan had a focus on providing
broadband and voice services to other service providers, which
resulted in the discontinuation of retail Internet access
services offered, principally, digital subscriber line access and
dial-up access. A reorganization and restructuring charge
totaling approximately $3.9 million was recorded during fiscal
2001.

The restructuring charge of $3.9 million includes cash
expenditures totaling $1.5 million related to (i) personnel
severance of $0.6 million, (ii) lease abandonment of $0.6
million, and (iii) other costs of $0.3 million and non-cash
charges of $2.4 million, primarily for the write-down of impaired
assets and the intrinsic value of stock options granted to a
former employee as part of his separation agreement. The
positions eliminated included three senior management positions
as a result of the management consolidation and 16 technical and
support positions related to the discontinuation of retail
Internet access services.

                              F-20

<PAGE>

A summary of the completed and planned reorganization and
restructuring activities follows:

<TABLE>
<CAPTION>

                                        Reorganization        Fiscal        Balance at     Fiscal         Balance at
                                             and                2001         June 30,        2002           June 30,
                                        Restructuring       Utilization        2001       Utilization        2002
                                        --------------      -----------    ------------   -----------    ------------

                                     <c>                 <c>            <c>            <c>            <c>
Personnel severance                     $    1,487,543      $(1,487,543)   $          -   $         -    $          -
Property, plant & equipment                  1,374,498       (1,374,498)              -             -               -
Abandonment of leased facilities               646,389         (220,092)        426,297      (426,297)              -
Discontinuation and divestiture of
  retail Internet access operations            390,226         (390,226)              -             -               -
                                        --------------      -----------    ------------   -----------    ------------
                                        $    3,898,656      $(3,472,359)   $    426,297   $  (426,297)   $          -
                                        ==============      ===========    ============   ===========    ============
</TABLE>



11.  Obligations Under Capital Leases

Novo Networks' debtor subsidiaries leased network equipment under
certain non-cancelable capital leases, which are secured by
certain property and equipment, see footnote 7. Terms of the leases
called for monthly payments ranging from $479 to $89,211,
including implicit rates ranging from 6.5% to 13.7% per annum. As
a result of the bankruptcy filings during fiscal 2002, all
capital lease obligations have been terminated. Novo Networks
guaranteed one of its subsidiaries' non-cancelable capital lease
commitments, which was settled as part of the bankruptcy
proceedings for $0.7 million during fiscal 2002.

12.  Commitments and Contingencies

Operating Leases
----------------

The Company is a lessee under certain non-cancelable operating
leases. Terms of the leases call for monthly payments ranging
from $2,000 to $7,000. During the years ended June 30, 2002, 2001
and 2000, the Company incurred rental expense of approximately
$1.0 million, $3.3 million and $2.6 million, respectively,
pursuant to the operating leases detailed below. Future minimum
lease payments under these non-cancelable operating leases are as
follows:

     For the year ended June 30,

     2003                          $  166,197
     2004                              74,441
     2005                              57,453
                                   ----------
                                   $  298,091
                                   ==========


Litigation
----------

On June 17, 2002, Novo Networks and the liquidating trust filed a
lawsuit against Qwest and John L. Higgins in the Eighth Judicial
District Court of Clark County, Nevada. The amended plan called for
certain causes of action to be pursued by the liquidating trust
against various third parties, including Qwest, in an attempt to
marshall sufficient assets to make distributions to creditors. We
were a co-proponent of the amended plan and suffered independent
damages as a result of Qwest's actions. Accordingly, Novo Networks
and the liquidating trust asserted, among other things, the following
claims against Qwest: (i) breach of contract, (ii) conversion,
(iii) misappropriation of trade secrets, (iv) breach of a
confidential relationship, (v) fraud, (vi) breach of the covenant
of good faith and fair dealing, (vii) tortious interference with
existing and prospective business relations, (viii) aiding and
abetting Mr. Higgins's misconduct, (ix) civil conspiracy, and (x)
unjust enrichment. The following claims also have been asserted
against Mr. Higgins: (i) breach of contract, (ii) breach of
fiduciary duties, (iii) breach of a confidential relationship,
(iv) fraud, (v) aiding and abetting Qwest's misconduct, (vi)
civil conspiracy, and (vii) unjust enrichment. In addition to an
award of attorneys' fees, Novo Networks and the liquidating trust are
seeking such actual consequential and punitive damages as may be
awarded by a jury or other trier of fact. On August 14, 2002,
Qwest filed a motion to stay the lawsuit and a demand for
arbitration with the American Arbitration Association. A hearing
has been scheduled on October 17, 2002, to determine the proper
forum for the disputes to be heard. No assurances can be given
that any recoveries will result from the prosecution of such
causes of action against Qwest and Mr. Higgins. Furthermore, if
there are any recoveries, they may or may not inure to our
benefit. Also, it currently is not possible to predict whether or
not any counterclaims will be asserted by Qwest.

                              F-21

<PAGE>



On August 28, 2002, Chad E. Coben, our Senior Vice President of
Finance and Corporate Development, initiated an arbitration
proceeding against the Company with the American Arbitration
Association. Mr. Coben has asserted that he has "good reason"
under his employment agreement to resign and receive certain
contractual payments totaling approximately $0.5 million.
According to Mr. Coben, the events that give rise to his ability
to take such action are as follows: (i) that he no longer reports
to any one of three individuals identified in his employment agreement,
(ii) that his duties and responsibilities changed in such a way as to
constitute a material demotion, (iii) that Novo Networks failed to
maintain an incentive bonus plan, and (iv) that we failed to pay a
bonus of $90,000 to him during fiscal year 2002. Novo Networks has
disputed the validity of Mr. Coben's claims, and we have denied that
"good reason" exists for Mr. Coben's resignation. Mr. Coben has
informed the Company that his resignation will be effective
October 31, 2002. Under the circumstances, we intend to
vigorously defend ourselves in the arbitration proceeding. Since
the process has not proceeded beyond the initial pleadings stage,
no realistic assessment can be made with respect to potential
exposure, except to refer to the amount of damages requested and
note that, if Mr. Coben prevails, we could be required to pay his
attorneys' fees.

     As previously reported, the bankruptcy court confirmed the
amended plan of the debtor subsidiaries by an order dated March 14,
2002. On April 3, 2002, the amended plan became effective and a
liquidating trust was formed, with funding provided by us in the
amount of $0.2 million. Assets to be liquidated of $0.7 million
were transferred to the liquidating trust during fiscal 2002. The
purpose of the trust is to collect, liquidate and distribute the
remaining assets of the debtor subsidiaries and prosecute certain
causes of action against various third parties, including, without
limitation, Qwest. No assurances can be given that claims brought
against such third parties or Qwest will be successful or that
those parties will not file one or more counterclaims.  Also, as
previously reported, our subsidiary iGlobal filed a voluntary
petition under Chapter 7 of the bankruptcy code in the United
States Bankruptcy Court for the Northern District of Texas on
April 2, 2001. It is not possible to predict the outcome of
either iGlobal's bankruptcy proceedings or the administration of
the debtor subsidiaries' amended plan or the effects of such
efforts on our business or our non-debtor subsidiaries or the
interests of creditors or stockholders.

The Company and its subsidiaries are involved in other legal
proceedings from time to time, including those described above of
which the Company believes, if decided adversely to the Company or
its subsidiaries, would have a material adverse effect on the
business, financial condition or results of operations of the
Company.


Employment Agreements
---------------------

The Company has entered into multi-year employment agreements or
management contracts with four of its senior executives. These
agreements mature at various times through April of 2004 and provide
for annual salaries ranging between $157,600 and $190,000. In
addition, certain of these employees were granted options to
purchase Novo Networks' common stock. These options, if
exercised, would represent the right to purchase 4,720,000 shares
of common stock at various exercise prices ranging from $4.63 to
$28.50 per option.

13.  Customer and Vendor Concentrations

The Company has concentrations of credit risk related to
customers, and vendors as follows:

                              F-22

<PAGE>

Customer Concentrations
-----------------------

During fiscal years 2002, 2001 and 2000, sales to Qwest
represented 70%, 36% and 68% of total revenues, respectively. No
other customer represented greater than 10% of total revenues
during these fiscal periods.

Vendor Concentrations
---------------------

During fiscal years 2002, 2001 and 2000, the Company purchased
72%, 43% and 55% of its carrier and termination costs from four,
three and two major vendors, respectively.

14.  Income Taxes

There is no provision for income tax expense since the Company
incurred net losses for all periods presented. At June 30, 2002,
the Company had net operating loss carryforwards ("NOLs") of
approximately $69.1 million. The NOLs expire incrementally through
2021.

NOL's generated from operations prior to the Initial Transaction
may be limited due to limitations on the annual amount of NOLs
which can be utilized if certain changes in ownership occur. The
NOL's were reduced by $28.7 million in fiscal 2002 from the forgiveness
of the debtor subsidiaries' liabilities pursuant to Internal
Revenue Code Section 108(b).

Deferred tax assets and liabilities for fiscal 2002 and fiscal
2001 reflect the impact of temporary differences between the
amounts of assets and liabilities for financial reporting and
income tax reporting purposes. Temporary differences that give
rise to deferred tax assets and liabilities at June 30, 2002 and
June 30, 2001, are as follows:

<TABLE>
<CAPTION>

                                                      2002           2001
                                                  ------------   ------------

                                               <c>            <c>
Deferred tax assets:
   Net operating loss carryforwards               $ 36,962,986   $ 25,662,120
   Accrued expenses                                     12,950        672,340
   Accounts receivable reserves                      1,333,220      1,871,286
   Investment basis difference                       7,840,076      6,515,973
   Fixed asset impairment                                    -      8,851,381
                                                  ------------   ------------
          Total gross deferred tax assets           46,149,232     43,573,100
   Less valuation allowance                        (45,984,270)   (40,724,151)
                                                  ------------   ------------
          Net deferred tax assets                      164,962      2,848,949
                                                  ------------   ------------

Deferred tax liabilities:
   Accelerated depreciation                            164,962      2,848,949
   Other                                                     -              -
                                                  ------------   ------------
          Total gross deferred tax liabilities         164,962      2,848,949
                                                  ------------   ------------

          Net deferred tax assets                 $          -   $          -
                                                  ============   ============


</TABLE>




Net deferred tax assets at June 30, 2002, and June 30, 2001, have
been fully offset by valuation allowances as it is more likely
than not that the Company will not ultimately realize any
benefits resulting from such NOLs. Deferred tax assets resulting
from net operating losses include $3,445,046 relating to NOLs the
company acquired through acquisitions.

A reconciliation setting forth the differences between the
effective tax rate of the Company and the United States statutory
rate is as follows:

<TABLE>
<CAPTION>

                                                         2002                      2001                  2000
                                                  --------------------     --------------------   --------------------

                                               <c>            <c>       <c>            <c>     <c>            <c>
Statutory federal income tax benefit              $  2,650,143     34%     $ 64,605,262    35%    $ 11,856,545     35%
State tax rate, net of federal benefit                 290,977      4%        3,691,729     2%         677,517      2%
Non-deductible expense                                 141,439      2%      (43,167,691)  (23%)     (3,902,583)   (11%)
Other                                                  822,347     10%        1,282,346     1%       3,455,046     10%
NOLs not benefited                                  11,982,248)   153%                -     -                -      -
NOL reduction under Section 108(b)                 (10,627,035)  (136%)               -     -                -      -
Decrease (increase) in valuation allowance          (5,260,119)   (67%)     (26,411,646)  (15%)    (12,086,525)   (36%)
                                                  ------------   -----     ------------ -----     ------------   -----
Effective rate, net                               $          -       -     $          -     -     $          -       -
                                                  ============   =====     ============ =====     ============   =====

</TABLE>


                              F-23

<PAGE>

15.  Stockholders' Equity

As of June 30, 2002, pursuant to the Amendment to the Amended and
Restated Certificate of Incorporation of Novo Networks, Inc.
dated November 13, 2000, the Company is authorized to issue
225,000,000 shares, consisting of (i) 200,000,000 shares of
Common Stock, par value $0.00002 per share, and (ii) 25,000,000
shares of Preferred Stock, par value $0.00002 per share.

Preferred Stock
---------------

Our Board of Directors is authorized to establish and designate
series of Preferred Stock, to fix the number of shares
constituting each series, and to fix the designations and the
preferences, limitations, and relative rights, including voting
rights, of the shares of each series. As of June 30, 2002, the
Company's Board of Directors had designated four series of
Preferred Stock consisting of the following:

Series A Convertible Preferred Stock ($.00002 par value, 5,000
shares authorized, 0 shares issued and outstanding). Holders of
Series A Convertible Preferred Stock are not entitled to vote,
except as provided by law and are not entitled to receive any
dividends. In the event of liquidation, holders of Series A
Convertible Preferred Stock are entitled to receive $1,000 per
share out of the assets available for distribution to the
Company's stockholders.

Series B Convertible Preferred Stock ($.00002 par value, 25,000
shares authorized, 4,500 shares issued and outstanding). Holders
of Series B Convertible Preferred Stock are not entitled to vote,
except as provided by law and are not entitled to receive any
dividends. In the event of liquidation, holders of Series B
Convertible Preferred Stock are entitled to receive $1,000 per
share out of the assets available for distribution to the
Company's stockholders under the same terms as the holders of any
outstanding shares of Series A Convertible Preferred Stock.

7,000 shares of Series B Convertible Preferred Stock were issued
on November 19, 1999, November 26, 1999 and December 15, 1999 at
a price of $1,000 per share. The shares are convertible into
common shares at a price of $13.80 per share, subject to certain
anti-dilution adjustments. On March 13, 2000, 2,500 shares of
Series B Preferred Stock were converted to 181,159 shares of
common stock.

Series C Convertible Preferred Stock ($.00002 par value, 30,000
shares authorized, 14,570 shares issued and outstanding). Holders
of Series C Convertible Preferred Stock are not entitled to vote,
except as provided by law and are not entitled to receive any
dividends. In the event of liquidation, holders of Series C
Convertible Preferred Stock are entitled to receive $1,000 per
share out of the assets available for distribution to the
Company's stockholders under the same terms as the holders of any
outstanding shares of Series A and Series B Convertible Preferred
Stock.

15,570 shares of Series C Convertible Preferred Stock were issued
in a series of transactions that closed between January 6 and
February 10, 2000 to 8 accredited investors, at a price of $1,000
per share. The shares are convertible into Common Stock at a
price of $17.90 per share, subject to certain anti-dilution
adjustments. During fiscal 2001, 1,000 shares were converted into
55,866 shares of Novo Networks common stock.

Series D Convertible Preferred Stock (50,000 shares authorized,
7,769 shares issued and outstanding). The par value of shares of
Series D Convertible Preferred Stock is $0.00002 with a
liquidation value of $1,000 per share. Holders of Series D
Convertible Preferred Stock are entitled to vote on all matters
to be voted on by the Company's stockholders. Each share of
Series D Convertible Preferred Stock shall have one vote for each
share of Common Stock into which it may be converted.

On December 5, 2000, the Company issued 7,000 shares of Series D
Convertible Preferred Stock and 450,001 shares of the Company's
common stock for approximately $7.0 million in cash and a
minority interest in a private communications company. The shares
of Series D Convertible Preferred Stock are convertible into
shares of the Company's common stock at a price of $7.00 per
share. The Company has assigned no value to the minority interest
received in this transaction, and has treated the issuance of the
7,000 shares of Series D Convertible Preferred Stock and 450,001
shares of common stock as a single transaction. During fiscal
2002 and 2001 an additional 444 and 325 shares of Series D
Convertible Preferred Stock were issued for payment of dividends,
respectively.

                              F-24

<PAGE>

As a result of the beneficial conversion rates applied to the
Series B, Series C and Series D Preferred Stock, the Company
recorded imputed non-cash preferred dividends totaling
approximately $2.3 million and $10.4 million in fiscal 2001
and 2000, respectively.

Stock Options

On September 22, 1999, as part of the Agreement and Plan of
Reorganization entered into in connection with the Initial
Transaction, see footnote 1, the Company adopted a new share
option plan, the 1999 Omnibus Securities Plan, (the "1999 Plan")
for its employees, officers, directors and consultants. The
share option plans of e.Volve and AxisTel were terminated. The
1999 Plan provides for the grant of incentive stock options and
non-qualified stock options. The terms of the options are set by the
Company's Board of Directors. The options expire no later than
ten years after the date the stock option is granted. The number
of shares authorized for grants under the Plan is 15% of the
total outstanding common stock, provided that no more than 4
million options can be "incentive" stock options. Additionally,
during fiscal 2000 the Company issued options outside of the 1999
Plan.

In December of 2000, the Company adopted a new share option plan,
the 2001 Equity Incentive Plan, (the "2001 Plan") for its
employees and officers. The 2001 Plan provides for the grant of a
maximum of 12 million incentive stock options that expire no
later than ten years after the date the stock option is granted.
A summary of activity for the fiscal year ended June 30, 2002, is
presented below:

<TABLE>
<CAPTION>

                                             2001 Plan           1999 Plan          Non-Plan           e.Volve Plan
                                        ------------------- ------------------- ------------------- -------------------
                                                  Weighted            Weighted            Weighted            Weighted
                                                   Average             Average             Average             Average
                                         Number   Exercise   Number   Exercise   Number    Exercise  Number   Exercise
                                        of Shares   Price   of Shares   Price   of Shares   Price   of Shares   Price
                                        --------- --------- --------- --------- --------- --------- --------- ---------

                                     <c>       <c>       <c>       <c>       <c>       <c>       <c>       <c>
Options Outstanding at June 30, 1999            - $       -         - $       -         - $       -       780 $3,274.04
                                        ========= ========= ========= ========= ========= ========= ========= =========
-----------------------------------------------------------------------------------------------------------------------
Options Granted
  At Fair Market Value                          - $       - 3,282,997 $   15.34 9,493,000 $   22.89         - $       -
  Below Fair Market Value                       -         -   766,666      8.13   191,574     12.00         -         -
Options Exercised                               -         -         -         -         -         -         -         -
Options Cancelled                               -         -         -         -         -         -       780  3,274.04
                                        ---------           ---------           ---------           ---------
Options Outstanding at June 30, 2000            - $       - 4,049,663 $   13.98 9,684,574 $   22.68         - $       -
                                        ========= ========= ========= ========= ========= ========= ========= =========
Options exercisable at June 30, 2000            - $       -   450,000    $11.50         - $       -         - $       -
                                        ========= ========= ========= ========= ========= ========= ========= =========
Weighted average fair value of
  options granted during fiscal 2000              $       -           $    8.14           $   17.66           $       -
                                                  =========           =========           =========           =========
-----------------------------------------------------------------------------------------------------------------------
Options Granted
  At Fair Market Value                 10,227,163 $    4.63 1,138,499 $    8.69         - $       -         - $       -
  Below Fair Market Value                       -         -         -         -         -         -         -         -
Options Exercised                               -         -         -         -         -         -         -         -
Options Cancelled                       3,281,038      4.63 1,874,997      4.66 3,430,667     23.00         -         -
                                        ---------           ---------           ---------           ---------
Options Outstanding at June 30, 2001    6,946,125 $    4.63 3,313,165 $   13.24 6,253,907 $   22.50         - $       -
                                        ========= ========= ========= ========= ========= ========= ========= =========
Options exercisable at June 30, 2001    4,644,625 $    4.63 1,720,163 $   11.97 4,519,858 $   22.77         - $       -
                                        ========= ========= ========= ========= ========= ========= ========= =========
Weighted average fair value of
  options granted during fiscal 2001              $    4.63           $    4.84           $       -           $       -
                                                  =========           =========           =========           =========
-----------------------------------------------------------------------------------------------------------------------
Options Granted
  At Fair Market Value                          - $       -         - $       -         - $       -         - $       -
  Below Fair Market Value                       -         -         -         -         -         -         -         -
Options Exercised                               -         -         -         -         -         -         -         -
Options Cancelled                       2,819,125      4.63 1,991,665      8.87 2,695,333     23.00         -         -
                                        ---------           ---------           ---------           ---------
Options Outstanding at June 30, 2002    4,127,000 $    4.63 1,321,500 $   19.84 3,558,574 $   21.73         - $       -
                                        ========= ========= ========= ========= ========= ========= ========= =========
Options exercisable at June 30, 2002    2,906,000 $    4.63 1,009,540 $   18.61 2,691,550 $   22.23         - $       -
                                        ========= ========= ========= ========= ========= ========= ========= =========
Weighted average fair value of
  options granted during fiscal 2002              $       -           $       -           $       -           $       -
                                                  =========           =========           =========           =========

</TABLE



                              F-25

<PAGE>


At June 30, 2002, the range of exercise prices, weighted average
exercise price and weighted average remaining contractual life
for options outstanding are as follows:

<TABLE>
<CAPTION>
                                                   Options Outstanding                  Options Exercisable
                                        -----------------------------------------    ------------------------
                                                       Weighted     Weighted         Weighted
                                          Number        Average     Average            Number        Average
                 Option Price               of         Exercise     Remaining           of          Exercise
                    Range                 Shares         Price   Contractual Life     Shares          Price
               ---------------          ---------      --------  ----------------    ---------      ---------

            <c>                      <c>            <c>          <c>              <c>            <c>
2001 Plan      $2.50 to $5.00           4,127,000      $   4.63     8.54 years       2,906,000      $    4.63

1999 Plan      $2.50 to $5.00              11,500      $   4.63     8.54 years           2,875      $    4.63
               $5.01 to $10.00            550,000      $  10.00     7.27 years         500,000      $   10.00
               $10.01 to $15.00            10,000      $  15.00     7.29 years           6,665      $   15.00
               $15.01 to $20.00            75,000      $  17.00     8.01 years          50,000      $   17.00
               $25.01 to $30.00           675,000      $  28.50     7.71 years         450,000      $   28.50

Non-Plan       $10.01 to $15.00           191,574      $  12.00     7.71 years         127,716      $   12.00
               $15.01 to $20.00           200,000      $  18.00     7.79 years         133,334      $   18.00
               $20.01 to $25.00         3,167,000      $  23.00     7.75 years       2,430,500      $   23.00

</TABLE



The Company follows APB 25 in accounting for its stock options,
and, accordingly, in fiscal 2000, recorded deferred compensation
of approximately $3.3 million equal to the intrinsic value of
options granted to employees that had an exercise price lower
than the market price of the underlying stock on the day of the
grant. The deferred compensation is being amortized over the
related vesting periods and the amortization is included in
selling, general and administrative expenses in the statement of
operations. During fiscal periods 2002, 2001 and 2000,
amortization of deferred compensation totaled approximately $0.4
million, $0.8 million and $2.0 million respectively. At June 30,
2002, we had $31,944 in remaining deferred compensation.

The Company has adopted the disclosure-only provision of SFAS
123, "Accounting for Stock Based Compensation." SFAS 123 requires
pro forma information be presented as if the Company had
accounted for the stock options granted during the fiscal periods
presented using the fair value method. We did not grant any stock
options during fiscal 2002. The fair value for options granted
during fiscal 2001 and 2000, respectively, was estimated as of
the date of grant using the Black-Scholes option-pricing model
with the following assumptions:

                                      Fiscal         Fiscal
                                       2001           2000
                                   ------------   ------------
     Expected volatility               280.0%         60.0%
     Risk-free interest rate             4.5%          6.1%
     Dividend yield                      0.0%          0.0%
     Expected life (years)               8.2           8.3

For purposes of pro forma disclosure, the estimated fair values of
the options are amortized to expense over the options' vesting
period. The Company's pro forma information relative to the 2001
Plan and 1999 Plan is as follows:

<TABLE>
<CAPTION>

Pro forma net loss                                            Fiscal 2002         Fiscal 2001         Fiscal 2000
                                                            --------------      --------------      --------------
  
                                                       <c>                 <c>                 <c>
  Net loss allocable to common shareholders as reported     $   (8,397,969)     $ (184,189,204)     $  (44,283,794)
  Additional compensation expense under SFAS 123               (17,831,911)        (76,692,199)        (17,471,952)
                                                            --------------      --------------      --------------
  Net loss allocable to common shareholders, pro forma      $  (26,229,880)     $ (260,881,403)     $  (61,755,746)
                                                            ==============      ==============      ==============

  Net loss per share, pro forma                             $        (0.50)     $        (5.00)     $        (1.59)
  Net loss per share, basic and diluted, as reported        $        (0.16)     $        (3.53)     $        (1.14)

</TABLE>



                              F-26

<PAGE>

Common Stock Issued in Settlement of Accounts Payable
-----------------------------------------------------

During fiscal 2000, the Company issued 426,799 shares of common
stock to three vendors for settlement of accounts payable. The
shares were issued at a discount below market value and resulted
in a charge to selling, general and administrative expense of
approximately $2.8 million.

Warrants and Options Issued in Connection with the iGlobal
Acquisition
----------------------------------------------------------

In connection with the iGlobal acquisition on March 10, 2000, the
Company issued 139,378 warrants to purchase shares of common
stock of the Company to holders of iGlobal warrants. The warrants
have exercise prices of $0.01384 and $9.6899 and expire in fiscal
2004 through 2006. The fair value of the warrants on March 10, 2000,
of approximately $3.8 million was included in the initial cost of the
iGlobal acquisition. Additionally, the Company issued 209,732 options
to purchase Novo Networks stock in exchange for fully vested options
of iGlobal. The fair value of the options on March 10, 2000, of
approximately $5.5 million has also been included in the initial cost
of the iGlobal acquisition. The fair value of the warrants and options
was determined using the Black-Scholes option-pricing model.

Call Options
------------

During fiscal 2000, Novo Networks entered into Issuer Stock
Option Agreements ("Call Options") with two senior officers of
the Company. The Call Options grant Novo Networks the option to
acquire a combined 700,000 shares of common stock of the Company
at exercise prices of $15 to $20 per share based on the date
exercised. The Call Options expired in September of 2001, unexercised.
The Company has accounted for the purchase of the Call Options as
an equity instrument and, accordingly, recorded a reduction to
additional paid in capital of $0.2 million, the combined purchase
price of the call options.

16.  Related Party Transactions

Sales to Affiliates
-------------------

During fiscal 2002, there were no sales to affiliates. During
fiscal 2001 and fiscal 2000, sales to Gemini Voice totaled
approximately $0.1 million and $0.2 million, respectively. Sales
to ICT during fiscal 2000 totaled $47,225. Such transactions
occurred in the normal course of business.

Administrative Expenses
-----------------------

Novo Networks provided administrative services to our debtor
subsidiaries pursuant to an administrative services agreement
approved by the bankruptcy court. The agreement provided that our
debtor subsidiaries pay us $30,000 per week for legal,
accounting, human resources and other services. The original
agreement expired on April 2, 2002, and an interim agreement was
reached whereby, the liquidating trust, as successor-in-interest
to our debtor subsidiaries, paid us $40,000 per month for the
same services. The interim agreement expired on August 15, 2002.
We are currently negotiating the terms of an on-going agreement
with the liquidating trust. As of June 30, 2002, we had an
outstanding receivable from the debtor subsidiaries relating to
the provision of such administrative services of approximately
$0.5 million. Due to the uncertainty surrounding the collection
of the receivable, it has been fully reserved.

In September of 1999, the Company entered into a Management Services
Agreement with HW Partners to perform various operational and
administrative services for eVentures. Barrett Wissman, Novo
Networks' President, is the sole manager of HW Partners. Novo
Networks incurred approximately $0.1 million in expense pursuant
to this agreement during fiscal 2000.

During fiscal 2002, Novo Networks paid a former e.Volve employee
approximately $64,000 for consulting services. In February of 2000,
the Company paid a former majority shareholder of e.Volve
approximately $0.1 million for consulting services.

Notes Receivable From Shareholders
----------------------------------

In March of 2000, 15 employees of iGlobal exercised 524,436 options
to purchase common stock of iGlobal by the use of a note payable
to iGlobal. At June 30, 2000, the aggregate notes receivable
totaled approximately $1.0 million. The notes receivable bore
interest at 8.5%, were secured by the common stock of Novo
Networks received in the acquisition (189,426 common shares), and
were due on April 15, 2001. During fiscal 2001, Novo Networks
collected $96,984 in principal from one former iGlobal employee
and foreclosed on the remaining $0.9 million, representing
171,911 shares of Novo Networks common stock.

                              F-27

<PAGE>

Notes Receivable From Affiliate

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

In June of 2000, Novo Networks advanced $0.1 million to CallRewards
pursuant to two promissory notes. During fiscal 2001, the Company
advanced an additional $84,096. In September of 2000, CallRewards
merged with a subsidiary of Gemini Voice and the notes were
converted into 103,340 additional shares of Gemini Voice common
stock.

Equipment Purchase
------------------

On April 3, 2000, in connection with the relocation of Novo
Networks' corporate offices and the employment of Jeffrey A.
Marcus, Thomas P. McMillin, Daniel J. Wilson and Chad E. Coben,
the Company entered into a letter agreement with each of these
individuals that required Novo Networks to reimburse Marcus &
Partners (an affiliate of these individuals) for certain
leasehold improvements, fixtures and other costs associated with
the finish out of Novo Networks' new offices. The total payment
pursuant to this letter agreement was $1.5 million, representing
the actual costs paid by Marcus & Partners for such items.

17.  Unaudited Quarterly Results of Operations

The following table presents unaudited summary data relating to
the Company's results of operations for each quarter of the
fiscal years ended June 30, 2002, 2001 and 2000:



<TABLE>
<CAPTION>

                                                   For the Fiscal Year Ended June 30, 2002
                              ----------------------------------------------------------------------------
                               First Quarter       Second Quarter*     Third Quarter*      Fourth Quarter
                              ---------------     ----------------    ---------------     ----------------

                           <c>                 <c>                 <c>                 <c>
Revenues                      $     8,687,677     $      1,799,305    $             -     $              -
Loss from operations before
  other income and expense    $    (7,485,041)    $     (6,326,113)   $    (1,958,837)    $     (6,932,404)
Net income (loss)             $    (7,655,136)    $      8,412,975    $    (4,128,002)    $     (5,027,806)
Net income (loss) per share
  (basic and diluted)         $         (0.14)    $           0.16    $         (0.08)    $          (0.10)
Avg. shares outstanding
  (basic and diluted)              52,323,701           52,323,701         52,323,701           52,323,701
----------------------------------------------------------------------------------------------------------
                                                    For the Fiscal Year Ended June 30, 2001
                              ----------------------------------------------------------------------------
                               First Quarter       Second Quarter*     Third Quarter*      Fourth Quarter
                              ---------------     ----------------    ---------------     ----------------
Revenues                      $    18,597,027     $     20,593,654    $    19,749,715     $     13,091,158
Loss from operations before
  other income and expense    $   (12,356,818)    $    (18,756,695)   $  (125,133,484)    $    (16,224,528)
Net loss                      $   (16,193,938)    $    (22,294,775)   $  (127,280,871)    $    (18,419,620)
Net loss per share
  (basic and diluted)         $         (0.31)    $          (0.43)   $         (2.43)    $          (0.36)
Avg. shares outstanding
  (basic and diluted)              51,989,562           52,121,108         52,462,631           52,323,701

----------------------------------------------------------------------------------------------------------
                                                    For the Fiscal Year Ended June 30, 2000
                              ----------------------------------------------------------------------------
                               First Quarter       Second Quarter*     Third Quarter*      Fourth Quarter
                              ---------------     ----------------    ---------------     ----------------
Revenues                      $     8,675,719     $     13,986,119    $    16,308,494     $     16,383,698
Loss from operations before
  other income and expense    $    (1,869,833)    $     (7,582,919)   $    (6,029,949)    $    (13,298,876)
Net loss                      $    (3,312,319)    $     (8,802,914)   $   (17,817,987)    $    (14,350,574)
Net loss per share
  (basic and diluted)         $         (0.20)    $          (0.20)   $         (0.38)    $          (0.36)
Avg. shares outstanding
  (basic and diluted)              16,547,331           44,309,461         46,512,853           39,862,706


</TABLE>

                              F-28

<PAGE>

     * For our debtor subsidiaries, the financial statements for
       the second and third quarters of the current fiscal year
       were prepared in accordance with accounting principles
       generally accepted in the United States of America
       applicable to a liquidating entity. All debtor
       subsidiaries' assets were stated at estimated realizable
       values. Similarly, liabilities were reflected at
       estimated settlement amounts, subject to the approval of
       the bankruptcy court, with those secured by specific
       assets being offset against such liabilities, as allowed.

18.  Pro Forma Financial Data (Unaudited)

In September and October of 1999, the Company acquired all of the
outstanding shares of AxisTel and the remaining 33.3% of e.Volve
(see Note 1). On March 10, 2000, the Company acquired 100% of
iGlobal (see Note 9).

Set forth below is the Company's unaudited pro forma condensed
statement of operations for the fiscal year ended June 30, 2000,
as though the above transactions had occurred on July 1, 1999:

                                   For the Fiscal Year Ended
                                         June 30, 2000
                                   -------------------------
     Revenues                           $62,149,705
     Net loss allocable to
       common shareholders              $61,306,411
     Net loss per share                    ($1.18)


The unaudited pro forma results are not necessarily indicative of
either actual results of operations that would have occurred had
the transactions referred to above occurred on July 1, 1998,
respectively, or of future results.










                              F-29



<PAGE>

       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE


  Board of Directors and Stockholders
  Novo Networks, Inc.:

       In connection with our audit of the consolidated financial
  statements of Novo Networks, Inc. and subsidiaries referred to
  in our report dated September 6, 2002, which is included in the
  annual report to stockholders in Part II of this Form 10-K,
  we have also audited Schedule II at June 30, 2002 and for the
  year then ended. In our opinion, this schedule presents fairly
  in all material respects, the information required to be set forth
  therein.



  Dallas, Texas
  September 6, 2002















                              FS-1

<PAGE>

              NOVO NETWORKS, INC. and SUBSIDIARIES
                           Schedule II
         Valuation and Qualifying Accounts and Reserves




<TABLE>
<CAPTION>

                                     Balance        Charged                            Balance
                                       at           to Costs                             at
                                    Beginning         and              Deductions/     End of
                                    of Period       Expenses           Writeoffs       Period
                                   -----------    ------------        ------------   ------------

                                <c>            <c>                 <c>            <c>
Allowance for doubtful accounts:
  Year ended June 30, 2000         $         -    $    793,900        $          -    $   793,900

  Year ended June 30, 2001         $   793,900    $  4,038,479        $   (242,732)   $ 4,589,647

  Year ended June 30, 2002         $ 4,589,647    $  6,063,299        $(10,652,946)   $         -


Reserve for notes and other receivables:
  Year ended June 30, 2000         $         -    $          -        $          -    $         -

  Year ended June 30, 2001         $         -    $          -        $          -    $         -

  Year ended June 30, 2002         $         -    $  3,603,299        $          -    $ 3,603,299

  </TABLE>



                              FS-2

<PAGE>



                        INDEX TO EXHIBITS

  EXHIBIT                                                FILED
  NUMBER                  DESCRIPTION                   HEREWITH
 --------  -----------------------------------------  -----------

 21.1      Subsidiaries of Novo Networks, Inc.             X

 23.1      Consent of Grant Thornton LLP                   X

 23.2      Consent of Arthur Andersen LLP                  *

 23.3      Consent of BDO Seidman, LLP                     X

 24        Power of Attorney                              See
                                                       Signature
                                                         Pages

-----------------------
*  Not available.






                                A-1